Santee Cooper Formally Joins Southeast Energy Exchange Market

January 7, 2022

by Paul Ciampoli
APPA News Director
January 7, 2022

Santee Cooper, South Carolina’s state-owned electric and water utility, has joined the Southeast Energy Exchange Market effective Jan. 4, 2022.

“After nearly two years working with the other SEEM member utilities, Santee Cooper is pleased to formally join the group. We are excited by the opportunities SEEM will offer our customers, including better capability for integrating renewables and savings from lower fuel costs and improved efficiencies,” said Charlie Duckworth, Santee Cooper Deputy CEO and Chief Innovation and Planning Officer, in a statement.

The new SEEM platform will facilitate sub-hourly, bilateral trading, allowing participants to buy and sell power close to the time the energy is consumed, utilizing available unreserved transmission.

Participation in SEEM is open to other entities that meet the appropriate requirements.

Other founding members of SEEM are expected to include Associated Electric Cooperative, Dalton Utilities, Dominion Energy South Carolina, Duke Energy Carolinas, Duke Energy Progress, Georgia System Operations Corporation, Georgia Transmission Corporation, LG&E and KU Energy, MEAG Power, N.C. Municipal Power Agency No. 1, NCEMC, Oglethorpe Power Corp., PowerSouth, Southern Company and TVA.

The founding members represent nearly 20 entities in parts of 11 states with more than 160,000 megawatts (summer capacity; winter capacity is nearly 180,000 MW) across two time zones.

ERCOT Says Generation Fleet Ready for Winter Weather Following Winterization Inspections

January 4, 2022

by Paul Ciampoli
APPA News Director
January 4, 2022

The Electric Reliability Council of Texas (ERCOT) has completed on-site inspections of mandatory winterization efforts, and inspection results show the independently owned electric generation fleet and electric transmission companies serving the ERCOT region are ready for winter weather.

Inspections were completed at more than 300 electric generation units, representing 85 percent of the megawatt hours lost during 2021’s Winter Storm Uri due to outages and 22 transmission station facilities, ERCOT said on Dec. 30.

ERCOT has filed a preliminary summary inspection report with the Public Utility Commission of Texas and will submit its final inspection report on January 18, 2022 for review and any potential enforcement action. In 2021, the Legislature increased the maximum penalties for violating weatherization rules to $1,000,000 per day per violation.

Of 302 generation resources inspected, some generators had exceeded PUC winterization requirements. Only ten generation resources inspected had items identified on the day of inspection requiring correction.  For example, a generation unit may have needed a windscreen to be compliant, but it was not yet installed on the day of inspection. Many items like this have now been completed since the inspection occurred and all ten units are still operational.  The ten generation units have a total capacity of 2,129 megawatts, representing about 1.7 percent of the total ERCOT generation fleet. 

Of the 22 transmission station facilities inspected, ERCOT found that six had potential identified deficiencies, most of which have already been corrected.  These were generally minor items, such as cabinet heaters out of service or missing weather stripping on cabinet doors on the day of inspection.  Most of these items have already been corrected.

ERCOT will conduct follow-up inspections on the generation and transmission facilities with potential identified issues.

ERCOT and its contractors have spent more than 3,600 hours on these inspection-related activities to date. Additionally, ERCOT and PUC staff are actively monitoring the compliance plans of the generation resources that requested additional time to finalize compliance with the new winterization regulations.

Texas Utility Regulators Approve Reforms To Wholesale Electricity Market

December 20, 2021

by Paul Ciampoli
APPA News Director
December 20, 2021

The Public Utility Commission of Texas (PUCT) on Dec. 16 voted to enact major reforms to the state’s wholesale electricity market.

Some changes will take effect very quickly to be in place this winter, the PUCT said, while other changes “will provide long-term incentives for investment in reliable power generation infrastructure to ensure Texas will have the power the state needs for decades.”

Key Changes

The changes approved by the PUCT will provide earlier price signals to bring additional generation online and for large consumers to adjust their demand, it said.

The PUCT said its approved reforms increase the market incentives for large consumers to decrease electricity usage in response to prices and grid conditions. This includes virtual power plants where groups of customers can come together into a single resource for the grid.

Emergency Response Service (ERS) is an existing program for large customers to register with ERCOT to decrease their electricity demand when the grid needs additional power. Previously, this tool was only available during an emergency. Now ERS can be used to avoid emergency conditions.

The commission also approved new or revamped ancillary services that include paying generators for having onsite fuel storage, for the ability to respond quickly to changes in the frequency of the grid, and for the capacity to react to abrupt swings in electricity supply and demand.

These improvements are part of Phase 1 of the Commission’s work to improve grid reliability and the wholesale electricity market. Phase 2 will include a review of a backstop reliability service and a load-side reliability mechanism.

These will provide further market signals for reliable generation, the PUCT said.

PUCT staff and Electric Reliability Council of Texas staff will develop phase 2 policies over the coming weeks and report back to the commissioners.

FERC Seeks Comment On Recovery, Reporting Of Industry Dues, Expenses

December 20, 2021

by Paul Ciampoli
APPA News Director
December 20, 2021

The Federal Energy Regulatory Commission (FERC) has issued a Notice of Inquiry (NOI) to examine the rate recovery, reporting and accounting treatment of industry association dues and certain civic, political and related expenses, as well as whether additional transparency is needed with respect to defining donations for charitable, social or community welfare purposes.

The Commission also is requesting comments on whether any changes are necessary to ensure those expenditures are properly accounted for and recovered in rates regulated by FERC.

FERC’s NOI seeks comment on 22 questions focused in three areas:

• Delineation of recoverable and non-recoverable industry association dues by member utilities for rate purposes;
• Increased transparency in industry association expenses and segments of industry association dues charged to utilities as well as utilities’ and industry associations’ expenses from civic, political and related activities; and
• A framework for guidance should the Commission determine action is necessary to further define the recoverability of industry association dues charged to utilities and/or utilities’ expenses from civic, political and related activities.

FERC generally allows utilities to recover a portion of their industry association dues, but certain expenses, such as the portion of dues relating to industry association lobbying, are generally supposed to be excluded from the costs passed on to customers.

The NOI explains that FERC does not have a “bright-line rule” delineating between recoverable expenses and those excluded from rate recovery.  Instead, FERC allows regulated entities to determine the portion of their industry association dues to include in recoverable accounts, based on information provided by the industry associations about their activities and associated costs. Currently, the Commission generally considers the appropriate delineation between the two classes of expenses on a case-by-case basis, determined based on the facts presented.

Initial comments on the NOI are due 60 days after the date of publication of the NOI in the Federal Register. Reply comments are due 90 days after the date of publication in the Federal Register.

ERCOT, Texas PUC Leaders Detail Actions Taken To Bolster Grid Reliability This Winter

December 9, 2021

by Paul Ciampoli
APPA News Director
December 9, 2021

Public Utilities Commission of Texas (PUCT) Chairman Peter Lake and Electric Reliability Council of Texas (ERCOT) Interim President and CEO Brad Jones recently provided an update on grid operations and the actions their organizations are taking to improve grid reliability this winter.

At a press conference, Lake and Jones detailed the ongoing reforms and actions underway to ensure a stronger and safer grid, including:

• ERCOT will continue policies put in place this summer that operate the grid in a conservative manner with an abundance of power reserves;
• ERCOT’s Emergency Response System that allows large electric consumers to curtail their usage under direction from ERCOT can now be used before the grid encounters emergency conditions;
• The PUCT has reduced the cap on high prices that can be charged when supply is tightest, lowering the cap from $9,000 per megawatt hour (MWh) to $5,000 per MWh;
• Along with the Railroad Commission of Texas, the PUC has adopted a rule to designate natural gas facilities that are critical to the operation of the electric grid; and
• PUCT rules required the weatherization of power plants in Texas by December 1. This will be verified by ERCOT inspections of power plants

In addition, penalties for violating weatherization rules have increased to $1,000,000 per day per violation.

PUCT Staff Files Reports Of Violation Against Generation Companies

PUCT staff on Dec. 8 filed reports of violation against eight generation companies for failure to file winter weather readiness reports by the Dec. 1, 2021 deadline.

Out of the 850 generation resources in the state, PUCT’s Division of Compliance and Enforcement identified 13 separate generation resources owned by the eight companies that missed the deadline. These 13 resources have the ability to generate 801 megawatts of electricity out of the state’s total installed capacity of 120,000 MW, or less than one percent of the state’s total.

The winter weather readiness reports are critical to ensure the generation fleet in Texas is more prepared to provide service through severe winter weather, the PUCT Said. Failure to file winter weather readiness reports on time does not indicate whether or not these companies have taken the steps to weatherize their facilities. Subsequent inspections by ERCOT will verify that.

In October 2021, the PUCT adopted a new rule requiring power generators and electric transmission companies to take actions based on weather preparation best practices in advance of the 2021-2022winter season.

Entities receiving violations have 20 days to respond to the notice of violation and can request a hearing.

APPA, Others Ask Court To Reject Petitions, Uphold FERC Orders 872, 872-A

December 9, 2021

by Peter Maloney
APPA News
December 9, 2021

The American Public Power Association joined other power industry groups  in filing a joint brief in the United States Court of Appeals for the Ninth Circuit, asking the court to deny petitions challenging Federal Energy Regulatory Commission (FERC) orders that revised FERC’s regulations implementing the Public Utility Regulatory Policies Act of 1978 (PURPA).

The petitions, filed by the Solar Energy Industries Association (SEIA) and a coalition of renewable energy and environmental groups, seek to vacate FERC orders 872 and 872-A.

The groups joining APPA in the Nov. 22 filing are the Edison Electric Institute, the National Rural Electric Cooperative Association, and the Large Public Power Council. APPA and the other trade groups are intervenors in the appeal in support of FERC, which filed a brief defending its orders in October 2021.

Under PURPA, electric utilities are required to purchase power produced by certain qualifying facilities (QFs) defined in the statute.The rates for these purchases are not to exceed the cost that a utility would have otherwise paid to generate or purchase the power – what FERC calls “avoided cost.” Avoided cost rates are generally set by state or local utility regulators.

Issued in July 2020, FERC’s Order No. 872, among other things, granted greater flexibility to state regulatory authorities in establishing avoided cost rates for QF purchases, both inside and outside of the organized electric markets, providing relief to utilities that have argued for years that some state-set avoided costs had become higher than the wholesale electric costs available to them. The rule also gave states the ability to require that energy rates, but not capacity rates, vary during the term of a QF contract.

Order 872 also modified the “one-mile rule” that FERC had long applied in determining whether a generating resource satisfies the 80 megawatt (MW) limit for one category of qualifying facilities – small power production QFs. The 80 MW limit encompasses all facilities located at the same site, and FERC’s one-mile rule provided that facilities located more than a mile apart were deemed to be located at separate sites. Some utilities had alleged that developers of renewable energy projects used the rule to avoid size limitations on QF projects by disaggregating large projects into smaller components and spacing the components to take advantage of the bright line one-mile rule.

Order 872 also reduced the size threshold that FERC applies in assessing whether a QF has nondiscriminatory access to organized power markets. Under amendments added to PURPA in 2005, utilities can ask to be relieved of the obligation to purchase power from QFs that have nondiscriminatory access to certain power markets. Prior to Order No. 872, FERC presumed that QFs smaller than20 megawatts (MW) lacked nondiscriminatory access to power markets, but FERC’s revised rules lowered the threshold to 5 MW for small power production QFs,, but not cogeneration, facilities.

FERC affirmed Order No. 872 in November 2020 in Order No. 872-A.

In their recent brief to the court APPA and its joint intervenors argued that FERC’s orders “were designed to continue encouraging certain power production addressed in PURPA, while ensuring that customers realize the benefits of the recent growth in renewable generation in the United States without paying above-market rates for that privilege.”

The petitioners “nonetheless cry foul, insisting that the Commission’s Orders will harm the environment and the renewables industry,” the intervenors wrote. “But in truth, their primary concern is preserving an obsolete regulatory framework that has morphed into an arrangement that consistently awards ‘qualifying facilities’ (‘QFs’) with above-market rates for the energy they produce, to the ultimate detriment of energy consumers,” they said.

The petitioners “paper over the fact that the practical effect of adopting their theories would be to extend them a further (decades-long) subsidy financed on the backs of utility customers, including those in rural areas and many who can scarcely afford that burden.”

In support of their position on FERC’s revisions to its avoided costs rate rules, the intervenors argued that FERC did not violate PURPA’s command to “encourage” QFs because the law does not call for the encouragement of QF development without constraint. Rather, the intervenors said, the “statute reflects a balancing of interests, including certain limits on the degree of such encouragement, such as the command that QF prices not exceed a utility’s avoided costs.”

“Petitioners wrongly read PURPA’s ‘encouragement’ clause as a one-way ratchet under which every aspect of every Commission action, taken in isolation, must prefer QF developers over other interests,” the intervenors wrote.

With respect to the “one-mile rule,” the intervenors argued that FERC “reasonably reformed” the rule “to curtail attempts by developers of oversized projects to garner unwarranted QF certification at the expense of consumers.” And in arguing that FERC’s reforms were not supported by the record, the “Petitioners ignore numerous examples of abuse provided by commenters and credited by the Commission,” the intervenors said.

The intervenors also supported FERC’s adjustment of the threshold for presumed nondiscriminatory access to wholesale electric markets from 20 MW to 5 MW, saying the agency’s decision was reasonable.

“Petitioners’ scattershot complaints about FERC’s rationale evince a misunderstanding of what the agency actually said and did,” the intervenors wrote. “In any event, QF developers who are unsatisfied with the revised rule are free to present evidence to overcome the 5 MW presumption.”

The intervenors also dismiss the petitioners’ challenge to FERC’s order as a violation of the National Environmental Policy Act (NEPA). APPA and the other intervenors disputed the petitioners’ standing to raise the NEPA claims, while also contending that the challengers’ NEPA arguments failed on the merits.

The intervenors argued that the petitioners’ claims are “meritless” and the court should not grant the requested relief. But if the court does find fault with FERC’s orders, it should not vacate the orders altogether.  Rather, the intervenors argued, the court should “remand without vacatur because any such errors can be corrected on remand and because the disruptive consequences of vacatur would be severe.”

The intervenors also argued that the challenged provisions of Order 872 are “sufficiently separable that vacatur should be determined separately for each.” The court “should not invalidate important parts of the rule that no party challenged,” the intervenors wrote.

Phillips Sworn In As FERC Commissioner

December 4, 2021

by Paul Ciampoli
APPA News Director
December 4, 2021

Willie Phillips on Dec. 3 was sworn in as a member of the Federal Energy Regulatory Commission (FERC) for a five-year term that ends June 30, 2026. 

Phillips was nominated to FERC by President Biden in September 2021 and confirmed by the Senate on November 16, 2021. 

Phillips, a Democrat, returns FERC to its full complement of five commissioners, and he provides the Democrats with a 3-2 majority. 

Before joining FERC, Phillips was the Chairman of the District of Columbia Public Service Commission.  He previously worked as Assistant General Counsel for the North American Electric Reliability Corporation (NERC), and also worked for two law firms. 

Nominations Sought To Fill Opening On Electricity Subsector Coordinating Council

November 22, 2021

by Paul Ciampoli
APPA News Director
November 22, 2021

Nominations are being sought to fill a vacancy on the Electricity Subsector Coordinating Council (ESCC) with the resignation of Gil Quiniones.

Nominations are due by December 3, 2021 and the form to nominate individuals for the position can be found at this link.

The New York Power Authority (NYPA) announced on Oct. 14 that Quiniones had resigned as NYPA’s President and Chief Executive Officer to accept a position as CEO at Illinois-based Commonwealth Edison Company, a subsidiary of investor-owned Exelon Corp.

The guidelines used by members of the American Public Power Association ESCC Nominating Committee in the evaluation of candidates are available at this link. 

The ESCC was established to serve as a strategic liaison between the electric power industry and the federal government related to the preparation and response to national-level disasters or threats to critical infrastructure.

Senate Confirms Nomination Of FERC Nominee

November 17, 2021

by Paul Ciampoli
APPA News Director
November 17, 2021

The Senate on Nov. 16 confirmed the nomination of Willie Phillips, Jr. to be a member of the Federal Energy Regulatory Commission (FERC) for a term expiring June 30, 2026.

Phillips, a Democrat, is currently Chairman of the Public Service Commission (PSC) of the District of Columbia.

Once he is sworn in, Phillips will return FERC to its full complement of five commissioners after the departure of Commissioner Neil Chatterjee on August 30, 2021. 

He would also give Democrats a 3-2 majority on the Commission.

House Passes Infrastructure Bill That Includes Funding Opportunities For Public Power

November 8, 2021

by Paul Ciampoli
APPA News Director
November 8, 2021

The House of Representatives on Nov. 5 voted 228 to 206 to pass H.R. 3684, the Infrastructure Investment and Jobs Act, that includes numerous funding opportunities for public power utilities that are supported by the American Public Power Association (APPA).

The Infrastructure Investment and Jobs Act is an infrastructure and surface transportation bill that includes $1.2 trillion in funding for transportation, energy, and water infrastructure.

Of the $1.2 trillion, $550 billion is new federal spending that was not previously authorized. This includes $7.5 billion in federal spending for electric and alternative fuel vehicle infrastructure, $65 billion for broadband infrastructure, $65 billion for electric and grid infrastructure, $7.5 billion for zero- and low-emission school buses and ferries, and $47.2 billion for resiliency, including cybersecurity.

APPA members can get additional details on grant availability by clicking here.

Build Back Better Act

Immediately following the vote on the infrastructure bill, the House on a 221 to 213 party line vote approved H. Res. 774, a rule for considering H.R. 5376, the Build Back Better Act. The House will now postpone further consideration of the Build Back Better Act until congressional budget scorekeepers can provide analysis of the full spending and revenue effects of the measure.

As it stands now, the House may still vote on the most recent version of the Build Back Better Act, or it may vote on some final agreement on the bill if such an agreement is reached.

APPA supports the expansion of energy tax credits to include public power utilities provided under the Build Back Better Act.

Enactment of those provisions would complete decades of work to obtain comparable incentives to those provided to for-profit electric utilities by current energy production and investment tax credits.

But given the additional time provided by the delay in consideration of the Build Back Better Act, APPA will continue to seek improvements to the bill.

This includes seeking to exclude municipal bond interest from a new proposed corporate alternative minimum tax, seeking reinstatement of bond modernization provisions approved by the House Ways and Means Committee and seeking access to a $9.7 billion Rural Utility Services renewable energy program.