Electricity Markets

FERC to look at PJM capacity construct during two-day technical conference in March

The Federal Energy Regulatory Commission (FERC) in March will convene the first in a series of technical conferences focused on modernizing electricity market design.

The technical conference will be held on March 23 and 24, 2021. News of the conference was unveiled at FERC’s monthly open meeting on Feb. 18. The meeting was Richard Glick’s first open meeting as Chairman.  Glick was named Chairman by President Biden on January 21, 2021.

 At the meeting, Glick noted that next month’s conference will address the role of capacity constructs. The focus of this first conference will examine the PJM Interconnection’s capacity construct “and examine options for creating a durable resource adequacy construct” that will accommodate states’ exercise of their authority in the modern electricity sector, he noted.

“We will also plan to hold similar conferences regarding ISO New England and New York ISO in the months ahead,” Glick said.

“In addition, later this year we will convene additional conferences to examine how energy and ancillary services markets may need to evolve to meet challenges posed by the grid of the future.”

Clements to lead effort to establish new FERC Office of Public Participation

In another announcement, Glick said that he has asked Commissioner Allison Clements to take the lead in getting a FERC Office of Public Participation up and running. 

Although 1978 legislation provided for such an office within FERC, it has never been established. Congress recently directed FERC to develop a plan for establishing and operating the Office of Public Participation. 

With respect to her lead role in establishing an Office of Public Participation, Clements said that she intends “to place priority on listening to stakeholders, in particular reaching out to environmental justice and front line communities, that lacked representation before FERC.” 

She cited the importance of such an office not only for natural gas pipeline proceedings, but in cases impacting the reliability and affordability of electricity. 

Clements said FERC would be holding a workshop on April 16, 2021 to receive input on the establishment of the Office of Public Participation, along with an opportunity to submit written comments. 

Glick also highlighted his recent announcement of the creation of a senior level position to help consider the impact of FERC actions on historically marginalized communities.

FERC terminates docket tied to grid resilience issues in RTOs, ISOs, Chatterjee dissents

In other news from the meeting, FERC terminated a generic administrative docket it initiated in January 2018 to explore grid resilience issues in regional transmission organizations (RTOs) and independent system operators (ISOs). 

Commissioner Neil Chatterjee dissented from FERC’s decision to terminate the docket.

“I acknowledge that the issues teed-up in this proceeding are multi-layered and complex. I also acknowledge that this proceeding has politically charged origins beginning with the Department of Energy’s (DOE) initial proposed rulemaking to compensate certain categories of generators with on-site fuel,” wrote Chatterjee in his dissent.

“However, a unanimous, bi-partisan Commission rejected DOE’s proposal and, in its stead, posed fuel-neutral, critical questions about what it means to have a resilient grid and what steps the Commission can take to foster it. Those questions and their answers remain as critical today as they were three years ago.”

Despite thorough examinations of previous cold weather events, “we find ourselves wondering what went wrong this week when much of the nation encountered extreme cold weather that led to load shed in ERCOT, MISO, and SPP,” he said.

“Initial reports suggest that, as with previous cold weather events, these regions experienced unusually high demands, inadequate natural gas supplies, frozen infrastructure, correlated generation resource outages, and varying levels of load shed,” wrote Chatterjee.

The severity of the event, “measured in duration, geographic scope, amount of load shed, customers affected, and amount of unplanned generation outage -- suggests that, despite the lessons learned and actions taken in the past to improve winterization and gas-electric coordination, the bulk power system may not be able to adequately withstand extreme cold weather events,” he said.

Chatterjee said he is concerned that extreme weather events will continue to increase in frequency and severity, and present serious risks to the resilience of the bulk power system.

“I would prefer that the Commission grapple with the resilience concerns raised in this proceeding in a more comprehensive way,” he wrote. “The Commission is well positioned to, for instance, adopt a definition of resilience that could be implemented in all regions, describe categories of resilience concerns that would include extreme weather events and common-mode failures, and then take additional steps to ensure that the Commission, RTOs/ISOs, and stakeholders can understand how each RTO/ISO assesses the resilience of its region.”

Such assessments “would enable a comparative, cross-market view of how each RTO/ISO identifies and addresses resilience needs and would enhance coordination across regions. Such a holistic review would not only assist RTOs/ISOs and their stakeholders in considering different approaches to these efforts, but also help the Commission understand how to best assess and address bulk power system resilience,” Chatterjee said.

FERC Commissioner James Danly offered a concurrence.

"I concur in the result of this order insofar as it is the privilege of the majority to terminate a discretionary inquiry. I write separately, however, to highlight my concern that the resilience issues raised in this proceeding have not been solved—indeed, in most cases they have not even been addressed," he wrote.

Commissioners Christie, Clements offer joint concurrence

Commissioners Mark Christie and Clements offered a joint concurrence in the RTO/ISO grid resilience docketto emphasize that our agreement to terminate this specific proceeding is purely procedural, not substantive.” 

 The issues “attendant to grid resilience and reliability that this particular proceeding raised are compelling and must command this Commission’s future attention. Procedurally, this matter has languished for more than three years with no action, so the unavoidable conclusion is that these issues need to be shifted to other procedural vehicles to make progress.  On that basis, we concur,” wrote Christie and Clements.

“As the widespread power outages this very week in Texas – as well as the outages in California last summer – graphically demonstrate, the challenges of ensuring a reliable supply of power to American consumers as the generation mix changes, remain as relevant and compelling as ever,” the Commissioners said.

“Reliability to most Americans means power available 24/7; not just during good weather, but during bad weather, when they need it most to heat or cool their homes, operate their businesses, and to some consumers, even to maintain their very health.”

Christie and Clements also agree that “while there are general issues attendant to reliability and resilience, each RTO/ISO is different and faces different challenges from its generation mix and weather patterns.  FERC’s job is to ensure that each RTO/ISO is meeting its individual operational responsibilities to ensure a 24/7 supply of power.”

To meet that reliability challenge, RTOs and ISOs “must be willing to face and speak inconvenient truths about what is – and is not – feasible from an engineering standpoint, given the state of technology,” the Commissioners wrote.

“They must also tell the public and the elected political leaders at both the state and federal levels about the realistic impacts on the bills consumers will have to pay for reliability. Politically driven mandates and deadlines may not be grounded in engineering reality and we depend on the leadership of each RTO and ISO to provide forthright information about what is needed to ensure the 24/7 power supply Americans expect.”

Christie and Clements said that decarbonization “is a necessary policy goal and preliminary reports from ERCOT, for example, indicate supply problems not only with wind resources, but also with gas and other forms of dispatchable generation as well. We should avoid drawing final conclusions about the events in these various RTOs/ISOs before complete investigations and reports are available. Common sense tells us, however, that as what is called the ‘energy transition’ takes place, it must be grounded in the scientific facts of electrical engineering and physics, if Americans are to receive the reliable supply of power they need at the least cost to them.”  

The Commissioners noted that they do not take issue with the sentiments included in Chatterjee’s dissent -- “indeed, we share them. Resilience and reliability issues remain compelling and unavoidable. Unfortunately, this specific proceeding, which began long before we came to this Commission and is rooted in another proposal that was unanimously rejected, no longer appears to be the right vehicle.” 

In that regard, “we agree with Commissioner Chatterjee’s statement that he ‘. . . would prefer that the Commission grapple with the resilience concerns raised in this proceeding in a more comprehensive way.’ It is our hope that this Commission will do exactly that – and soon.”