Electricity Markets

RTOs, ISOs outline resilience efforts, proposals

The nation’s regional transmission organizations and independent system operators recently responded to a Federal Energy Regulatory Commission order by submitting filings that discuss how to define resilience, detail their efforts to assess and maintain grid resilience and, in some instances, offer proposals for ways in which to enhance resiliency.

The filings, all of which were submitted to the Commission on March 9, responded to a FERC order issued in January.

FERC on Jan. 8 said that it was terminating a proceeding it initiated in order to address a proposed rule on grid reliability and resilience pricing submitted to the commission by Secretary of Energy Rick Perry last year.

At the same time, FERC in its order said that it was initiating a new proceeding (Docket No. AD18-7-000) to specifically evaluate the resilience of the bulk power system in the regions operated by RTOs and ISOs.

PJM Interconnection

PJM, the grid operator for the mid-Atlantic region, offered the greatest number of specific requests from the Commission, and recommended that the Commission undertake several actions for all RTOs.

For example, PJM said that FERC should establish a Commission process to allow an RTO to receive verification of the reasonableness of its assessments of vulnerabilities and threats, including Commission utilization of information that may be available to it, but not to the RTO because of national security issues.

Those assessments, once verified, could then form the basis for RTO actions under its planning or operations authority consistent with its tariffs.       

In addition, PJM said that FERC should articulate in the docket that the regional planning responsibilities of RTOs and the NERC Transmission System Planning Performance Requirements standards include an obligation to assess resilience, and initiate a new rulemaking or other appropriate proceeding(s) to further clarify the RTO role in resilience planning.

Moreover, FERC should require all RTOs and jurisdictional transmission providers in non-RTO regions to submit a subsequent filing, including any necessary proposed tariff amendments, to implement resilience planning criteria, and develop processes for the identification of vulnerabilities, threat assessment and mitigation, restoration planning, and related process or procedures needed to advance resilience planning, PJM said.

PJM also asked that FERC launch additional initiatives addressing the interaction between RTOs and interstate natural gas pipelines, and acknowledged that it had hoped that capacity performance rule changes would spur a corresponding array of new service offerings by pipelines, as well as interest from generators seeking such options. But instead, PJM reported that to the extent that new flexible pipeline services have been offered, they appear to have been confined to the bilateral secondary market in which available gas from LDCs or industrial customers is made available.

PJM also asked the Commission for several PJM-specific actions.

For example, it requested that FERC ask PJM to submit a filing, including any necessary proposed tariff amendments, to permit non-market operations during emergencies, extended periods of degraded operations, or unanticipated restoration scenarios.  Such filings could include provisions for cost-based compensation when the markets are not operational or when a wholesale supplier is directed to take certain emergency actions for which there is not an existing compensation mechanism. PJM noted that its current tariff and operating agreement do not include such provisions.

Also, PJM said that should direct the grid operator to submit to the Commission “in a timely manner,” proposals that improve the retention and attraction of resources with attributes needed to ensure grid resilience, including price formation reforms. PJM explained that although it has been developing a price formation proposal and plans to file it with the Commission later in the year, “an early-on expression of desire” by the Commission would be helpful in aligning the timing of the price formation and operating reserve reforms.

ISO New England

In its filing, ISO New England identified the most significant resilience challenge to be fuel security, especially against the backdrop of coal, oil, and nuclear unit retirements, constrained fuel infrastructure, and the difficulty in permitting and operating dual-fuel generating capability.  The shift from generators with onsite fuel to generators relying on “just-in-time” fuel delivery is challenging the system’s resilience, particularly during winter peak demands.

ISO-NE attached to its filing its recent Operational Fuel-Security Analysis, or OFSA, and stated that it is actively engaged with regional stakeholders to develop a long-term market solution that will maximize the likelihood that generators have sufficient fuel to meet winter electricity needs.

The OFSA found that energy shortfalls due to inadequate fuel supply would occur with almost every fuel-mix scenario in winter 2024/2025. But the results also indicate that higher levels of liquefied natural gas, imports, and renewables can help minimize system stress and maintain reliability, which will require arrangements for LNG with assurances for winter delivery, and investment in transmission infrastructure to support renewable resources and imports from neighboring systems.

The New England grid operator is evaluating a range of solutions, including changes to Pay for Performance parameters, increasing incentives for forward fuel supply and re-supply, and inclusion of opportunity costs associated with scarce fuels and emission allowances.

Given the complexity of the problem, ISO-NE believes it will be necessary to allow the region sufficient time (through the second quarter of 2019) to develop a solution and test its robustness through New England’s established stakeholder process.

ISO-NE asked that it be given time to continue working with stakeholders, and be extended flexibility to permit the development of solutions.

California ISO

The California ISO recommended that the Commission take a holistic approach that considers the unique circumstances and conditions facing each region.

The CAISO footprint faces natural threats primarily from earthquakes, drought, and fires, not hurricanes or extreme cold conditions like other regions, and also has a different resource mix than other regions.

FERC, CAISO argues, should also recognize that any risks to the resilience of the electric system are not limited to ISOs and RTOs, and can affect all jurisdictional entities and all regions.  Ensuring resilience potentially requires the involvement and actions of entities other than the ISOs and RTOs, including transmission and generation owners, fuel suppliers and transporters, federal agencies, reliability organizations, states, consumer groups, environmental groups, and other stakeholders.

The CAISO argued that the concept of “resilience” presented in the order is general and somewhat vague, does not include clear objective criteria, metrics, or standards to evaluate whether the existing grid is resilient, and does not instruct entities on the specific steps they should take to achieve the desired level of resilience or specify any compliance obligations to ensure the grid remains resilient.

The CAISO does not presently see the need for an additional resilience “requirement.” 

New York ISO

For its part, the New York ISO reported that it is undertaking a comprehensive review and reevaluation of its planning process, market products and operational practices to ensure the continued ability to efficiently and reliably serve New York’s electricity requirements. 

Such initiatives include, among others, reevaluating the current Ancillary Services products, including possible increases in operating reserves and creation of a ramping product, and changes to shortage pricing values; ensuring that market price signals continue to incentivize resource performance and production consistent with dispatch instructions; and assessing changes to the measurement of capacity supply resource availability to more accurately reflect resource performance during critical operating periods.

The NYISO asked that the Commission allow the New York grid operator to continue to work with its stakeholders in assessing and developing the needed enhancements to the wholesale markets.


The Midcontinent Independent System Operator argued that, although it does not face any imminent reliability or resilience issues, there are several opportunities for the Commission to continue focused industry dialogue.

These opportunities include continued industry dialogue on identifying, valuing, and incorporating resilience attributes in transmission planning processes that will help the Commission identify further opportunities to support and advance grid resilience, it noted.

Through its Market Roadmap, MISO is exploring several initiatives including: enhanced modeling of combined cycle generators; multi-day market commitments; revisions to its Energy Offer Cap and Value of Lost Load, and additional enhancements to Extended LMP.


The Southwest Power Pool said that a lack of fleet diversity and any resulting over-dependence upon any particular fuel type poses a potential capacity shortage risk. This risk has thus far been minimal in SPP, which SPP attributes largely to the approval and development of over $10 billion in transmission infrastructure investment on a fuel-neutral basis. 

SPP stated that the additional transmission has enabled resources of all fuel types to help meet customer demand during a range of potential threats to reliability and resilience.

Due to SPP’s fuel-diverse resource mix and relatively high reserve margins, SPP has not experienced “real time” reserve margin levels (taking into account scheduled and unscheduled outages) low enough to trigger special studies of lack of capacity in connection with a specific fuel type.   

SPP stated that more work is needed to develop and refine cost recovery and allocation mechanisms for costs incurred in support of resilience.  Its concern is that without clear objectives in support of resilience, the planning that SPP and other organizations perform to support the robustness of the bulk power system may be undermined if an entity or jurisdiction resists funding for transmission it deems unnecessary. Resilience has an associated cost, and it is important that state regulators be included in the discussion of how that cost is to be allocated and ultimately paid.

ERCOT/Public Utility Commission of Texas

The Electric Reliability Council of Texas filed comments along with the Public Utility Commission of Texas (PUCT). ERCOT noted that it is not subject to FERC jurisdiction, but sees value in providing input.

ERCOT and the PUCT said that, in their view, resilience has always been an essential part of their larger public mission to ensure adequate and continuous service. They noted that although the term resilience is often used to narrowly refer to a system’s ability to withstand “high-impact, low-frequency events” such as cyberattacks, fuel-supply disruptions, and extreme weather events, there are clearly other events of greater frequency and lower impact that remain credible threats to the bulk-power system and that merit policy consideration. The ultimate goal of policymakers should be to ensure that all foreseeable threats to the reliability of the bulk-power system are identified and addressed in the most cost-effective way.

ERCOT and the PUCT also underscored the importance of market design to ensuring system resilience.  Scarcity-based pricing mechanisms, they argued, not only encourage sufficient long-term investment in generation, but also help to ensure that generation owners maintain their units to maximize availability during a variety of possible system disturbances. Other mechanisms to address resilience include reliability-must-run agreements, supplemental ancillary service auctions, and black-start generator procurement.

FERC gives parties additional time to respond to filings 

On March 14, the American Public Power Association joined a group of other energy groups seeking an extension of time of 30 days for interested entities to file comments in response to the RTOs/ISOs’ filings.

Replies were initially due April 9. But the Association and the other groups said that the filings made by the RTOs/ISOs are significant and will require substantial time and effort by interested members of the public (including the associations and their members) to digest and analyze. 

“The filings provide substantial information and details regarding the appropriate definition of resilience, each RTO/ISO’s efforts to assess resilience within its region, and the steps each RTO/ISO has already taken and plan to take on issues impacting the resilience of the bulk power system in their region.  Each RTO/ISO filing also contains detailed region-specific information regarding unique resilience challenges they face in their geographic area,” the groups said. 

Reviewing this “detailed information and formulating thoughtful reply comments to aid in the Commission’s consideration of the issues will be time and resource intensive, requiring a careful region-by-region analysis,” they said.

FERC on March 20 issued an order extending the time for interested entities to submit their comments under the January 8 order by 30 days to May 9, 2018.

In its order, the Commission stated “we appreciate that interested entities may not only want to respond directly to the express content of the RTOs/ISOs’ submissions, but also to provide their own independent perspectives and recommendations with regard to grid resilience. It is imperative that we base our next steps on the best available information, and we encourage input from stakeholders across the energy spectrum.”