NJ considers PJM capacity market alternatives

The New Jersey Board of Public Utilities has opened an investigation into "how the State can best achieve its reliability, clean energy, and environmental objectives, while keeping costs to consumers as low as possible." Like many states, New Jersey’s utilities participate in a federally regulated regional transmission organization’s capacity market, but are also subject to state clean energy laws -- a tension that has caused the state's energy regulators to consider whether to leave the PJM regional capacity market.

At issue is whether New Jersey can "achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigm" -- the regional electric capacity market operated by PJM Interconnection -- or whether it should adopt an alternative mechanism to "meet New Jersey’s resource adequacy needs in a manner consistent with the State’s clean energy and environmental objectives, while considering costs to utility customers."

New Jersey electric utilities currently participate in the PJM regional markets, including a capacity market. The state has adopted a 2019 Energy Master Plan: Pathway to 2050, establishing a series of state-focused clean energy goals such as 7,500 MW of offshore wind by 2035 and 100% clean energy by 2050. Other states in the PJM region have adopted different clean energy goals.

At the same time, PJM's regional market is federally regulated. In December 2019, the Federal Energy Regulatory Commission directed PJM to modify its "Minimum Offer Price Rule" or MOPR, governing the capacity market. Designed to counteract excessive market power, the federal ruling directed PJM to modify its MOPR to also counteract the pricing effects of state clean energy policies. In its state Energy Master Plan, New Jersey described FERC's action as "actively attempting to support fossil fuel interests in the [PJM] region under the guise of promoting ‘fair’ competition."

In response to the FERC's MOPR order, on March 27, the New Jersey Board of Public Utilities issued an Order Initiating Proceeding in Docket No. EO20030203. Citing the federal order, the Board characterized it as "a direct attack on the State’s clean energy programs" and expressed concern that continued participation in the federally-regulated PJM market could frustrate New Jersey's ability to achieve its clean energy goals. The Board thus initiated a proceeding to consider whether to retain the current PJM market paradigm, or whether an alternative could achieve the state's climate and environmental goals at a lower cost to consumers.

Withdrawing from a regional transmission organization can be done under certain circumstances, but federally regulated tariffs and territories spanning multiple states with their own laws can complicate the path toward a clean break. As envisioned by the Board, possible alternatives for New Jersey might include using a "fixed resource requirement" or FRR approach under the PJM tariff to effectively withdraw one or more service areas from the broader PJM capacity market, or adopting a statewide clean energy standard that would require load-serving entities to source increased percentages of renewable or other clean energy.

Board staff subsequently issued a Request for Written Comments in the proceeding, soliciting written comments on four sets of topics by April 29. Issues raised in the request for comment include whether New Jersey could utilize the Fixed Resource Requirement alternative to satisfy its resource adequacy needs and accelerate its clean energy goals, whether modifications to the Board's Basic General Service construct could facilitate resource adequacy procurements aligned with the state's Energy Master Plan, and whether other mechanisms such as a clean energy standard or clean energy market could facilitate achievement of the state's clean energy goals.

Staff have suggested the Board's investigation will be completed later this year.

NERC reports US electric sector prepared for pandemic

The bulk electric power industry is "well prepared and taking aggressive steps to confront the threat posed by the current pandemic", according to an update by U.S. electric reliability organization NERC. Based on NERC's survey of registered entities subject to its jurisdiction, pandemic planning is pervasive; most registered entities have reviewed pandemic staffing requirements, have reviewed supply chain needs, and said they would support mutual aid requests. At the same time, NERC reports that utilities have identified risks including shortages of staff and material, as well as regarding their ability to complete major construction projects and maintenance turnarounds, which NERC notes could lead to some constraints during the summer of 2020.

On March 10, NERC issued a "Level 2" alert regarding the COVID-19 pandemic, requiring covered entities to respond by March 20 with information on their readiness and planning. According to a March 27 NERC statement, the responses to the alert showed that the "vast majority of registered entities indicated that they either have a written pandemic response plan or are in the process of developing one in light of the COVID-19 crisis, an unprecedented event for bulk power system operators in North America."

NERC also noted measures including utility responses to an all-points bulletin issued by NERC’s Electricity Information Sharing and Analysis Center (E-ISAC) on February 5, indicating efforts to address potential supply chain or equipment shortfalls. NERC also noted its weekly situational awareness call with the continent’s Reliability Coordinators, which it says "have generally activated their back-up control centers, isolated key workers and are maintaining a deep cleaning routine."

According to NERC, these factors reinforce the need for "continuous monitoring, planning and coordination." NERC is developing a more comprehensive assessment of potential reliability risks and considerations presented by the pandemic, expected for release in April.

Massachusetts Clean Peak Energy Portfolio Standard rule draft

Massachusetts regulators are advancing the implementation of a new "Clean Peak Energy Standard" as required by a 2018 state law. Once the Massachusetts Department of Energy Resource's Clean Peak Energy Portfolio Standard regulations take effect, the new rules will require retail electricity providers to meet a baseline minimum percentage of sales with qualified clean peak resources that either dispatch or discharge electricity to the electric distribution system during seasonal peak periods or reduce load on the system.

On August 9, 2018, Governor Charlie Baker signed into law An Act to Advance Clean Energy, requiring the state DOER to develop a clean peak energy standard program. Through 2019, DOER engaged in stakeholder discussions and developed a draft regulation.

DOER has now submitted its draft Clean Peak Energy Portfolio Standard rule to the state legislature which has a statutory opportunity to review and provide feedback on the rule. The DOER's communication to the Massachusetts General Court is docketed as Bill H.4581.

As summarized by DOER, the Clean Peak Energy Standard allows for qualified renewable energy generators, energy storage resources, and demand response resources to earn Clean Peak Energy Certificates (CPECs) for every megawatt hour of electricity they produce or reduce during defined Seasonal Peak Periods which represent the times when demand for electricity is typically the highest.  Retail electricity suppliers are required to document annually that they have procured a certain quantity of CPECs each year, and may purchase CPECs from qualified clean peak resources.

In 2020, retail electricity suppliers will be obligated to procure CPECs equal to an amount of 1.5% of their total electricity sales to end-use customers. The CPEC mandate will then change periodically -- typically increasing by 1.5% each following year, but the requirement may increase by more than 1.5% per year if the market is oversupplied, which would trigger a decrease in Alternative Compliance Payment rate "to cool the market and reduce the ratepayer impact of an increased obligation."

The draft rules allow DOER to require the state's Electric Distribution Companies to enter into long term contracts for CPECs through a competitive procurement process. Municipal Lighting Plants are exempt from the obligation, and facilities interconnected with Municipal Lighting Plants are ineligible to participate in the program.

Maine PUC opens thermal REC inquiry

The Maine Public Utilities Commission has opened an inquiry into issues related to an upcoming rulemaking proceeding regarding the new thermal renewable portfolio standard requirement created by legislation enacted last year.

In 2019, Maine Governor Janet Mills signed L.D. 1494, An Act To Reform Maine’s Renewable Portfolio Standard. Enacted as P.L. 2019, c. 477, the legislation significantly expanded Maine's renewable portfolio standards (RPS), which require retail electricity providers to source power from renewable resources meeting defined criteria. The law created a new Class 1A portfolio requirement, requiring suppliers to source at least 40% of their retail sales from renewable resources meeting defined standards, on top of preexisting laws requiring another 40% to come from existing and new renewable resources. It also created a new long-term contracting program, requiring the Commission to solicit and direct utilities to enter into contracts with Class 1A resources covering 14% of Maine's load.

Another portion of the RPS reform law added a new thermal renewable energy resource requirement. As enacted, it requires competitive electricity providers to source an amount of thermal renewable energy credits (sometimes referred to as T-RECs) beginning at 0.4% in 2021 and increasing to 4% in 2030 and thereafter. Each T-REC of one megawatt-hour represents 3,412,000 British thermal units of thermal energy, delivered to an end user in Maine in a manner that can be verified, from a qualifying resource that begins operation after June 30, 2019, used for heating, cooling, humidity control, process use or other end use to meet a need of the end user that would otherwise be met using another energy source such as electricity or an on-site thermal energy system, and generated or delivered in accordance with any efficiency performance standards established by the Commission.

On March 23, 2020, the Commission issued a Notice of Inquiry Regarding Thermal Renewable Portfolio Requirement, docketed as Docket No. 2020-00090. Through the inquiry, the Commission seeks comment on issues including what alternative compliance payment for T-RECs the Commission should set, what criteria the Commission should use to verify that a facility is qualified pursuant to the Act to provide thermal energy (such as the size of the facility or technology type) and how the Commission should ensure that the criteria are met, how the Commission should verify and certify the quantity of thermal energy generated and its use to confirm compliance with the Act; and what, if any, efficiency performance standards should be required.

Legal resources regarding coronavirus response

Here's a quick roundup of legal resources regarding the U.S. response to the COVID-19 coronavirus disease pandemic.

• President Trump declared a national emergency under the federal National Emergencies Act on March 13.  This declaration authorizes the Secretary of Health and Human Services to exercise the authority under section 1135 of the Social Security Act to temporarily waive or modify certain requirements of the Medicare, Medicaid, and State Children’s Health Insurance programs and of the Health Insurance Portability and Accountability Act Privacy Rule throughout the duration of the public health emergency declared in response to the COVID 19 outbreak.
• President Trump also declared a emergency under Section 501(b) of the federal Stafford Act. This declaration authorizes the Federal Emergency Management Agency to provide, as appropriate, assistance pursuant to section 502 and 503 of the Stafford Act for emergency protective measures not authorized under other Federal statutes. It also directs relief from certain tax deadlines pursuant to 26 U.S.C. 7508A(a). Finally, the Stafford Act declaration expresses the administration's belief "that the disaster is of such severity and magnitude nationwide that requests for a declaration of a major disaster as set forth in section 401(a) of the Stafford Act may be appropriate." Section 401 of the Stafford Act allows states and tribes affected by a major disaster to request and receive additional federal assistance under certain circumstances, and the declaration explicitly encourages state governors and tribal leaders to consider requesting assistance under this section of the Stafford Act.
• www.usa.gov/coronavirus, the U.S. government's webpage for "Government Response to Coronavirus, COVID-19", which currently provides information on international travel restrictions, how you can prepare for coronavirus, and what the U.S. government is doing in response to the virus.
• Maine emergency legislation, LD 2167, taking a variety of actions with respect to coronavirus preparation and emergency authorizations.

Preparing the electric grid for coronavirus

As the world deals with pandemic illness due to a novel coronavirus, the electric reliability organization responsible for the bulk power grid in most of the United States is taking steps to prevent impacts to the reliability of the electric grid, including requiring NERC-regulated entities to acknowledge receipt of six recommendations and to report back on their preparedness.

The coronavirus-related disease known as COVID-19 is a respiratory disease caused by a novel virus first identified in Wuhan, China on December 8, 2019. Since its discovery, the virus and related illness have spread internationally.

NERC, or the North American Electric Reliability Organization, is the designated electric reliability organization for the U.S., charged with ensuring the reliability of the North American bulk power system. On March 11, 2020, NERC issued an announcement, a Level 2 NERC Alert recommendation, and a guidance document from the Electricity Subsector Coordinating Council providing resources on assessing and mitigating the virus's impacts.

As part of the Alert, NERC offers six specific recommendations to industry, including:

• Develop and maintain suitable situational awareness of the current status of the spread of COVID-19 and credible future estimates of its spread and impacts. Incorporate the CDC’s most current travel advisories into event planning and travel arrangements, and consider practices to increase awareness of employees’ personal travel plans to areas with active advisories.
• Reinforce good personal hygiene practices across the workforce. Consider measures to increase the frequency and extent of cleaning and disinfecting surfaces and equipment that comes into routine contact with multiple people, particularly in business critical spaces or confined spaces that may be more conducive to disease communicability. Such areas may include control rooms, shared vehicles, conference rooms, and break areas. Consider implementing additional access restrictions such as limiting visitors or non-essential meetings within these spaces, and segregation of crews on shift work schedules.
• Review and update existing business continuity plans to ensure they are adequate to mitigate the direct impacts of a pandemic outbreak in the organization’s footprint that creates staffing constraints for reliability and business functions. Recognize that a pandemic outbreak affecting the organization will also have similar effects on third-party contractors and supporting resources in the same footprint. Validate or develop thresholds and triggers for implementing increased flexible workforce arrangements and for more disruptive mitigations, and ensure these mitigations are harmonious with guidance from the CDC or PHAC and local health agencies. Consider testing or exercising business continuity plans against a pandemic scenario.
• Assess the organization’s resilience against disruption to the availability of critical components, materials, and support resources with supply chains originating or traversing significantly impacted regions globally. At the present time,this includes China and nearby southeast Asian nations, so the most likely impact is expected to be to electronics, personal protective equipment and sanitation supplies, chemicals, and raw materials that are eventually transformed into goods directly purchased and used by North American asset owners and operators. Global transportation disruptions will also have ripple effects on the availability of these goods, particularly for “just-in-time” logistics systems. Organizations should work with their suppliers to understand current inventories of critical components throughout the supply chain as well as their anticipated use and resupply rates, and identify changed risks to routine, planned, and contingency operations to prioritize efforts appropriately.
• Assess the need to adjust planned construction and maintenance activity schedules to prioritize the most important projects.Consider third-party support requirements and facility outage windows, and understand consumption rates of spare parts and supplies required for both planned and contingency work.Adjust plans as needed to maintain safe and reliable operations through potential workforce availability or supply chain disruptions.
• Anticipate and prepare for coronavirus-themed opportunistic social engineering attacks. Spearphishing, watering hole, and other disinformation tactics are commonly used to exploit public interest in significant events. Take steps to ensure continued visibility and maintenance of cyber assets in the event of staffing disruptions.Ensure information and communications technology resources are appropriate to accommodate increased use of remote work arrangements consistent with business continuity plans, without compromising security. Consider conducting planned stress tests for these arrangements.

Under NERC's rules of procedure, NERC registered entities are required to acknowledge receipt of the advisory within the NERC Alert System by midnight Eastern on March 12, and to report to NERC on the status of their activities in relation to the recommendation by midnight Eastern on March 20. NERC will then aggregate the data from U.S. respondents and provide an anonymized report to the Federal Energy Regulatory Commission.

Maine offshore wind port study announced

Maine Governor Janet Mills has announced that Maine state agencies will conduct an assessment of port opportunities related to the offshore wind industry.

State and federal waters off the Maine coast have significant potential for siting offshore wind electric generation projects. A 2009 report by the Maine Ocean Energy Task Force identified significant offshore wind resources off the coast of Maine, with a technical capacity potential quantified in a January 2020 report by the National Renewable Energy Laboratory as 94,498 megawatts -- roughly three times as much generating capability of all types as is installed in all of New England, or 36 times greater than Maine's electric energy demand.

In 2019, in pursuit of these opportunities and in an effort to address climate change, Governor Mills launched the Maine Offshore Wind Initiative, a state-based initiative to identify opportunities for offshore wind development in the Gulf of Maine, and determine how Maine can best position itself to benefit from future offshore wind projects. The Initiative's mandates include consideration of opportunities for job creation, supply chain and port development, and offshore wind’s impact on Maine’s energy future, as well as promoting compatibility between potential future uses and existing uses in the Gulf of Maine to inform offshore wind siting considerations and minimize any impact on Maine’s commercial fishing and maritime industries. 

On March 11, 2020, as part of the Initiative, Governor Mills announced that the Maine Department of Transportation, Governor’s Energy Office, and Department of Economic and Community Development will lead a Port Infrastructure and Market Potential Assessment study. The study will build on a 2017 report on the Mack Point Terminal in Searsport and associated intermodal commodity shipping infrastructure, to identify and assess short-term and long-term port opportunities related to offshore wind.

According to a press release, the new study will review current characteristics of the Mack Point terminal site, analyze possible offshore-wind-related users of the port, and identify any necessary capital investments and structural improvements. The study will also consider supply chain opportunities in the offshore wind sector, such as the assembly of foundations and turbines, as well as the workforce needed to support these activities in Maine.

NH C&I solar rebate program reopened

New Hampshire utility regulators have issued an order modifying and reopening the state's existing solar rebate program for commercial and industrial electric customers. The New Hampshire Public Utilities Commission's Order No. 26,336 creates new opportunities for nonresidential solar energy projects in New Hampshire.

By statute, the New Hampshire Public Utilities Commission is authorized to establish incentive or rebate programs and competitive grant opportunities for renewable energy projects sited in New Hampshire. In 2010, the Commission first approved a commercial and industrial (C&I) solar rebate program, which provides incentive funds to C&I electric customers for solar photovoltaic and solar thermal energy projects.

Since 2010, at various times the Commission has modified, closed, and reopened the C&I rebate program due to "high demand for the program and funding constraints." Most recently, in 2019, Commission staff filed a memorandum stating that it had received applications in excess of available funds, prompting the Commission to close the C&I program to new applicants. Following stakeholder discussions, Commission staff filed proposed modifications to the program, including to reduce the incentive amount to $0.20 per watt, with an overall maximum of $10,000 per project, to allow more projects to share in the progam's funding pool. Commission staff also proposed program changes, including measures designed to facilitate efficient application processing, effectively manage the application queue, and restrict applications to "shovel-ready" projects; to ensure that funding is directed toward projects that need incentives; and to simplify the application process and reduce administrative burdens on applicants.

Through the New Hampshire Public Utilities Commission's Order No. 26,336, the Commission generally approved and adopted its staff's proposed modifications to the program, and directed staff to conduct a public lottery to allocate initial queue positions for applications, to be held on April 21, 2020. The Commission noted that as it has previously found, "a lottery is an orderly and equitable method of administering applications for a limited amount of funds" -- and also that if the application and lottery process results in a significant number of waitlisted applications, the Commission "may have to once again close the program to new applications."

ISO-NE 2020 Regional Electricity Outlook

New England is unquestionably on the path to a clean-energy future, according to a report by the operator of the region's electric grid -- but while "decarbonizing the electricity industry is well underway, the journey to decarbonize the other sectors of the economy has really only just begun." ISO New England Inc.'s 2020 Regional Electricity Outlook notes that the region's power system will need to change significantly to accommodate the electrification of millions of vehicles, homes, and buildings with low-to-no-carbon energy.

Grid operator ISO-NE issues an annual Regional Electricity Outlook report describing its view of trends that could have an impact on the region’s power system. For 2020, these trends include a shift in state goals, away from strictly least-cost planning toward the inclusion of clean energy goals. The report notes that wind projects "currently dominate new resource proposals", while in 2019 coal- and oil-fired resources produced less than 0.5% of the region's electricity, corresponding with the lowest annual average wholesale price on record.

The report also notes the need for state and regional policymakers to consider "which policy instruments will best incentivize New Englanders to decarbonize and change important aspects of their lives—to adopt electric vehicles and convert their homes and businesses to electric heat." According to ISO New England, it expects the power system will look very different in the future, and says the "electrification of everything" will require dialogue about the overall architecture of the regional power system and wholesale marketplace.

The report concludes that the region can achieve states' clean-energy goals while keeping the power system reliable, by harnessing competitive market forces.

NJ offshore wind solicitation schedule proposed

New Jersey Governor Phil Murphy has proposed a series of five additional solicitations for offshore wind energy proposals, in support of the state's goal to reach 7,500 megawatts of installed offshore wind capacity by 2035.

New Jersey enacted the Offshore Wind Economic Development Act in 2010. In 2018, Governor Murphy issued Executive Order No. 8, directing all New Jersey state agencies with responsibilities under the Act to fully implement it in order to meet a goal of obtaining 3,500 MW from offshore wind by the year 2030.

In 2018, the New Jersey Board of Public Utilities issued a solicitation for 1,100 megawatts of offshore wind energy generation, and in 2019 selected developer Ørsted's Ocean Wind project for contracting. The Board also developed a proposed timeline under which it would solicit 1,200 additional megawatts of offshore wind generation in 2020 and 2022. Later that year, Governor Murphy issued Executive Order No. 92, which replaced the 3,500 megawatt goal with a new mandate that state agencies take actions supporting an expanded goal of 7,500 megawatts of offshore wind energy generation by the year 2035.

Now, Governor Murphy has announced a proposed schedule for solicitations to meet the 7,500 megawatt goal. As proposed, the Board would initiate the next 1,200 MW solicitation by September 2020, and would award a contract by the second quarter of 2021. Four more solicitations, for a total of six rounds, would occur with contracts awarded through 2029.

According to the Murphy administration, setting a solicitation schedule through 2035 "provides a crucial level of certainty for developers, original equipment manufacturers, and the supply chain."

New England solar growth leads to increasing duck curve

In a sign of increasing penetration of rooftop and customer-sited solar projects, New England's electricity grid is starting to experience the "duck curve" phenomenon, in which a mid-day drop in grid demand is followed by a steep evening increase -- a significant shift in the timing of consumer demand relative to historic patterns.

Regional grid operator ISO New England Inc. tracks demand for electricity across its six-state New England market. On a typical day, demand is lowest in the middle of the night, rises through the morning to reach a mid-day high, declines somewhat in mid-afternoon, and then rises in the evening to reach the daily peak in the evening. This aggregate pattern of consumer demand has historically been reliable.

But New England now has about 3,400 megawatts of solar power located in the region, most of which is generated locally or produced directly on site at retail customers’ homes or businesses. As a result, less electricity is used from the regional power system at midday when sunny conditions prevail.

With increasing solar penetration, this phenomenon can cause major shifts in the timing of demand for grid electricity, moving the time of daily low-demand from overnight hours to midafternoon. According to the grid operator, on seven days, afternoon demand for grid electricity has fallen below overnight low demand levels. This phenomenon first occurred on Saturday, April 21, 2018, which ISO-NE attributed to "the right combination of sunshine and mild weather led to light consumer demand on the high-voltage electric power system, coupled with record-high output from the more than 130,000 solar power installations in the region."

The following chart, prepared by ISO-NE, illustrates the effects of increasing quantities of behind-the-meter solar capacity on load shape.

Source: ISO-NE.

As ISO-NE observes, this "graph also demonstrates how the region will increasingly need power resources that are able to quickly ramp up their output to bridge the steepening slope between minimum and peak load hours."

Afternoon demand has fallen below overnight demand on six occasions since April 21, 2018 -- three of which occurred this month, on the weekend days February 15, 22, and 23, 2020. For the February 22-23 weekend, ISO-NE attributed the phenomenon to "mild temperatures and sunny skies".

ISO-NE expects at least 5,800 megawatts of behind-the-meter solar power in New England by 2027. As behind-the-meter solar power continues to grow in scale, ISO-NE forecasts "more occasions when demand may dip extremely low, particularly during the spring and fall".