FERC considers Primary Frequency Response reforms

U.S. energy regulators are considering whether reforms are needed to regulations for the provision and compensation of primary frequency response, a function essential to the electric grid's operation.

In general, the U.S. bulk power system operates on an alternating current.  For reliability and interoperability, that current must maintain its frequency within predetermined boundaries above and below 60 Hertz.  An interconnected grid’s ability to arrest and stabilize frequency deviations within those boundaries after a sudden loss of generation or load is called "frequency response." A grid's frequency response characteristics are affected by factors including inertial response (as spinning generators speed up or slow down when load changes), primary frequency response, and secondary frequency response.  Historically, most primary frequency response has been provided by baseload synchronous generators as an ancillary service.

But the U.S. electric grid's energy mix is changing.  In a Notice of Inquiry released on February 18, 2016, the Federal Energy Regulatory Commission notes that changes to the U.S. electric supply portfolio likely mean that fewer resources are now primary frequency response.  In particular, the U.S. has seen broad retirement of coal-fired baseload synchronous generators, some of which provide primary frequency response, while some have been replaced with variable energy resources such as wind and solar which do not typically have primary frequency response capabilities.

In response, FERC solicited public input on whether and what action is needed, including whether to:

• Amend the pro forma Large Generator and Small Generator interconnection agreements to require that all new generation resources have frequency response capabilities as a precondition of interconnection;


• Implement primary frequency response requirements for existing generation resources; and


• Establish procurement and compensation mechanisms for primary frequency response.

FERC has docketed the matter as RM16-6-000, Essential Reliability Services and the Evolving Bulk-Power System — Primary Frequency Response.  Comments on the Notice of Inquiry are due 60 days after publication in the Federal Register.

Feds pay damages in Yankee Atomic Power lawsuit

The Portland Press Herald reports that the federal government has partially paid damages awarded under a lawsuit filed by the owners of three former nuclear power plants for about $160 million in damages.  While final regulatory approvals remain pending, the companies plan to use the award to benefit ratepayers.

The nuclear plants -- Maine Yankee, Connecticut Yankee, and Yankee Rowe -- closed in the 1990s.  Federal law requires the federal government to develop a plan for long-term storage and disposal of radioactive waste.  While waste removal was supposed to start in 1998, the federal government has yet to designate a permanent waste repository or to remove the spent fuel.  As a result, the radioactive waste is stored in concrete casks at the sites of the former plants, at the plant owners' expense.  For Maine Yankee, those storage and maintenance costs range from $7 million to $11 million annually, with similar expenses for the other two plants.

The plant owners filed a lawsuit against the federal government in 1998, seeking damages for the cost of maintaining the spent fuel onsite.  After a series of awards and appeals,  a 2012 U.S. Court of Appeals decision upheld the award of $39,667,243 to Connecticut Yankee and $81,690,866 to Maine Yankee, and increased Yankee Atomic's damages award from $21,246,912.55 to $38,268,654.55.

These amount have reportedly now been paid, and the power companies are proposing how they will use the proceeds to benefit ratepayers.  Meanwhile, because the U.S. Court of Claims ruled that utility companies cannot receive damage awards for storage costs that have not yet been incurred, the Yankee Companies have filed a second round of damages claims for approximately $247 million, and anticipate filing a third round of damage claims before the end of 2013.

From 1972 until permanent shutdown in 1997, Maine Yankee operated a 900 megawatt pressurized water reactor in Wiscasset, Maine.  During its operations, Maine Yankee was the largest generating station in Maine.  The plant closed after its owners received a report by the Nuclear Regulatory Commission staff identifying safety problems that were deemed too costly to fix.  Even after closure, the unexpected costs of storing the spent fuel onsite only worsened the plants' economics.  The lawsuit judgment is designed to compensate the plant owners for these costs, although the litigation itself carries a price tag for both the companies and the U.S. taxpayer.

What role will nuclear power play in our energy mix in the coming years?  For now, no federal waste repository is planned.  Safety is paramount, particularly following the 2011 Fukushima disaster in Japan.  Nuclear power plants can produce cost-effective baseload electricity, but face the risk of surprise costs such as those faced by Maine Yankee.  Can a holistic legal and business solution enable the safe operation of nuclear power plants?

FERC seeks demand response standards

Demand response, an innovative strategy to ensuring the integrity of electric grids, is growing in popularity, prompting federal regulators to consider standardizing how demand response performance is measured.

Managing an electric grid entails ensuring a constant balance between electric generation and customer demand for electricity.  As customer demand rises, grid operators have traditionally called on more and more generating units.  In most markets, grid operators dispatch the lowest-cost units first to keep overall costs down.  As a result, generating units needed to meet peak demand tend to be more expensive than baseload generation.  Many peaking units also emit more pollutants per unit of energy than baseload units.

In a demand response program, customers can volunteer to be available to reduce their load during times of peak demand.  When done right, this reduction in customer demand can play much the same role as dispatching additional generation, but at a lower cost in dollars and environmental impacts.  Energy efficiency resources can also play a similar role.

The U.S. Congress and the Federal Energy Regulatory Commission have both recognized that demand response can be a decentralized, crowd-sourced alternative to peaking power plants.  Utilities and regional transmission organizations across the nation are implementing demand response programs.

As demand response grows in importance, the question of how to measure a customer's performance is important.  Different utilities and regions have adopted varying standards for how performance is measured.  In an attempt to standardize the measurement and verification of demand response and energy efficiency resources participating in organized wholesale electricity markets, the FERC has proposed to amend its regulations to incorporate by reference the demand-side management and energy efficiency business practice standards of the North American Energy Standards Board.  NAESB describes itself as "an industry forum for the development and promotion of standards which will lead to a seamless marketplace for wholesale and retail natural gas and electricity, as recognized by its customers, business community, participants, and regulatory entities."

In its Notice of Proposed Rulemaking (29-page PDF), Standards for Business Practices and Communication Protocols for Public Utilities, 139 FERC ¶ 61,041, FERC states its hope that "[a]doption of these standards is intended to improve the methods and procedures used to accurately measure demand response and energy efficiency resource performance" and that their adoption should help regional grid operators "properly credit demand response and energy efficiency resources for their services".