Nescoe

Presentation to EUCI US Canada Cross Border Power Summit 2016

U.S. / Canada Cross Border Power Summit
Implications of Power Plant Retirements for Market Fuel Prices, Regional Reliability, and Clean Energy Goals
March 14, 2016

Overview

  • Quick look at New England transmission investment, comparative methodologies, the likelihood of consumer benefits of competitive dynamic and Order 1000’s public policies provisions
  • Multi-State Clean Energy RFP
  • State Energy and Environmental Policy Execution

New England has invested in reliability-based transmission, more than other regions from 2010 forward

[see pdf for graphic]

Perennial Debate in New England:
How do ISO-NE’s Transmission Planning Assumptions and Methodologies Compare to Those of Other Regional Transmission Operators?

Competition in (reliability) Transmission Development
Good Results for Consumers Elsewhere
Illustration: Cost Variation in Bids

[see pdf for graphic]

FERC’s Order 1000 on Public Policy

  • NESCOE / 5 States challenging FERC’s compliance orders at D.C. Circuit
  • FERC unlawfully expanded the rule to require project selection rather than consideration of public policies

The problem with Order 1000 is not academic

By requiring project selection and at the same time denying states a central role in that process, FERC substitutes ISO-NE judgment for the judgment of state officials implementing state laws.

What’s the Vision?

  • The half of ISO-NE that determines how to transmit electricity must consider state public policies under Order 1000
  • The half of ISO-NE that determines what resources will generate electricity generally do not consider state public policies

Multi-State Clean Energy RFP Objective

To explore whether a multi-state procurement might attract larger-scale projects and transmission than single state procurements and achieve individual states’ clean energy goals more cost effectively than if each state proceeded on its own.

Initial Action: Certain state agencies and utilities in CT, MA and RI developed, with NESCOE assistance, the joint RFP for clean energy projects based on each state’s current authority.

All documents at www.CleanEnergyRFP.com

 Multi-State Clean Energy RFP Schedule

  • Feb 2015:  Draft RFP issued for public comment
  • June-October 2015:  RFP posted and filed at DPUs / MA and RI DPUs approved RFP for issuance
  • Fall 2015: RFP Issued November 12th / Bidder Conference December 3rd / Bidder Q&A ended December 29th
  • Winter 2016: Final Q&A posted January 14th / Bids submitted January 28th
  • Now: Evaluation of Bids through July 2016
  • Summer: Submission of selected projects to regulatory authorities for review

Bid Evaluation
RFP Issuers jointly and individually evaluate bids

  • No obligation to procure anything at all
  • Each state, EDC use own authority, criteria, judgment to determine whether a proposed project is cost-effective and beneficial for its consumers

NESCOE facilitated development and issuance of RFP instruments and has no role in bid evaluation or project selection

Proposed Projects

Sizes: 20 MW to more than 600 MW

Locations: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New York and eastern Canada

Types:

  • Traditional PPAs No Transmission Requirement
  • PPAs with associated Transmission
  • Clean energy delivery commitments
    • Clean energy delivery commitment approach ties transmission-only payments to project’s performance in fulfilling commitments for clean energy delivery
    • Support payments under a FERC filed/accepted Tx tariff/rate schedule paid for by participating states; Tx developer, a clean energy supplier negotiate commercial terms

Proposals with No Transmission

[see pdf for graphic]

Transmission Proposals with Associated Generation. Review generation projects at www.CleanEnergyRFP.com

[see pdf for graphic]

Green Tracking

  • Verification of clean energy attributes for imported power is critical if Canadian resources with to be credited with helping states satisfy carbon reduction requirements or environmental objectives
    • No uniform structure currently in place in Eastern Canada to measure, verify, and track emissions characteristics of imports into New England.
  • In 2013, N.E. Governors and Eastern Canadian Premiers adopted a resolution encouraging Canadian provinces to evaluate existing options and opportunities to adopt verification mechanisms of generation sources and environmental attributes that correspond with the existing New England Power Pool GIS verification system
    • Recent changes to NEPOOL GIS rules to facilitate tracking but corresponding changes likely needed on other side of New England’s borders

While improvement to the suite of market rules and policy mechanisms is always a subject of discussion, New England states will move forward to implement policy requirements and will seek to do so in the most cost-effective way for consumers. See also Public Policy Mechanisms Whitepaper

In the Meantime, Some Oppose State Energy and Environmental Policy Execution at Every Turn

  • Clean Energy RFP
  • RTR in FCM
  • DG Forecast in ICR
    • Rehear
    • Appeal
    • Oppose

Opposition to Implementation of State Laws is Not a Productive Plan

  1. Competitive markets must accommodate state policies in order for markets to be sustainable over the long term
  2. States must execute state policies – with or without generators’ support, in- or out-of-market as needed
  3. Even if generators “succeed” to weaken in-market mechanisms, it won’t eliminate state energy and environmental laws
  4. 2016 – the year to move forward productively…

An example – A Modest Clean Energy Mechanism in the FCM: “Renewable Technology Resource” Exemption

In February 2016 auction, 55 MW of new renewable resources cleared under the exemption – roughly 0.15% of the resources procured

  • Generators challenged the RTR Exemption at FERC
    • FERC disagreed
  • NRG, PSEG and NextEra petitioned for review at the D.C. Circuit. Entergy supported.
    • Remanded to FERC
  • Some now challenge the RTR Exemption at every corner
    • by seeking to tie it to the DG Forecast
    • in stakeholder discussions about other proposed market changes to advocate for changes more favorable to them

And another – Recognizing Consumer Investment in Distributed Resources

ISO-NE uses DG Forecast to determine the level of resources consumers must by via ISO-NE markets

This helps to ensure consumers do not buy resources as if that solar did not exist

  • Generators challenged ISO-NE’s use of the DG Forecast at FERC
    • FERC disagreed
  • NRG recently asked FERC to rehear the matter