RTO Insider: Don't Rush On Resilience, Commenters Urge

May 9, 2018

Don't Rush On Resilience, Commenters Urge

FERC should let RTO stakeholder processes work and not issue broad and costly new mandates, most commenters told the commission in its proceeding on grid resilience (AD18-7).

RTO Insider’s review of more than 60 of the dozens of comments filed ahead of the May 9 deadline indicated widespread support for RTOs’ requests in their initial filings in March for time to discuss the issues with stakeholders, more coordination with natural gas operators and more information on cyber threats. (See RTO Resilience Filings Seek Time, More Gas Coordination.)

But many commenters criticized PJM’s call for setting firm deadlines for rule changes, saying the RTO’s proposals would increase costs without necessarily improving resilience. Several commenters, including Edison Electric Institute and the National Rural Electric Cooperative Association (NRECA), suggested FERC schedule one or more technical conferences on the issue. Numerous commenters called for cost-benefit analyses of any new requirements.

In a joint filing, CAISO, MISO, NYISO, SPP and ISO-NE asked FERC not to impose PJM’s proposals in their regions.

“The record in this proceeding does not support any universal resilience standard or tariff changes requirements to be applied to all RTOs/ISOs. To the contrary, the record demonstrates that RTOs/ISOs have different resilience issues and priorities, and requiring all RTOs/ISOs to follow PJM’s proposed schedule on the issues pertinent to PJM will undermine each RTO/ISO’s efforts to address the specific challenges within its region,” they said. “Thus, the commission should reject PJM’s requests and allow individual RTOs/ISOs to pursue the resilience-related issues and initiatives they have identified in their region through collaborative efforts with their stakeholders and pursuant to the time frames they have established.”

Others, including the Advanced Energy Management Alliance, agreed that RTOs should continue their existing efforts to address their unique challenges. “PJM’s explanation of the need for changes to certain energy and ancillary market rules is helpful to inform the commission as to areas PJM is working on, but PJM cannot ask FERC to require rule changes to be filed in pre-emption of the stakeholder process or development of an evidentiary record that change is necessary.”

After rejecting the Department of Energy’s call for price supports for coal and nuclear generators in January, the commission asked its six jurisdictional RTOs and ISOs to respond to two dozen questions on resilience. This week’s deadline was for responses to the RTOs’ comments.

The comments touched on topics including FERC’s jurisdiction, fuel security, cyber threats and climate change, as well as individual regional issues.

Jurisdictional Concerns

Several commenters raised jurisdictional issues, noting that states, not FERC, have authority over distribution systems where most outages occur. Arizona Public Service said NERC’s reliability standards already address resilience.

“Before taking any additional steps to address resilience, the commission [should] consider the … comprehensive federal, state and industry efforts [that] address all levels of the electric grid and significantly contribute to ensuring” resilience, APS said. The utility criticized proposals it said “are clearly focused upon expanding the role of ISOs and RTOs and are, without understanding efforts at the state level and among utilities commercially, premature.”

The Pennsylvania Public Utility Commission asked FERC to “clearly articulate” its jurisdiction regarding resilience, saying it disagrees with PJM’s assertion that resilience is “‘within the commission’s existing authority with respect to the establishment of just and reasonable rates under the Federal Power Act.’ Therefore, clear and precise justification of FERC’s authority on this matter will be beneficial prior to any initial steps in regulating resilience,” the PUC said.

Entergy also disagreed with PJM’s “overly broad” interpretation of the commission’s jurisdiction.

The Large Public Power Council (LPPC) agreed with commission’s proposed definition of resilience but urged that “to the extent further rules or standards are considered, FERC must be mindful of the statutory limits on its authority,” saying the Federal Power Act does not provide the agency a general grant of authority “to take action on reliability or resilience outside its specific statutory role in the approval and enforcement of standards.”

The LPPC also contended there is “no basis” for applying any rule governing resilience to non-RTO areas, as had been recommended by MISO and PJM. “This is not an issue within FERC’s domain in non-RTO regions, where states and localities maintain authority over generation investment decisions and cost recovery,” the group said.

The Electric Power Supply Association sees it differently. “Resilience must be a priority in all regions of the country, not only those served by independent system operators or regional transmission organizations,” EPSA said. “Therefore, it is important for the commission to extend its inquiry on the holistic examination of resilience to all jurisdictional entities, particularly transmission owners and systems outside of ISOs/RTOs.”

The American Petroleum Institute said PJM’s proposals regarding gas-electric coordination — such as requiring interstate pipelines to offer new transportation services and build new infrastructure — are unnecessary and may be beyond FERC’s jurisdiction under the Natural Gas Act.

LG&E and KU Energy warned FERC against undermining existing state processes, saying its resource planning and transmission and distribution operations are working well, and noting that it is not part of an RTO. In 2017, the utilities said, they attained their lowest forced outage rate since 2004 at 3.46% of its baseload generation.

The Transmission Access Policy Study Group, which represents transmission-dependent utilities, said FERC should give RTO stakeholders time to build consensus on issues within their purview and leave distribution systems to state and local regulators.

Cyber Threats

PJM’s Transmission Owners Agreement-Administrative Committee said their members need more information from the government on potential cyber threats. “The threat data that resides at, for example, the Department of Energy, Department of Homeland Security, National Security Council and Department of Defense is vital for the RTO/ISOs to have access to for developing and implementing effective protection mechanisms,” they said.

“Therefore, it is essential that the commission develop a process by which PJM may receive verification concerning the reasonableness of vulnerability and threat assessments based on internal government data that has not been made available to RTOs on national security grounds.”

Exelon said FERC, DOE and DHS should participate in the development of modeling scenarios and create a “design-basis threat” to provide a baseline against which RTOs can measure their resilience efforts.

Climate Change’s Role

The Center for Climate and Energy Solutions said that FERC’s scope of grid resilience lacks an acknowledgment of climate change and how it could hinder resilience.

The environmental nonprofit said that although it would prefer FERC order “an economy-wide pricing mechanism” to absorb the economic impacts and even prevent some physical impacts of climate change, it said the commission should at least ensure that wholesale power markets are “internalizing the costs of carbon emissions” through carbon pricing.

Energy Price Formation Resilience PJM Fuel Security

Mobile substation | AEP Texas

The center added that increasing regularity of droughts threatens cooling systems for generating stations and rising temperatures will impede the capacity of bulk transmission lines to transport power. The nonprofit called on FERC to convene a technical conference to explore best practices for an industry coping with global warming.

“Climate science and lived experience show that historical conditions are no longer a reliable predictor of future conditions,” Pacific Gas and Electric said. “As issues arise in the future, PG&E encourages the commission to consider the risks of climate change when making decisions that could affect stakeholders’ ability to make climate-smart investments, or to make other decisions to address climate resilience for the future.”

Fuel Supplies

Numerous commenters cited the certainty of fuel supplies as an essential element of resilience.

NERC said FERC should consider encouraging firm transportation, multiple pipeline connections and dual-fuel capability for gas generators. “Further, the commission could consider requiring that resource adequacy assessments account for potential reliability ramifications associated with the ‘just-in-time’ natural gas fuel delivery model.”

“Fuel security risk is the most important factor to include in the commission’s definition of resilience and in its evaluation of grid resilience generally,” the American Coalition for Clean Coal Electricity said. The American Coal Council said coal generation retirements are a threat because intermittent resources can’t always be counted on.

Basin Electric Power Cooperative said its fossil generating units continue to be affected by markets “that fail to adequately compensate resources” for providing “essential electric service” in the wholesale markets.

The North Dakota co-op called for “equity across all fuel types,” saying the RTOs’ comments did not address the “preferential treatment” wind generation receives. It said a new ramp product, “if structured appropriately,” could reflect the value of stand-by products and provide “sufficient mitigation for assets that must stay online and incur losses” to backfill wind.

The Electricity Consumers Resource Council and industrial energy users warned against using resilience as a pretext for a “bailout” of coal and nuclear plants, adding, “No action to advance resilience can be considered ‘just and reasonable’ if it has not considered the impact to consumers and how to minimize that impact.”

Americans for a Clean Energy Grid, a coalition supporting a “fully electrified” society, noted that this winter’s “bomb cyclone” forced Northeast grid operators to rely on more expensive generation such as coal, oil and dual-fuel units, even while wind output — stranded by transmission constraints — was higher than normal during the weather event. “Thus, while wind power can be more reliable than other resources during extreme winter weather, it is limited by interregional transmission constraints,” the group said.

Role of Capacity Markets

While many commenters, including EPSA and the Natural Gas Supply Association, called for market-based responses to resilience needs, the American Public Power Association and NRECA said mandatory capacity markets are not producing the resource mix needed to provide required resilience attributes. “Rather than relying on the markets, appropriately accommodating state resource policy choices in the mandatory capacity markets likely would help alleviate some of these [resilience] concerns.”

API, in contrast, warned that some of PJM’s proposals “seem to be regressing back toward an integrated resource planning world where picking winners and losers takes precedence over markets and competition.”

Role of Transmission

Many commenters noted that most outages occur on the transmission and distribution system.

ITC Holdings said the bulk power system’s resilience faces “a substantial threat from the ongoing lack of any effective, regular interregional transmission planning processes between many RTOs/ISOs,” citing MISO’s seams with PJM and SPP. “Despite the highly interconnected nature of [the MISO-PJM] seam, and despite a long history of commission exhortation to ensure sufficient coordination between the two regions, no interregional transmission project has ever been planned for or built between these two RTOs. As such, each region is unnecessarily limited in its ability to call on generating resources from the neighboring region to respond to grid emergencies.”

Although the vast majority of customer disruptions occur because of failures of the distribution system and are beyond FERC’s jurisdiction, the commission could aid resilience by integrating distributed energy resources into wholesale markets and revising Order 1000 to increase the use of non-wires solutions to transmission constraints, said a group of environmental and public interest organizations, including the Natural Resources Defense Council and Environmental Defense Fund.

Trade group WIRES said FERC should update Order 890’s transmission planning principles to include resilience as a distinct planning driver for RTOs. “Generation and fuel supply policies offer only a limited hedge against potential disruption. Moreover, while distributed resources are important for rapid recovery, they are of limited long-term capability without the grid’s transfer capabilities,” the association said.

The Energy Storage Association said FERC could enhance resilience through greater storage use, embedding the resource type into transmission planning and encouraging wholesale market participation of distribution-level storage. “Storage decouples the element of time from supply and demand,” the ESA said. “It makes non-dispatchable generators dispatchable; it makes inflexible generators flexible; and it makes inefficient cycling generators more efficient.”

The WATT Coalition, a group of companies that offer technologies to increase the delivery capability of the existing grid, urged FERC to focus on how advanced transmission technologies can improve resilience. “During times of system stress, network topology optimization, dynamic line ratings, and power flow control can help ensure reliable operation,” the group said.

It noted that ISO-NE’s relaxation of transfer limits during this winter’s bomb cyclone allowed it to import an additional 200 MW of generation from NYISO. “When it is cold, cloudy, or windy, lines are cooled, so they can physically deliver more energy without sagging or over-heating,” the coalition said.

Tesla warned against a definition of resilience that focuses on generator availability or transmission. “Distributed energy resources that are co-located with load can continue to provide electric service to customers even in the face of a complete failure of the bulk power system and are best-placed to provide resilience in a wide variety of contingencies impacting the grid,” it said.

PJM Comments Under Scrutiny

PJM’s March filing was the subject of numerous commenters.

“In its zeal to address resilience in its own market, PJM has inappropriately laid out directives and requirements for every other market to follow, according to PJM’s proposed time frames,” EPSA said.

EEI agreed, saying “it may be premature to require all RTOs/ISOs to make specific filings as requested in PJM’s comments.”

David Patton, whose company Potomac Economics provides market monitoring services to MISO, ISO-NE, NYISO and ERCOT, said adopting PJM’s proposal to allow inflexible generators to set clearing prices would have boosted MISO’s system marginal prices by 30%, based on analysis of the 12 months ending in October 2017. (See Critics Slam PJM’s NOPR Alternative as ‘Windfall’.)

“This plan is a fundamental departure from the efficient locational marginal pricing framework that has been the foundation of all successful wholesale markets in the U.S.,” Patton said. “It would, for the first time, introduce fixed costs into real-time pricing that are clearly not marginal in the real-time dispatch horizon. In effect, PJM would be requiring that the average costs of all resources needed to service load be reflected in every five-minute interval.”

Energy Price Formation Resilience PJM Fuel Security

PECO Audubon substation | © RTO Insider

The Pennsylvania PUC said it supported some of PJM’s proposals but feared that some “offered in the name of resilience may shortchange or even bypass normal PJM stakeholder deliberative processes” and warned against giving RTOs “a license to ‘gold-plate’ the generation, transmission and cyber assets of its members to achieve standards of resiliency that are disproportionate to a particular vulnerability or threat assessment.

The regulators said they were concerned over the potential scope and costs of PJM’s proposals. “Some of PJM’s recommendations, especially in the market design arena, appear to utilize the grid resilience docket as another forum to advocate for specific market modifications, such as energy price formation, that are not immediately germane to the resilience discussion,” the PUC said.

It agreed with PJM that FERC may need to “revisit” NERC reliability standards. “However, revision of NERC standards is a complex, time-consuming process that should be allowed to proceed on its own timeline without an accelerated impetus from this docket.”

The PJM Power Providers Group (P3), on the other hand, praised the RTO’s “thoughtful recommendations” for addressing “antiquated energy price formation structures.”

“However, the stakeholder deliberations regarding this issue have been unproductive to date. Commission direction may be required for energy price formation goals to come to fruition as a means to support the commission’s resilience aims,” it said. P3 expressed concern over PJM’s proposal to permit non-market operations during emergencies, saying the commission should require the RTO to submit Tariff revisions to allow the change.

PJM also received support from American Electric Power, Dayton Power and Light and East Kentucky Power Cooperative, which made a joint filing as the PJM Utilities Coalition.

The coalition said it agrees with PJM’s recommendation that all RTOs be required to submit proposed Tariff changes to implement resilience planning criteria and develop processes for the identification of vulnerabilities.

“No meaningful steps towards a resilient system can begin without appropriate direction given by the commission that explicitly grants power to the RTO to establish resilience planning criteria and other aspects of the process,” it said. It also questioned whether the stakeholder process could address the issues. “If PJM reverts to a stakeholder process to determine resilience criteria, the process may get mired in political debates and cost allocation, and not focus on the necessary task of determining objective resilience criteria. For this reason, clear direction from FERC to guide that process is requested.”

PJM also filed reply comments, saying it wanted to provide additional information on its fuel security initiative announced April 30, clarify its proposals regarding gas-electric coordination and “provide context for its approach to this docket relative to the approach taken by certain other RTOs and ISOs.” (See PJM Seeks to Have Market Value Fuel Security.)

The Organization of PJM States Inc. (OPSI) said PJM’s filing did “not address the prudency and affordability of measures that may be implemented as a result of” the RTO’s recommendations, which it said indicate “extensions of its current mandate.”

“While not the stated intent, a future PJM could be positioned to drive transmission planning and craft new market structures in its mandate to address perceived low-probability, high-impact threats,” OPSI said. “The prospect of this expanded authority, with planning and decision-making impacting billions of dollars in investments with cost recovery from end users, may require a re-examination of PJM’s scope, governance and oversight.”

Graph on the left shows how baseload resources recover their fixed commitment costs under current LMP rules. During the peak hours, prices are typically above the resource’s marginal costs; the excess revenues in area B will exceed the amount by which the revenues fail to cover average costs in area A. Under the PJM proposal (right), LMPs would cover the average cost of all baseload resources needed to serve load. | Potomac Economics

Industrial energy users, consumer advocates for Delaware, New Jersey and D.C., and American Municipal Power, filing jointly as PJM Consumer Representatives, said the inconsistencies between the positions of PJM and those of other RTOs indicate the need for regional flexibility.

“Unlike the comments of the other RTOs/ISOs, PJM’s comments embark on an aggressively activist course, advocating positions that could result in substantial changes to PJM energy and capacity market rules, in addition to whatever changes may be necessary in transmission planning and system operations rules,” they said.

They called for a cost-benefit analysis or “prudence assessment” of any new resilience rules and said neither the 2014 polar vortex nor the 2017-2018 cold snap “justify subsidizing uneconomic coal and nuclear units … in the name of resilience.”

FirstEnergy’s regulated utilities called for urgent action, noting they sought voluntary load curtailments during the polar vortex to prevent load shedding for 142,000 customers. FERC should “immediately implement stopgap measures to preserve the operation of generators that contribute to grid resilience until a full evaluation of resilience needs is complete,” the utilities said.

FirstEnergy Solutions, the company’s merchant generation unit, said it “disagrees with the overall thrust of PJM’s comments.” It called for FERC to adopt mandatory resilience standards for RTOs and ISOs and ensure the continued operation of “critical” nuclear and coal-fired generators in the interim.

The Natural Gas Supply Association said PJM’s fuel security initiative “appears to reflect an unsupported bias against natural gas.”

“PJM states that the process of examining fuel risk will be done in a fuel-neutral manner. However, its document describing its process only refers to risks associated with greater reliance on natural gas and the language suggests that PJM has already made an unsupported predetermination that natural gas is a weak link in their ability to be reliable and resilient.”


ISO-NE’s response to FERC’s identified fuel security as its resilience risk. It said potential responses include additional gas pipeline or LNG capacity, relaxing rules on dual-fuel resources and additional investments in renewables and transmission.

The New England Power Pool Participants Committee stressed that resilience solutions be worked out in the stakeholder process, calling it “a prerequisite to yield the solutions that work best for New England.”

The New England States Committee on Electricity shared ISO-NE’s perspective that fuel security presents the primary challenge to the resilience of the region’s power system. NESCOE recommended additional analysis of potential risks and cautioned “against prescriptive actions or further processes” that could impede regional or state efforts to mitigate fuel security challenges.

The New England Power Generators Association said ISO-NE’s Operational Fuel Security Analysis (OFSA) “neither captures market participant behavior in response to price signals nor the probability of any particular outcome … and therefore should not be the basis for the market solutions to be developed and later filed for acceptance with the commission.” (See Report: Fuel Security Key Risk for New England Grid.)

Eversource Energy said ISO-NE’s fuel security study “may understate the magnitude and scope of the challenges.”

“This could lead one to falsely conclude that only minor changes are required, and that commission action may be unneeded at this time. To the contrary, time is not on New England’s side,” the company said.

The company urged the commission to convene a New England-specific technical conference to determine state and federal actions to improve the region’s infrastructure, citing additional gas pipeline capacity from the Marcellus shale deposit and electric transmission to carry Canadian hydropower and on- and offshore wind.

The attorneys general of Massachusetts, Rhode Island and Vermont also cautioned against overreliance on the OFSA, which they said “relies on underlying assumptions that do not present a realistic or complete view of either the present or the future bulk power system.”

“The OFSA presents a deterministic (as opposed to probabilistic) analysis that provides no context about whether modelled events are likely to occur,” they said.

They also said the study’s approach to resilience is overly narrow, failing to consider “cyber and physical adversarial threats, technological accidents, and extreme heat and other weather events.”

The region’s local gas distribution companies recommended FERC “consider expedited review of and decisions on new natural gas pipeline certificate applications in critical fuel security regions.”


NYISO told FERC in March that it does not face “imminent resilience concerns that require immediate action.”

The New York Public Service Commission said it agreed that ISO and stakeholder efforts to address bulk system resilience “are comprehensive and continuous,” asking for no other FERC measures beyond its “continued attention.” The PSC also agreed with the ISO’s suggestion for the commission to host a technical conference on bulk system resilience.

The Independent Power Producers of New York also supported the ISO’s approach and said FERC should not force it to abide by PJM’s suggested deadlines. “Efforts to ensure resilience should not be rushed to meet some arbitrarily short time frame unless they are justified by the evaluation of the ISO/RTO,” the group said.

The New York Transmission Owners also called on the commission to respect regional differences. “Any requirement to change course could impede resilience efforts already underway in the stakeholder process,” they said.


The Organization of MISO States said NERC standards, combined with initiatives from RTOs, state regulators, utilities, municipalities and others were enough to ensure long-term resilience. No additional rules or standards are necessary, the group said, especially those that might impede on state jurisdiction. “It is clear to the OMS that the appropriate processes are already in place to identify and adapt to the evolution of the industry and perceived threats to resilience,” the group said.

The MISO Transmission Owners emphasized that RTOs have only part of the answer to resilience, noting the role of distribution systems.

“MISO and its utility members have developed an integrated electric system that is currently sufficiently resilient, and MISO has identified no imminent resilience crises requiring commission action,” they said. “Notwithstanding MISO’s and its members’ regional efforts, enhancements to interregional coordination will promote greater resilience. Thus, while seams issues are broader than the concept of resilience, MISO is correct that the commission should not ignore the benefits of greater, more effective and efficient interregional cooperation in this proceeding.”

Entergy said it saw no need for a federal role in determining the proper long-term resource mix — “at least in MISO.”

The company called for resource adequacy to “continue to be a shared responsibility in MISO,” with state and local regulators determining the fuel mix.

“In this way, state and local regulators ensure diversity of fuel resources consistent with each area’s needs and those regulated utilities’ customers bear the cost burden and the reliability and resiliency benefits of those local regulators’ decisions,” Entergy said. “Direct federal action to regulate the long-term resource mix also could jeopardize utilities’ continued participation in MISO.”

In a joint filing, the Coalition of MISO Transmission Customers and Illinois Industrial Energy Consumers said that resilience is already central to the RTO’s reliability assessments. “The commission should not carve out resilience and treat it as a discrete characteristic of wholesale electricity markets,” they said, adding that any resilience requirements should be subject to cost-benefit analyses.

Northern Indiana Public Service Co. said that most grid innovation is happening with customer-owned technologies that connect at distribution level, urging FERC to work with state regulators to address resilience “across the entire electric value chain.” The company said that a “top-down, nationally-focused approach could overemphasize one or two parts of the overall electric system” and fail to account for the adoption of storage devices, electric vehicles, microgrids and DERs.

Alliant Energy used its comments to call for modernizing the Public Utility Regulatory Policies Act and criticize qualifying facilities “that haphazardly site themselves on the grid, causing distribution system and system planning issues.” Alliant said PURPA must be reworked to incent QF developers to concentrate on “system reliability and long-term grid stability.”


SPP’s Market Monitoring Unit emphasized the importance of creating standards and metrics to quantify and measure resilience.

“We recommend that in addition to defining resiliency, the commission and the parties should also engage in discussions to measure resiliency in order to assess whether an area has or has not attained resiliency. This measurement may also contribute in creating new market mechanisms to promote resiliency,” the Monitor said.

It pointed to SPP’s 30 to 36% capacity margins over peak needs but said that those high levels do not necessarily equate to resilience.

The MMU also said the resilience discussion should not be used “as a venue to promote certain price formation proposals.”


The California Public Utilities Commission said the state “has made substantial efforts to ensure grid reliability and resiliency by ensuring redundancy and coordination in its energy planning efforts,” citing the deployment of distributed energy resources and smart inverters.

It also noted the state “continues to aggressively plan for a changing climate to ensure Californians have safe, affordable and reliable access to electricity.”

Nevada Hydro, which develops pump storage projects, said CAISO’s transmission planning process has fallen short in properly valuing hydropower. CAISO’s “transmission economic assessment method (TEAM) has not fully applied the method to storage projects and has not quantified the grid reliability and resiliency benefits of the projects it has examined,” the company said. It said FERC should direct RTOs to include pumped storage hydro in transmission studies and resource adequacy planning.

Southern California Edison said FERC should consider regional differences and costs. It said it shares CAISO’s view that FERC’s proposed definition of resilience is lacking.

It said the use of the term “‘disruptive events” is indistinguishable from “‘contingencies,’ which, per NERC reliability standards, refers to unexpected failures or outages of a [Bulk Electric System] component.”


Wednesday, May 9, 2018