Balancing

Order 745: A Time Bomb for Electricity Consumers

One of the worst orders FERC has ever produced

Order 745 overcompensates demand response, unduly discriminates against wholesale suppliers, sanctions and institutionally enforces the exercise of monopsony market power, and will ultimately raise electricity prices.

From ISO to DSO

Imagining a new construct – an independent system operator for the distribution network.

A new utility industry construct – the Distribution System Operator (DSO) – could help maximize the benefits of distributed energy resources.

Big Wind in the Big Oil State

ERCOT readies for renewable market integration.

ERCOT readies to integrate a large future influx of wind generation and finds need for new, more flexible resources to provide ancillary services – preferably a zero-to-five-minute ramping resource which, unfortunately, does not correspond to any currently existing technology or market product.

Grid 2050

Shaping system transformation.

New technologies—and new expectations—require taking a fresh look at the institutions and practices that have provided reliable electricity for the past century. Collective action is needed to define the key attributes of a future grid and then to take the more difficult next step—adapting our processes and institutions to align with that future vision. A thoughtful approach will allow America to capture the potential value that’s offered by sweeping changes in technologies and policies.

Balance of Power

Large grids can integrate more wind—without major burdens.

Despite the variable nature of the resource, wind can be managed so that it will not impair the reliability of a utility system. The Federal Energy Regulatory Commission proposed a rule that would require changes to the way transmission service is scheduled, which would enhance the ability of balancing authorities to integrate wind.

Leaning on Line Pack

Green energy mandates might overburden gas pipelines.

Market rules could evolve to compensate gas suppliers for pressurizing pipelines when needed on short notice. Enhanced ancillary services will require innovative strategies using line pack in interstate pipelines and stepped up communication among gas and electric market participants to preserve reliability objectives in gas and electric markets.

Penalty Predictability Enhanced

FERC modifies its enforcement guidelines.

FERC’s revised policy provides greater predictability and transparency in the commission’s approach to determining civil and criminal penalties under its statutory authority. Despite a more systematic framework, however, FERC retains discretion to assess penalties based on the facts of individual cases.

Beyond Intermittency

Forecasting brings wind energy under control.

Advancements in forecasting have improved the reliability of day-ahead and hour-ahead estimates of wind generation. Wind never will behave like a base-load power plant. But as system operators integrate wind forecasts into their planning and market processes, they’re transforming intermittent wind energy into a variable but reliable resource.

Taking Green Private

How merchant funding is remaking the rules for renewables.

Six weeks ago, FERC opened a notice of inquiry to invite industry comments on whether wind, solar, and other intermittent energy sources face unfair obstacles in wholesale power markets. Now assigned their own acronym—VERs, for “variable energy resources”—renewables make up a growing percentage of the nation’s energy supply portfolio. But as FERC notes, they present “unique challenges,” especially in terms of constraints on location and limits on the degree to which system operators can control or dispatch individual VER units. Thus, FERC suggests that certain common rules and practices, such as those for unit commitment, dispatch, and scheduling, might make it overly difficult to integrate VERs into the grid.

The Coming Conflict

Predicting discord in power plant property tax assessments.

At a time when many states and municipalities are facing budget deficits of historic proportions, many power generators are struggling against declining demand, the lowest electricity prices in many years, and looming carbon legislation. As a result, tax authorities might be seeking to raise property tax receipts at the exact same time that many generators are looking to lower their assessments. Conflict appears to be on the horizon, but where will it emerge? An examination of state budgets, as well as the expected changes in generator gross margins, reveals how tax collectors and taxpayers are most likely to respond.