Finds tolerance for load-shedding ill-advised

Update courtesy of Utility Regulatory News #4069: A regional transmission planning standard proffered by the North American Electric Reliability Corp. (NERC) has met with resistance from the Federal Energy Regulatory Commission (FERC), because the standard does not include enough system strength or redundancy requirements to guarantee that load-shedding can be avoided under all circumstances. NERC had proposed certain modifications to its Standard TPL-002-0b, which governs transmission planning reliability. Under the revised standard, it would be acceptable to recognize in a regional transmission plan the potential for some degree of load-shedding, provided the overall planning process had been open and transparent and had given all stakeholders a chance to voice their concerns about the plan. According to the FERC, however, such openness and transparency are no substitute for technical engineering criteria that would ensure system reliability. Indeed, the FERC said, NERC’s proposed new standard clearly runs counter to the overarching goal of the transmission planning process, which is reliability of service and avoidance of the need to shed load so as to prevent cascading outages. Thus, deeming NERC’s suggested changes impermissibly vague and overly complacent about the possibility of service interruptions, the FERC returned the standard to NERC for further consideration. For the full story, subscribe to URN.

Posted: May 8th, 2012 under reliability, transmission.
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Orders EDCs to enter into contract with project developer

Update courtesy of Utility Regulatory News #4069: Based on prior warnings from the regional transmission organization overseeing the Mid-Atlantic area that growing demand in Maryland might outpace the state’s electric supply, the Maryland Public Service Commission has directed the state’s three largest electric distribution companies (EDCs) to enter into a contract for differences with the power plant developer that was named the winning bidder in a commission-ordered generation procurement process. Pursuant to that solicitation, CPV Maryland, LLC, was selected as offering the best bid. Under its plan, it will build a 661-megawatt natural gas-fired combined-cycle generating plant in Charles County, Maryland. To facilitate the project, the three EDCs – Baltimore Gas & Electric Co., Delmarva Power & Light Co., and Potomac Electric Power Co. – were instructed to negotiate a contract with CPV. In expounding upon its decision, the commission conceded that the generation outlook for Maryland had improved since PJM Interconnection had first alerted the region to possible capacity shortfalls, which improvement the commission attributed to a combination of transmission facility expansions and conservation, energy-efficiency, and other demand response programs. Nevertheless, the commission said it viewed the new CPV project as a prudent form of insurance for the state. It explained that while increases in demand may have eased in some parts of the state, the Charles County area was still seeing unabated growth, such that it would not be enough to simply maintain the status quo on generating capacity. Moreover, the commission pointed out that Maryland historically has relied on coal-fired generation, but that the age of such plants, in conjunction with more stringent carbon emission limits, has placed those units at a high risk of retirement. It thus deemed it necessary to arrange for other sources of generation to take the place of those coal units. For the full story, subscribe to URN.

Posted: May 8th, 2012 under coal, generation.
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Court had declared LIEEF programs as beyond PSC jurisdiction

Update courtesy of Utility Regulatory News #4069: Declining to appeal a state court pronouncement that the Michigan Public Service Commission (PSC) could no longer allow regulated utilities to continue their respective Low-Income and Energy Efficiency Fund (LIEEF) programs, the commission has reviewed the amounts that the state’s three largest energy utilities had accrued in their pre-existing LIEEF accounts and has ordered those monies returned to ratepayers. The Michigan Court of Appeals had ruled that legislative amendments to the state’s Customer Choice and Electricity Reliability Act had eliminated in their entirety all references to LIEEF initiatives. Deeming that change intentional and not merely an oversight, the court had told the PSC that all LIEEF measures must cease. Initially, however, the commission had permitted the three utilities – Detroit Edison Co. (DTE), Consumers Energy Co. (CEC), and Michigan Consolidated Gas Co. (Mich Con) – to maintain their LIEEF procedures while the PSC mulled over whether to challenge the court’s ruling. Upon opting not to do so, the commission found that all LIEEF charges collected from customers in the interim must be returned. Using the utilities’ own estimates of the refunds owed as a baseline, but finding that additional amounts must be repaid as well, the commission held that the utilities must return the following totals to their customers: for DTE, slightly more than $27.66 million; for Mich Con, a little more than $3.5 million; for CEC electric ratepayers, somewhat more than $17.2 million; and for CEC natural gas customers, approximately $7.78 million. For the full story, subscribe to URN.

Posted: May 8th, 2012 under ratemaking, regulation.
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Finds plans for a new nuclear plant too remote

Update courtesy of Utility Regulatory News #4068: Although granting an electric utility more than two-thirds of its requested rate increase, the Florida Public Service Commission has rejected the utility’s attempted inclusion in rate base of a large parcel of land it ostensibly purchased for a possible new nuclear plant. The utility, Gulf Power Co., had sought more than $100 million in rate relief, observing that this would be its first increase in base rates in a decade. As part of its petition, it asked that a 4,000-acre tract it had acquired be treated as property held for future use (PHFU) and recognized in rate base. A number of parties objected, however, pointing out that the utility had failed to secure from the commission a determination of need before it purchased the land. Moreover, they argued that the utility had no definitive plans for the property, as its statements about a future nuclear plant were nothing more than speculation at the present time. The commission agreed, declaring the company’s requested PHFU treatment fatally flawed by its failure to first obtain the requisite determination of need. Moreover, because Gulf Power is a subsidiary of a holding company, the commission also deemed it possible that use of the subject land could end up being shared with nonjurisdictional affiliates. Consequently, the commission declined to include the property in rate base as PHFU. For the full story, subscribe to URN.

Posted: May 1st, 2012 under nuclear, ratemaking.
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Orders Pacific Power to report on its pay-setting standards

Update courtesy of Utility Regulatory News #4068: In accord with a number of other regulatory authorities for which executive compensation levels have become a hotly debated topic, the Washington Utilities and Transportation Commission (UTC) has directed an electric utility, PacifiCorp d/b/a Pacific Power & Light Co., to furnish a report in which it documents the basis for its executive pay packages. The commission said various interested parties had made cogent arguments that executive pay levels, including incentive compensation programs, had been escalating rapidly and were disproportionate to economic realities. In the required report, Pacific Power must provide data on its base pay scales, its standards for nonequity incentives, and its other bonus incentives. It also must delineate what parts of its pay structure are reflected in rates and what parts are excluded. The utility must further demonstrate that it has looked to other utilities in the Pacific Northwest for guidance, to assure that its compensation structure is in line with those of comparable utilities. The UTC explained that ever-rising executive pay packages have become a recurring bone of contention in rate proceedings and that a formal study of Pacific Power’s pay practices would be beneficial in future cost analyses. For the full story, subscribe to URN.

Posted: May 1st, 2012 under management, ratemaking.
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