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March 20, 2015
NEM 18th Annual National Energy Restructuring Conference

NEM will convene its 18th Annual National Energy Restructuring Conference on April 29th-May 1st, 2015. This year the conference will focus on “Redesigning Wholesale and Retail Energy Markets - Enhanced Reliability, Consumer Services and Advanced Technologies." The conference will begin with a Welcome Reception on the evening of April 29th at the Georgetown Club. The next two days of substantive discussion will take place at the Embassy Suites, Washington, DC Convention Center.

Confirmed participants include: Philip Moeller, FERC Commissioner; Colette Honorable, FERC Commissioner; Catherine Pugh, Maryland State Senator; Audrey Zibelman, NYPSC Chairman; Betty Ann Kane, DCPSC Chairman; John Quackenbush, MIPSC Chairman; Edward Finley, NCUC Chair; James Cawley, PAPUC Commissioner; Gladys Brown, PAPUC Commissioner; Anne Hoskins, MDPSC Commissioner; Steven Lesser, PUCO Commissioner; Lisa Polak Edgar, FLPSC Commissioner; Tim Echols, GAPSC Commissioner; Joseph Fiordaliso, NJBPU Commissioner; Dianne Solomon, NJBPU Commissioner; Upendra Chivikula, NJBPU Commissioner; Andrew Ott, Exec. VP, PJM; Dr. Joseph Bowring, PJM Market Monitor; Jon Wellinghoff, Stoel Rives.

You may register for the conference at this hotlink. The Agenda is available here.

FERC Staff Issues Annual State of the Markets Report

FERC Staff issued its annual 2014 State of the Markets Report at yesterday's agenda meeting. Of particular note, the Report also examined the performance of the markets this winter. "By many measures, this winter rivaled last year's in terms of record low temperatures across much of the country, and in overall demand for electricity. However, compared to last winter, with its series of Polar Vortex events in early 2014, the wholesale power markets and natural gas pipeline system performed remarkably well."

Staff noted, "extreme cold temperatures prevailed on February 20 and records were set in 72 cities including Washington DC, Detroit, Cleveland and Pittsburgh. On that day, PJM set a new winter peak record of approximately 144,000 MW, beating its previous record of about 142,000 MW, set in January 2014. The Southwest Power Pool also set a new winter peak record of 36,993 MW on January 8, and MISO, NYISO, and ISO-NE all experienced peak demands this winter that nearly matched last year’s winter records."

Staff specifically noted that, "actions taken since last winter by the RTOs and market participants, such as PJM's new Cold Weather Preparation Guidelines and the continuation of ISO-NE's Winter Reliability Program for a second winter, appear to have improved operational performance and the availability of units, which helped to moderate prices. For example, real-time prices at the PJM Western Hub were $400 MWh lower on PJM's peak day this winter, than on last winter's peak day. The drop in real-time prices can also be attributed to an improved forced outage rate, with PJM's outage rate dropping from 22% last winter to 12% this winter.

Across the RTOs and ISOs, no significant outages or major operational issues were reported and the bulk electrical system performed well despite changes to the resource supply mix. In particular, ISO-NE, which found itself in a stressed operational state last year, did not experience any significant reliability issues this winter despite the retirement of the Vermont Yankee nuclear station in late December, which removed 615 MW of baseload capacity from the grid."

Staff further attributed the improved performance to improved electric transmission and natural gas pipeline operator communications, record natural gas production, plentiful storage inventories, new pipeline infrastructure, and low oil prices.

The full text of the 2014 State of the Markets Report is available on the NEM Website.

Maryland
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BGE Demand Response Proposal and Request for Hearing

BGE filed this week with the Commission to request a hearing on potential options to treat demand response participation in PJM’s May 2015 Base Residual Auction in the event that the Supreme Court denies cert on the decision on FERC Order 745 and PJM’s “stop-gap” rules take effect. Under PJM's proposed stop-gap rules, DR providers would not be permitted to offer DR resources directly into the PJM market, but rather DR resources could only be offered through a LSE and presented in the form of an offer to reduce demand.

BGE argues that a potential problem in this scenario is that, "there is no mechanism to require an LSE to offer DR resources into the BRA or to require an LSE to pass on the value of the reduced capacity obligation costs to the DR provider responsible for the DR resource." BGE's proposed solution is for the Commission to require, "LSEs to enter into a Commission-approved standardized contract with the DR providers as a condition of being licensed as an electric supplier in Maryland." BGE notes that such a solution would not need to be in place before the 2018-2019 delivery year and suggests a stakeholder collaborative be formed for the purpose of examining the issue.

However, if “stop-gap” rules go into effect, BGE argues that Commission action is needed to ensure that DR providers are incented to offer the maximum DR into the May 2015 auction. BGE suggests two options for addressing this - BGE offering only its DR portfolio or BGE offering up to the entire zone of DR. In either event, BGE argues it needs assurance of cost recovery in the event that it incurs costs associated with third party (LSE or DR provider) non-performance. BGE also argues that if the Commission approves BGE offering only its own DR, that BGE needs assurance that it and its customers will not be harmed in any way if an LSE fails to make payment for its DR.

BGE requests the following specific relief:
* "the Commission consider these options and begin the discussion quickly by adding this matter to an Administrative Meeting on or before April 1, 2015;
* in the event that the "stop gap" rules take effect, the Commission issue an order on or before May 4, to become effective prior to the May 2015 BRA, that provides assurance that BGE and its customers will not be harmed by any non-payment by an LSE for BGE's DR resources; and that provides assurance of BGE's full and timely cost recovery in the event that it incurs costs associated with third party (LSE or DR provider) non-performance; and
* the Commission convene a stakeholder working group and institute a legislative proceeding to consider additional requirements to become effective prior to the 2018-2019 delivery year that help ensure continued Maryland DR participation in the May 2015 BRA."

The full text of BGE's Filing is available on the NEM Website.

Michigan
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Governor Snyder Energy Message

Governor Snyder issued an Energy Message this week. The Energy Message focused on the impending expected shortfall in generation. Snyder did not call for the end of electric retail access. He said the 10% electric shopping allowance should continue subject to retailers making a showing with the Commission that they have the capacity to serve their customers for the next five years. The Energy Message specifically said:

“We can solve this problem [generation shortfall] without getting rid of retail open access – sometimes called choice -- for those businesses that have already made plans and commitments to get their power from an alternative electric supplier. But we can only solve this problem if that choice is a fair choice. In Michigan, any company that sells you life insurance has to show the state that they have enough reserves to make good on the policy they are selling. It’s only fair to make sure that everyone who sells power is also required to buy the insurance policy that protects us all from big risks if there is not enough power available.
. . . .
While we need to change our market structure, we need to recognize the fact that in much of Michigan, 10 percent of businesses have relationships with other electric providers. When we change our system, we can respect those business decisions and allow those relationships to continue, if those providers can be part of the solution to our current problems. Reorganizing and redesigning electric markets, and giving our electric companies and their customers time to respond to those changes, is crucial. We also need to have a defined universe of megawatts we are addressing, so we need to keep the 10 percent limit.

It takes 3-5 years to build a new generating plant, including all regulatory approvals and permit requirements. So we need to know electric customers are protected now and 5 years into the future. That will give us time to construct a new, efficient plant if needed. All electric companies should be required to show the MPSC they have the capacity to serve their customers for the next five years in order to do business in Michigan.”

The full text of the Energy Message is available on the NEM Website.

New York
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Comments Requested on Microgrid Issues

Following on the issuance of the Reforming the Energy Vision Order, the Commission is requesting comment on issues related to microgrids. The questions are as follows:

"1) How can the Commission ensure that microgrid customers receive reliable service at just and reasonable rates?
2) How can the Commission ensure that the microgrid/utility is advancing the objectives of REV?
3) What is the relationship, if any, between the outcomes produced by the microgrid and system-wide outcomes for which the DSP/utilities may be held accountable?"

Comments received will inform a Staff proposal on microgrid configurations and oversight.

The Commission additionally requests comment on the applicability of PSL Article 2, HEFPA, and submetering rules for residential tenants at 16 NYCRR Part 96 to microgrids serving residential customers.

Comments are due May 1, 2015. The full text of the Request for Comments is available on the NEM Website.



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