With 2014 just around the corner, TransmissionHub presents a spotlight on notable happenings in the energy industry, with a focus on the East Coast, that took place during 2013. From $13.5bn worth of transmission investment this year to utilities addressing cyber security concerns and electric vehicles making moves, 2013 proved to be a fruitful year for the industry. Below are just some of the highlights.
Spotlight on major projects in 2013
TransmissionHub reported earlier this month that an estimated $163bn worth of transmission investment is underway in the United States and Canada, with $13.5bn in 2013 alone.
For 2014, there is “$25.6bn on the books,” Kent Knutson, director of Hub services for PennWell, said during the Dec. 3 TransmissionHub Quarterly Market update webcast.
Some of those projects remain in the permitting and planning stages, he said, adding that most of the construction involves 345-kV and 500-kV DC and AC lines. Most of the construction is set to occur in the West, including in the WECC region, and in Canada’s Alberta and British Columbia, as well as in the Northeast.
Major transmission projects reached significant milestones in 2013. For instance, Northeast Utilities’ (NYSE:NU) Connecticut Light and Power (CL&P) and Western Massachusetts Electric Company (WMECO) completed the Greater Springfield Reliability Project on time and under budget.
The project upgraded 39 miles of transmission lines on an existing right-of-way between Ludlow, Mass., and Bloomfield, Conn., with more than 600 new structures and 13 new or rebuilt substations and switching stations, Northeast Utilities said in November. While the project cost was estimated at $718m, CL&P and WMECO came in more than $40m below that estimate, the company said.
Northeast Utilities is preparing to break ground on another New England East-West Solutions (NEEWS) project, the Interstate Reliability Project, early next year in eastern Connecticut.
On another NEEWS project, the Rhode Island Reliability Project, National Grid USA spokesperson David Graves told TransmissionHub in November that most of the construction work on that project wrapped up in the fall of 2012, and finalized in the spring.
National Grid is a subsidiary of National Grid plc.
Leon Olivier, Northeast Utilities executive vice president and COO, said in November that the company continues to make progress on its $1.4bn Northern Pass project, noting that the U.S. Department of Energy (DOE) has completed its public scoping meeting process. The project has held 16 open houses in towns along the route and a draft environmental impact statement from DOE is expected next summer.
PPL (NYSE:PPL) Chairman, President and CEO William Spence said in late October that PPL is more than 50% complete on the 500-kV Susquehanna-Roseland transmission project, and energized a 17-mile segment of the line that month.
“We continue to estimate completion of the Pennsylvania portion by June of 2015,” he said at the time.
Also in October, a Pennsylvania Public Utility Commission (PUC) administrative law judge recommended that the state regulators grant PPL’s PPL Electric Utilities’ application for approval of the siting and construction of the transmission lines associated with the Northeast-Pocono Reliability Project.
A final PUC order is expected in 1Q14.
As TransmissionHub reported in June, PowerBridge affiliate Hudson Transmission Partners’ approximately $850m HVDC line between Ridgefield, N.J., and Manhattan has begun delivering power to New York City customers.
The Hudson cable bundle extends from the Public Service Electric and Gas (PSE&G) Bergen substation in Ridgefield to the nearby HVDC converter station and then travels about 3.5 miles underground to Edgewater, N.J., where it enters the Hudson River. The route of the underground and underwater 660 MW project is about 7.5 miles long.
PSE&G is the largest subsidiary of Public Service Enterprise Group (NYSE:PEG).
Earlier this year, New York state regulators approved the terms of a joint proposal granting a certificate of environmental compatibility and public need to Rochester Gas and Electric (RG&E) to increase the reliability of electricity to the city of Rochester, N.Y., through the company’s proposed Rochester Area Reliability Project.
RG&E is a subsidiary of Iberdrola USA, which is a subsidiary of Iberdrola S.A.
In November, the state Public Service Commission (PSC) said it is reopening the project proceeding in order to give parties an opportunity to reexamine alternatives for certain segments of the project, which includes the construction of about 21 miles of new 115-kV line.
In April, the Virginia State Corporation Commission (SCC) authorized, with conditions, Virginia Electric and Power d/b/a Dominion Virginia Power to build and operate two proposed 230-kV transmission lines and a substation. Specifically, the SCC authorized the construction of the 230-kV Cloverhill-Liberty line, 230-kV Liberty Loop double-circuit line and the 230-115-kV Liberty substation.
Dominion Virginia Power is a subsidiary of Dominion Resources (NYSE:D).
Just over two years after announcing the spinoff of Entergy’s (NYSE:ETR) transmission assets to ITC Holdings (NYSE:ITC), the companies on Dec. 13 said they would terminate the transaction.
The decision came after months of state regulatory discussions and dealings that culminated with the Mississippi PSC’s decision on Dec. 10 to reject the deal. As a reverse Morris trust transaction, the spinoff needed approval from all state jurisdictions in order to close.
The proposed acquisition met with some regulatory hiccups in August that ignited speculation about whether the deal would ultimately close.
Obama signs presidential memorandum
In June, President Barack Obama signed a presidential memorandum directing federal agencies to identify and improve the use of energy corridors on federal lands that are most suitable for siting electric transmission projects, to help expedite permitting while improving environmental and community outcomes.
Those energy corridors are designed to reduce regulatory conflicts, minimize negative impacts on natural and cultural resources and address concerns of local communities, decreasing the potential for permitting delays.
FERC Order 1000 filings
In FERC Order 1000 news, ISO New England (ISO-NE), the New York ISO (NYISO) and PJM Interconnection (PJM) revised the Northeastern ISO/RTO Planning Coordination Protocol, under which the regions have exchanged data since it was developed in 2003, according to the respective FERC Order 1000 compliance filings of ISO-NE and NYISO.
ISO-NE, NYISO and PJM are parties to the protocol, while three entities in Canada are participants. The protocol provides for the periodic production of the Northeastern Coordinated System Plan, and the three regions revised the protocol to reflect the requirements of Order 1000.
In June, FERC said that the Order 1000 compliance filings by Tampa Electric, Duke Energy Carolinas, Florida Power & Light and the Orlando Utilities Commission do not comply with the order’s regional cost allocation principles.
Under the parties’ proposed regional cost allocation method, a regional transmission facility that results in a more efficient or cost-effective transmission solution than what is included in the roll-up of local transmission plans would not be eligible for regional cost allocation if there is no transmission facility in the local transmission plans that it would displace, FERC said.
MISO board approves MTEP13
Earlier this month, the Midcontinent ISO’s (MISO) Board of Directors approved MISO’s Transmission Expansion Plan 2013 (MTEP13), which provides 317 new projects, representing an incremental $1.48bn in transmission infrastructure investments through 2023.
Those investments are separated into three categories, including 79 baseline reliability projects totaling $372m that are required for the grid to continue to meet NERC reliability standards.
Since 2003, the MISO Transmission Expansion Planning process has approved $17.9bn of investment to promote system reliability, improve market efficiency, enable public policy mandates and allow the reliable integration of new generation resources, MISO added.
PJM board approves additions, upgrades to grid
The day before, on Dec. 11, PJM said that its board has approved $4.6bn in additions and upgrades to the high-voltage electric transmission grid, including PSE&G’s $1.2bn, 345-kV double circuit transmission project in northern New Jersey to address short circuit and thermal problems in that area.
PJM said that more than $3bn of the changes to the system are upgrades to connect new generating facilities. Baseline reliability projects with a total estimated cost of $1.5bn were identified in 15 different utility territories, including building a new 500-kV line within an existing right-of-way in the Dominion region.
Since the PJM regional transmission expansion planning (RTEP) process began in 2000, the PJM board has approved a net $28.9bn in transmission investment, PJM added.
ISO New England (ISO-NE), in its recent installed capacity requirement (ICR) filing with FERC, said that the ICR for 2017/2018 is 33,855 MW, which is the amount of generation and demand side resources that must be acquired in the eighth forward capacity market auction (FCA), to begin on Feb. 3, 2014.
The ICR is a measure of the installed resources that are projected to be necessary to meet reliability standards in light of total forecast load requirements for the New England Control Area and to maintain sufficient reserve capacity to meet reliability standards.
In other ISO-NE news, the presiding administrative law judge in the FERC proceeding involving the base return on equity (ROE) for New England transmission owners (NETOs), in his August initial decision, ruled that the current 11.14% ROE is unjust and unreasonable. The just and reasonable ROE for the locked in/refund period is 10.6% and for the subsequent period, 9.7%, subject to further updating or modification by FERC, Michael Cianci Jr., said in his initial decision.
Rate decisions in Maryland
In Maryland, state regulators on Dec. 13 approved a partial electric distribution rate increase for Exelon’s (NYSE:EXC) Baltimore Gas and Electric (BGE) of $33.6m and a $12.5m increase for its gas distribution rates, representing about 41% and 52%, respectively, of what the company had requested.
On Dec. 4, Pepco Holdings’ (NYSE:POM) Potomac Electric Power Company (Pepco) filed an application with the Maryland PSC seeking an approximate $43.3m increase in its Maryland distribution rates and an authorized rate of return on equity (ROE) of 10.25%.
In August, Joseph Rigby, chairman, president and CEO of Pepco Holdings, said that the company is challenging in court the PSC’s July decision granting Pepco an electric distribution rate increase of about $28m, which is less than half of what the company had requested.
District of Columbia rate case, undergrounding
Also on Dec. 4, the Office of the People’s Counsel of the District of Columbia urged District regulators to reject Pepco’s request for an approximate $44.8m increase in its base distribution rates, while the company maintained that the increase is just and reasonable.
Other District-related news this year involved legislation being introduced in the Council of the District of Columbia that provides for the implementation of a program to underground up to 60 high-voltage lines, Rigby noted in August.
New York Moreland Commission report, Energy Highway
In New York, the Moreland Commission on Utility Storm Preparation and Response, in its June 22 final report to New York Gov. Andrew Cuomo, recommended that utilities harden their systems by prioritizing investments in infrastructure to be more resilient to the ever-increasing threat of severe weather.
Also in New York, the Energy Highway initiative continued to advance. As reported, Cuomo, in his 2012 State of the State Address, announced a plan to build a private sector-funded $2bn “Energy Highway” system that will tap into the generation capacity and renewable energy potential in upstate and western New York to bring low-cost power to downstate New York.
The New York Transmission Owners (NYTOs), which include Consolidated Edison’s (NYSE:ED) Consolidated Edison Company of New York (Con Edison) and the New York Power Authority, were among those proposing projects.
In their Sept. 30 application, they said they seek to build a new 345-kV overhead electric transmission line from the Edic substation in the town of Marcy, Oneida County, to the Pleasant Valley substation in the town of Pleasant Valley, Dutchess County over a distance of about 153 miles; and a new 345-kV overhead line from the Oakdale substation in the town of Union, Broome County, to the Fraser substation in the town of Delhi, Delaware County over a distance of about 57.7 miles.
2nd annual TransForum East held in Washington, D.C.
TransmissionHub held its second annual TransForum East in October in Washington, D.C., featuring FERC Commissioner Philip Moeller as keynote speaker and high-profile industry executives such as American Electric Power’s (NYSE:AEP) Lisa Barton.
Speaking on a panel, Barton, executive vice president – AEP Transmission, said that transmission development is not really changing; who owns a particular line is the difference.
Discussing competition and whether non-incumbents would win such processes, Barton said she thinks projects will be awarded to non-incumbents, adding: “Will it be something that’s real speedy and happening here, there and everywhere? No, I think it will be slow.”
During another panel, John Flynn, executive vice president, strategic projects, with Duke-American Transmission Company, said that the main drivers of transmission growth for the next decade will continue to revolve around the fact that the transmission system is being asked to do things it was never initially designed to do, namely, to be an enabler of markets – to deliver renewable energy resources from where they are generated to load centers.
Representatives from Pepco Holdings and Con Edison spoke on a different panel about the fact that in the face of such challenges as an aging workforce and maintaining communication open with customers, companies continue to seek solutions, including mutual aid efforts, collaborating with high schools and using social media outlets like Twitter.
During Hurricane Sandy, which made landfall on the East Coast in October 2012, Con Edison more than doubled its work force through mutual aid efforts, Griffin Reilly, an engineer with the company, said.
Another topic addressed during TransForum East involved project development. For instance, Rudy Wynter, president, FERC regulated business, with National Grid USA, said that the company, in working on its NEEWS family of projects, has encountered challenges involving tribal artifacts.
Electric vehicles make moves, cyber security remains a concern
Electric vehicles (EVs) continued to have momentum in 2013 with regulators in states like Maryland approving, with modifications, pilot programs by Pepco and Baltimore Gas and Electric (BGE) that involved EVs.
The proposals were based, in part, upon findings and recommendations of the final EV working group report, which was filed in February 2012, the Maryland PSC said in its August order.
BGE’s pilot program proposal has a simplistic structure and entails a voluntary, residential, time-of-use (TOU) rate for select EV owners within the company’s service territory.
Of Pepco’s amended pilot program, the PSC said that participants may choose one of three residential sub-programs. In one, existing Pepco residential customers who have EV supply equipment may choose either a whole-house TOU rate or a plug-in vehicle rate.
More recently, the Virginia State Corporation Commission said in November that it is seeking responses on the proposal by Dominion Virginia Power, to extend by two years its existing EV pilot program so that program enrollment will continue through Dec. 1, 2015.
In New York, NRG Energy (NYSE:NRG) told state regulators in July that impact to the transmission system performance, if any, stemming from the connection of new EV charging stations to the local utility should be managed the same as with any increase in demand, such as from a new Starbucks.
Green Mountain Energy, Energy Plus Holdings and Reliant Energy Northeast, collectively NRG Retail Affiliates, which are wholly owned subsidiaries of NRG, submitted comments in response to the New York PSC’s May notice seeking comments to review policies that may affect consumer acceptance and use of plug-in EVs.
As Tracy Miehlke, senior analyst, and Joseph Callis, senior business solutions engineer, both from PJM’s Applied Solutions, told TransmissionHub last summer, the biggest impact to the electric system from EVs is to the distribution system. They noted that large-scale integration of EVs may require distribution companies to upgrade neighborhood – pole-top – transformers.
PJM is looking at a couple of solutions: smart charging and traditional vehicle-to-grid solutions. The first will require that EVs be aware of the wholesale price of energy and be able to make “intelligent” decisions based on that, they added.
According to Paige Presley, corporate communications specialist with Nissan North America, Nissan LEAF was the top-performing Nissan model in San Francisco, Portland, Seattle and Honolulu.
On July 2, Nissan said sales of the Nissan LEAF in June were 2,225 units, with LEAF deliveries in the first half of 2013 being 9,839, exceeding the sales total from all of 2012.
Utilities remain vigilant on cyber security
On the cyber security front, TransmissionHub reported earlier this month that the issue continues to be an area of concern within the U.S. energy industry. The industry gets further thrust in the spotlight when incidents such as the recent physical attacks on Entergy Arkansas facilities, which included the ominous statement, “You should have expected U.S.,” take place.
Utilities including Entergy, Pepco Holdings and Southern Company (NYSE:SO) remain committed to physical and cyber security initiatives in order to keep the grid safe and reliable, officials told TransmissionHub.
Maintaining the reliability and the security of the computers, control systems and other cyber assets that help utilities operate the electric grid is a top priority for Southern and within the industry’s overall reliability effort, Jeannice Hall, media relations for Southern, told TransmissionHub.
“Cybersecurity is an ongoing effort because the threat continues to evolve,” she said. “We continually adapt our defenses to changing threats and leverage actionable intelligence from state and federal agencies to understand the threats facing our company, our industry and the private sector at large.”