Speakers on the Nov. 15 “Executive Perspectives” panel at Transforum East, held in Washington D.C., and presented by PennWell’s TransmissionHub, discussed such issues affecting the electric transmission industry as FERC Order 1000, the recent presidential election, and grid resiliency.
Jodi Moskowitz, senior director, Transmission Development and Strategy, Public Service Enterprise Group’s (NYSE:PEG) Public Service Electric and Gas, noted that the company is focusing on replacing aging infrastructure and making its system more resilient.
Discussing challenges, she noted that the company encountered permitting delays while it was working on the 500-kV Susquehanna-Roseland line, which was energized in 2015, also involved PPL’s (NYSE:PPL) PPL Electric Utilities.
Other challenges in the transmission space involve Order 1000, she said, adding, “We have seen some delays in working through the open window process.”
She also noted that there is a large focus on “so-called cost containment or cost caps, which places the RTO in an uncomfortable position of having to determine which cost cap is better, and which set of exclusions to cost caps … is more reasonable.”
There is also emphasis being placed on “cost,” which typically refers to the short-term installation cost rather than the lifecycle cost of the investment, she said.
“We believe that this type of focus ignores project solutions that ultimately provide the most benefit, the best, and most long-term value for customers,” Moskowitz said.
She also noted that there are challenges to the PJM Interconnection planning process.
As TransmissionHub reported in September, FERC has established a proceeding to determine whether the PJM Transmission Owners are complying with their FERC Order No. 890 obligations, noting that it is concerned that the transmission planning process governed by the PJM Operating Agreement is not providing stakeholders with the opportunity for early and meaningful input and participation in the transmission planning process, as required by Order 890.
Moskowitz said, “[I]t’s clear that the transmission owners in PJM are currently under scrutiny with respect to how they manage and maintain their systems, how they make asset management decisions to replace facilities, and how they come up with cost estimates.”
Looking ahead, she noted that what the company would like to see in Order 1000 implementation is less focus on cost caps and more focus on having the RTOs identify project solutions that would provide the best long-term value for customers.
Another area for potential improvement is having more time to respond to open windows and to present meaningful cost estimates, she said.
Moskowitz also said that there continues to be an acute need for transmission, noting that even if the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan goes away, the country still has a changing generation mix, and transmission will be needed to accommodate that change.
Panelist Clarke Bruno, senior vice president, Anbaric Transmission, discussed the recent presidential election, providing this thesis: “The election of President Trump will not change the fundamentals driving transmission development and may change the margins.”
He discussed three types of transmission projects: reliability, economic and projects driven by public policy needs.
Reliability projects are still driven by the states, the RTOs and vertically integrated IOUs, he said, adding, “I see absolutely nothing in the President-elect’s agenda that will change the way that any of those projects are conceived, designed, implemented and executed.”
He continued, “Likewise, for projects driven by economics, I see nothing in the President-elect’s agenda which suggests that any of those processes will change at all.”
In terms of competition, he said that in recent years, “the people planning and executing transmission projects [have been] largely, not exclusively, but largely, the same, the exceptions are regional.”
He said that post-election, he sees some potential areas that could change the way that reliability and economic projects are designed and developed, starting with an emphasis on infrastructure that was noted during Trump’s presidential campaign.
“It’s not clear there’s any sense of electricity infrastructure embedded in that vision of railroads, highways and other projects,” Bruno said. “If it moves in that direction, there could be some additional accelerated spending in traditional infrastructure.”
However, it is too soon to tell about any potential accelerated spending in infrastructure, he said.
Discussing current permitting issues, he noted that “a Trump administration, particularly with an agenda of creating more projects faster, could do something marginally to speed the permitting issues and the sort of debates that I think at some point are repetitive and unnecessary.”
Factors that affect projects driven by public policy include the Clean Power Plan, which he said is “all but dead.”
He noted that when the plan was issued, certain Republican governors were adamant about the plan not being “a good thing,” while certain utilities’ response was that the plan was something they could “work with.” Bruno added that the tension between the business reception of the plan and the political reception suggests that there may be some path for some elements of the plan to continue.
Another factor affecting projects driven by public policy is market forces, he said, noting that, “everyone knows what natural gas is doing to the competitive landscape in generation. I see that changing not at all.”
Market forces also include renewables, he said, noting that the price of solar continues to drop in many states.
Among other things, he said that another factor that may shape what happens on the margins involves the tension between large-scale renewable infrastructure development and local-scale development.
“In the recent tristate RFP in New England, there were lots of large-scale infrastructure projects submitted, my company included,” he said. “None of those were selected, nada, zero. What were selected instead were smaller projects on a local level in Connecticut and elsewhere.”
As reported, the states of Massachusetts, Connecticut and Rhode Island jointly announced Oct. 25 that they have completed their evaluation of proposed projects received in response to the three-state Clean Energy RFP. The states did not reveal details of the accepted offers. According to documents from the applicants on the RFP website, Ameresco, for example, bid the 20-MW (net) Candlewood Solar LLC project, to be located in New Milford, Conn., and to interconnect at the Rocky River substation.
Resilience and restoration
Speaker James Fama, former vice president of Energy Delivery, Edison Electric Institute (EEI), discussed the recent election briefly during his presentation, noting that the Electric Subsector Coordinating Council (ESCC) “is where our industry partners up with the government.”
In the coming weeks, there will be transition at the U.S. Department of Energy and certain other agencies, he said, adding, “[W]e’ll want to build the relationships with the new folks and get them to understand our industry.”
Questions following the election include whether FERC Chairman Norman Bay will remain in his position, or if a new chair will be named, he said. Other big picture post-election items include whether there will be change out of the government with respect to how it works with business on cyber security matters, he said.
During his presentation, Fama discussed various transmission resilience and restoration programs, including the Cyber Mutual Assistance program, which involves a voluntary sharing of cyber resources in an emergency. Participants join by designating a point of contact and by signing a non-disclosure agreement, according to his presentation.
Fama also discussed the North American Transmission Forum (NATF), which he said promotes excellence in the operation of transmission.
As noted on NATF’s website, members include investor-owned, state-authorized, municipal, cooperative, U.S. federal, and Canadian provincial utilities. The NATF is built on the principle that the open and candid exchange of information among its members is the key to improving the reliability of the transmission systems in the United States and Canada, the website noted.
Another program that Fama discussed is the Spare Transformer Equipment Program (STEP) created by EEI, which, as noted in his presentation, has 54 members. According to EEI’s website, under the program, each participating electric utility is required to maintain and, if necessary, acquire a specific number of transformers.
Fama also described the SpareConnect program, which, as noted on EEI’s website, establishes a confidential, unified platform for the entire electric industry to communicate equipment needs in the event of an emergency or other non-routine failure.
Another effort that Fama discussed was Grid Assurance, which, as reported, was formed by eight large investor-owned utility firms to purchase and store grid equipment at strategic locations to aid service restoration in case of an emergency.
Exelon (NYSE:EXC) and Southern (NYSE:SO), two of the founding members of Grid Assurance, are no longer equity investors in the business, a spokesperson told TransmissionHub in May. Their exit leaves six current owners – American Electric Power (NYSE:AEP), Berkshire Hathaway Energy, Duke Energy (NYSE:DUK), Edison International (NYSE:EIX), Eversource (NYSE:ES) and Great Plains Energy (NYSE:GXP) – and Grid Assurance is open to other equity investors if companies are interested, the spokesperson said.
During his presentation, Fama also discussed the RESTORE initiative involving Southern, Louisville Gas and Electric and Kentucky Utilities, PPL Electric Utilities, and the Tennessee Valley Authority.
As noted in a Nov. 1 statement, the initiative will establish a voluntary program where participants identify spare transformers and other transmission equipment that would be made available for purchase by other participants should they experience a widespread disaster or physical attack within their service area.