UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION ) Grid Resilience in Regional Transmission ) Organizations and Independent System ) Docket No. AD Operators ) ) REPLY COMMENTS OF PJM INTERCONNECTION, L.L.C. On March 9, 2108, PJM Interconnection, L.L.C. ( PJM ) submitted its initial comments and responses ( Comments ) 1 to the resilience issues and inquiries identified in the Federal Energy Regulatory Commission s ( Commission ) Order Terminating Rulemaking Proceeding, Initiating New Proceeding, and Establishing Additional Procedures issued on January 8, PJM files these brief reply comments to provide further information to the Commission concerning its April 30, 2018 announced fuel security initiative, 3 to provide context for its approach to this docket relative to the approach taken by certain other RTOs and ISOs and to 1 Grid Resilience in Regional Transmission Organizations and Independent System Operators, Comments and Responses of PJM Interconnection, L.L.C., Docket No. AD (Mar. 9, 2018) ( PJM s Comments ). In PJM s Comments, in response to question 3(e) regarding whether there are any market-based constructs, operating procedures, NERC reliability standards, or planning processes that should be modified to better address resilience, PJM advised, among other things, that: PJM s current Locational Marginal Price ( LMP ) formulation does permit all needed resources to compete to set the LMP which results in price suppression and consequently distorted market signals. See PJM Comments at 78. The sentence was missing the word not and should have read: PJM s current Locational Marginal Price ( LMP ) formulation does not permit all needed resources to compete to set the LMP which results in price suppression and consequently distorted market signals. 2 Grid Resilience in Regional Transmission Organizations and Independent System Operators, 162 FERC 61,012 (2018) ( Grid Resilience Order ). In the Grid Resilience Order the Commission (1) terminated the proceeding regarding the proposed rule on Grid Reliability and Resilience Pricing submitted to the Commission by the Secretary of the United States Department of Energy ( DOE ) that was focused on providing cost-of-service compensation to generators with on-site fuel capability, and (2) initiated the above-captioned proceeding on Grid Resilience in Regional Transmission Organizations and Independent System Operators. The Grid Resilience Order directed each Regional Transmission Organization ( RTO ) and Independent System Operator ( ISO ), including PJM, to submit initial comments and responses to the Commission on resilience in order to enable the Commission to holistically examine the resilience of the bulk power system. Hereinafter, RTOs and ISOs are referred to collectively as RTOs. 3 PJM, Valuing Fuel Security (April 30, 2018),

2 provide clarity around PJM s discussion of changes that should be made to improve gas-electric coordination in order to move toward a more resilient power grid. I. COMMENTS A. PJM s Approach to the Commission s Request for Specific Suggestions for Potential Commission Action PJM approached this docket by outlining not just its own initiatives, but also the actions that the Commission could consider to further grid resilience. PJM took this approach in response to public requests from certain Commissioners for both specificity in the comments to be submitted and their request for specific suggestions for potential Commission action, if any. Each of the other RTOs and ISOs filed their responses as well, with some similarly offering suggestions to the Commission for generic action the Commission could take to address system resilience nationwide. Others responded to the Commission s questions based on their historical, current and future analyses, tools, processes and procedures used to address reliability and resilience in their regions, but declined to offer more generic actions for Commission consideration. 4 PJM notes that given the open-ended nature of the Commission s inquiries, both approaches have validity depending on whether the Commission is seeking some consistency on overarching resilience issues such as physical and cybersecurity or whether it wishes to take a 4 Grid Resilience in Regional Transmission Organizations and Independent System Operators, Responses of the Midcontinent Independent System Operator, Inc., Docket No. AD (Mar. 9, 2018) ( MISO Responses ); Grid Resilience in Regional Transmission Organizations and Independent System Operators, Comments of The California Independent System Operator Corporation in Response to the Commission s Request for Comments About System Resiliency and Threats to Resilience, Docket No. AD (Mar. 9, 2018) ( CAISO Comments ); Grid Resilience in Regional Transmission Organizations and Independent System Operators, Response of the New York Independent System Operator, Inc., Docket No. AD (Mar. 9, 2018); Grid Resilience in Regional Transmission Organizations and Independent System Operators, Response of ISO New England Inc., Docket No. AD (Mar. 9, 2018); Grid Resilience in Regional Transmission Organizations and Independent System Operators, Comments of Southwest Power Pool, Inc. On Grid Resilience Issues, Docket No. AD (Mar. 9, 2018); Grid Resilience in Regional Transmission Organizations and Independent System Operators, Joint Comments of the Electric Reliability Council of Texas, Inc. and the Public Utility Commission of Texas, Docket No. AD (Mar. 9, 2018). 2

3 more reactive approach strictly deferring to individual regional initiatives when they are presented to the Commission for action. There is no single right answer to the approach to these issues. However, initiatives to enhance resilience of the grid should not, in PJM s view, necessarily stop at the borders of any particular RTO or ISO, or for that matter be limited solely to RTO and ISO footprints. 5 Accordingly, PJM suggested certain discrete initiatives that it believes are appropriate for some kind of Commission-directed consideration while still deferring to each region as to how that region addresses the particular issue. Although some of our RTO/ISO colleagues may believe no generic Commission action is appropriate at all on these topics, PJM believes that direction is appropriate as to the Commission s overall approach to resilience. Specifically, PJM believes the Commission should consider and provide guidance going forward on whether it envisions: a holistic approach to some of the issues raised in this proceeding (which in some cases such as planning require potential modifications to the Commission s Order No. 1000); or a more reactive approach deferring solely to a patchwork of potentially differing initiatives in each region to address the larger topic of resilience. PJM s recommended list contained a mix of both initiatives specific to the PJM Region 6 and others which the Commission may wish to consider more broadly. But the Commission will need to first address this threshold matter of how it wishes to approach these issues given differing views from the RTOs/ISOs as to whether any national initiatives are in order to complement regional initiatives. 5 MISO similarly points out the appropriateness of a wider scope that would include non-rto/iso regions as the Commission assesses future initiatives to address grid resilience. 6 All capitalized terms that are not otherwise defined herein have the meaning as defined in the PJM Open Access Transmission Tariff ( Tariff ), Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. ( Operating Agreement ), and Reliability Assurance Agreement Among Load Serving Entities in the PJM Region. 3

4 B. An Explanation of PJM s Announced Fuel Security Initiative The issue of how to best address fuel security was raised in several of the comments filed by the various RTOs and ISOs. For example, ISO New England, Inc. ( ISO-New England ) advised in its comments that it has been working with its stakeholders to develop solutions to meet the unique fuel-security challenges facing the region, and asked the Commission to allow it time to continue to do so. 7 Leaning on the fact that each RTO/ISO region is unique, ISO-New England opined that the Commission should allow each RTO and ISO to determine what assessments are needed to identify resilience needs, if any, based on the type of resilience threats faced in that RTO/ISO s region. 8 Similarly, California Independent System Operator Corporation also opined that while there can be general approaches to address resilience systemwide, each RTO/ISO may have unique conditions that require a mechanism specific only to that RTO/ISO region. 9 Like ISO-New England, PJM is also concerned about fuel security and its impact on the reliability and resilience of the bulk electric system in the PJM Region. Thus, while the bulk electric system in the PJM Region remains reliable and fuel-secure even with the resource retirements analyzed to date, 10 and investment in new, increasingly efficient gas-powered 7 ISO-NE Comments at Id. at CAISO Comments at On April 30, 2018 PJM announced the results of its reliability analysis undertaken pursuant to Tariff, Part V, section in response to FirstEnergy Solutions Corporation s ( FirstEnergy ) March 28, 2018 notice of planned deactivations to PJM, on behalf of FirstEnergy Nuclear Generation, LLC, for the Davis-Besse Nuclear Power Station Unit 1, Perry Nuclear Power Plant Unit 1, and Beaver Valley Power Station Units 1 and 2. Using traditional NERC reliability standards, PJM found that the units could be deactivated on the stated deactivation dates, if FirstEnergy so chose, and such deactivations would not adversely affect the reliability of the PJM Transmission System given that PJM could put in place transmission upgrades and implement additional operational measures prior to the deactivation of the units. 4

5 generating sources, the potential for a continually evolving fuel mix underscores concerns raised by PJM in a March 2017 report about the need to examine long-term resilience of the grid. 11 Therefore, to address longer-term questions of fuel security, PJM has initiated a process to analyze fuel security vulnerabilities and establish criteria to assess areas in the PJM Region which could face future fuel security issues, including fuel supply disruptions. The criteria will be used to value and price fuel security, and promote competition among different resource types to meet any fuel security needs in a particular location at the lowest reasonable cost. That value can then be incorporated into PJM s existing market mechanisms, including reforms that PJM could incorporate into future Base Residual Auctions or through other market measures. PJM anticipates completing its analysis within the next six months, and commencing a stakeholder process to further discuss the results of its analysis and any potential market rule changes with PJM stakeholders, including state and federal agencies as well as representatives from other industries such as oil and natural gas. Further details about PJM s proposed plan of action can be found in a paper PJM recently published. 12 C. Additional Context re: PJM s Gas-Electric Coordination Comments As noted above, in response to the Commission s request for specificity and actionable recommendations, PJM utilized its grid resilience comments not just to highlight the work that has been done to date on grid resilience but also to suggest some areas for further work as we move on a pathway toward a more resilient grid. In essence, PJM proposed a forward-looking 11 PJM, PJM s Evolving Resource Mix and System Reliability (March 30, 2017), /media/library/reports-notices/special-reports/ pjms-evolving-resource-mix-and-system-reliability.ashx?la=en (concluded that the PJM system could remain reliable with the addition of more natural gas and renewable resources, but that heavy reliance on one resource type raises potential resilience risks beyond existing reliability standards). 12 PJM, Valuing Fuel Security (April 30, 2018), 5

6 pathway for future work with the understanding that achieving these goals involves both Balancing Authority 13 to pipeline discussions and regulatory clarity in certain key areas. To further clarify the scope of PJM s comments relative to gas-electric coordination, PJM reiterates, as is stated on page 55 of PJM s Comments, that great progress has been made with the gas pipeline industry as to information sharing and communication protocols since the Polar Vortex of PJM detailed the memorandum of understanding and data sharing agreements it has with each of the major pipelines in its original comments and values the progress that has been made to date. Moreover, both before and subsequent to the submittal of PJM s Comments, PJM has met with the pipeline industry to further work through issues that go beyond traditional notions of reliability and work towards ensuring resilient operations in a way which meets the needs of both the pipeline industry and PJM. That constructive work will continue and PJM appreciates the pipeline industry s collaboration. Nevertheless, there remain certain regulatory issues (be it, for example, those relating to priorities in restoration as noted on pages of PJM s Comments or issues associated with whether information sharing under Order No. 787 could lead to pipeline exposure to discrimination claims from pipeline customers as noted on pages of PJM s Comments) which, in PJM s view, could benefit substantially by the Commission providing certain regulatory clarity. For example, PJM s request that the requirements of Order No. 787 be made mandatory was expressly designed to address the concerns of some pipelines serving the PJM Region that reliability information could not be provided or discussed with PJM until it was first 13 The North American Electric Reliability Corporation ( NERC ) defines Balancing Authority Area as: The collection of generation, transmission, and loads within the metered boundaries of the Balancing Authority. The Balancing Authority maintains load-resource balance within this area. Glossary of Terms Used in NERC Reliability Standards, North American Electric Reliability Corporation at 3 (Aug. 1, 2017) ( NERC Glossary ), Balancing Authority is also defined in the NERC Glossary as: The responsible entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within a Balancing Authority Area, and supports Interconnection frequency in real time. Id. at 3. 6

7 publicly posted and made available to all gas pipeline customers. PJM does not agree with this interpretation as Order No. 787 was designed, in PJM s view, to recognize the unique reliability responsibilities of the pipelines and of the Balancing Authorities. No Balancing Authority in the electric industry is limited to discussing reliability information only if such information is first made publicly available. Discussions happen among operators in neighboring Balancing Authorities every day. PJM is advocating for a similar openness between natural gas pipelines and Balancing Authorities such that pipelines are free to talk without fear of discrimination. Although the majority of pipelines in the PJM Region have similarly interpreted Order No. 787 as allowing this flexibility, some pipelines have not. As a result, regulatory clarity is needed to ensure that pipelines need not be concerned with possible discrimination claims should they provide information to the RTO under Order No. 787 s voluntary standard. Absent clarification or agreement between the pipeline and the relevant RTO, control room operators could face varying degrees of information sharing (in both the data provided and the time in which it is provided) at the very time they need to get a complete picture of operating conditions across the Balancing Authority Areas when going into the operating day during a particular cold weather period. PJM clarifies that the majority of pipelines have interpreted Order No.787 in the same way PJM does and have been open to communications without requiring posting of all information as a condition precedent to discussions among control rooms. PJM is grateful for their responsiveness in this regard. PJM s recommendation concerning Order No. 787 is designed to provide additional regulatory clarity for those pipelines who still feel some exposure to claims of discrimination from invoking the voluntary provision of that order. Effective reliability-based communication among pipelines with reliability responsibility and Balancing 7

8 Authorities with reliability responsibility can ensure real time communication and coordination in a manner that is so important to effective control room operations. II. CONCLUSION Ensuring the resilience of the bulk electric system requires a careful balancing of many competing interests. PJM stands ready to work with the Commission, states and stakeholders as well as its RTO/ISO colleagues whichever approach the Commission ultimately chooses. Craig Glazer Vice President, Federal Government Policy PJM Interconnection, L.L.C G Street, NW, Suite 600 Washington, DC (202) (phone) Craig.Glazer@pjm.com Respectfully submitted, /s/ Jacqulynn Hugee Jacqulynn Hugee Associate General Counsel PJM Interconnection, L.L.C Monroe Boulevard Audubon, PA (610) (phone) Jacqulynn.Hugee@pjm.com Christopher O Hara Vice President, Deputy General Counsel PJM Interconnection, L.L.C Monroe Boulevard Audubon, PA (610) (phone) Christopher.OHara@pjm.com Counsel for PJM Interconnection, L.L.C May 9,

9 CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Audubon, PA, this 9 th day of May, /s/ Jacqulynn Hugee Jacqulynn Hugee Attorney for PJM Interconnection, L.L.C.