RenewNewEngland.com

New England Governors Release Renewable Energy Blueprint

On Tuesday, the New England Governors' Conference released its Renewable Energy Blueprint. The Blueprint is based in part on a draft study conducted by ISO New England at the Governors' request, the New England 2030 Power System Study (pdf),which explored a range of different renewable energy development scenarios for New England.  The Governors' Blueprint is intended to identify strategies to "help bring new renewable resources to market within the current market structure." To that end, it identifies three main opportunities for New England states:

1) Synchronize states' power procurement and contracts -  Each New England state has authority to procure renewable energy, capacity, energy and RECs, usually in the form of long term contracts with generators selected through a competitive solicitation process.  The blueprint reviews these laws, and proposes synchronizing these approaches to obtain the most cost-effective renewable resources.  This makes some sense: the wind developments needed to meet the domestic wind generation totals envisioned in the ISO-NE study (from 2,000 to 12,000 MW) dramatically exceed the scale of any single state's existing procurement program.  Given the costs and uncertainty involved, offshore wind in particular (the ISO-NE study considers as much as 4,500 MW of offshore wind) will rely on state-mandated long term contracts in the foreseeable future. But state procurement authority is typically tied to in-state development of renewables:  coordinated procurement would not address states' interests in fostering their own in-state renewable energy industries.

2) Coordinate siting of interstate transmission facilities - The Blueprint offers an overview of state transmission siting laws, and explores the possibility of coordinating these processes to facilitate building large interstate transmission lines.  Right now, there aren't any existing plans to build any such lines in New England (at least onshore: there are a number of proposals to link Maine and Massachusetts underwater), but the ISO Report states the need for a lot of new interstate transmission lines to support New England's renewable energy goals.  For example, the 12,000 MW wind case contemplates "a new three-subloop, dual circuit overhead 500 kV or 765 kV backbone transmission system overlaying most of the interior of New England."  The cases involving expanding interconnections with Quebec and New Brunswick propose two lengthy +/- 450 kV HVDC lines, including a 400 mile line stretching from the Maine-New Brunswick border to Millbury, Massachusetts.

3) Strengthen federal support for state and regional renewable development - This last category is more a hodge podge of things that New England would like the federal government to do, including prioritizing and expediting federal permitting for off-shore wind projects in state and federal waters, and providing additional funding for development of renewable resources and transmission infrastructure.  Most important, though is a general plea that the federal government:

Respect regional system planning processes and consider the results of regional transmission system plans and renewable resource scenario analysis as guidance in connection with interconnection wide analyses and any federal financial support for renewable energy infrastructure development

This hints at what's really driving the blueprint: New England governors' concerns about federal intervention forcing New England ratepayers to contribute to massive transmission projects needed to bring the huge amounts of wind planned in the Midwest to New England markets.  (For an example of what this might look like, see the Joint Coordinated System Plan (pdf), released by MISO, PJM and other regional entities in February, or our previous post on the subject.) In addition to the costs, those projects, backed by federal subsidies, could crowd out renewable energy investment in New England.  The Blueprint, along with the ISO-NE study, represent New England's latest efforts to show that New England can meet its renewable energy goals with intra-regional solutions.

Maine PUC: Maine will stay in ISO-New England

Last Tuesday, the Maine Public Utilities Commission issued its final order in Docket No. 2008-156, finding that Maine’s transmission and distribution utilities, Central Maine Power (CMP)* and Bangor Hydro, should automatically renew their participation agreement with ISO New England (ISO-NE).  The ruling closes a two-year Commission investigation into whether Maine utilities’ continued participation in the regional transmission organization was in the interests of Maine’s electricity consumers.

The proceeding was a fascinating case study with some important lessons for the rest of  the country (The Ohio legislature recently created a Federal Energy Advocate in part to evaluate that state's continued participation in MISO).  Throughout the proceeding, the Maine Commission grappled with the state's diminished control over its own energy policy as part of a regional market, and the need to address transmission planning on regional basis.  The Commission expressed concerns with ISO-NE’s transmission cost allocation, governance, and cost containment efforts: in the final Order the Commission vowed to continue efforts for reform in these areas within the ISO.

Ultimately, none of the proposed alternatives proved viable or cost-effective.  Instead, the Commission determined that continued ISO participation was the best option.  The Commission's Order rules out Maine leaving ISO-NE, which is good news for the development of renewable energy, particularly wind, in Maine.  Some of the proposed alternatives lacked a day-2 market, which would have required wind generators to submit day ahead balanced schedules, and there were serious questions about an independent or joint Maine-New Brunswick ISA's ability to balance the combined 2,800 MW (1,300 MW in Maine) of proposed wind in the two areas.  Reliable access to the ISO-NE markets for Maine renewables will benefit all of New England.  Kudos to the Maine PUC for making the right decision.

National developments may have trumped Maine's concern for its own autonomy. The Order contains something of a call to arms, reflecting the growing concern within New England that federal electricity policy is biased toward midwestern wind and the giant transmission projects needed to bring that generation to market:

In order to fulfill our energy objectives, neither Maine nor our sister States in New England can act alone.  We in New England cannot ignore the reality that there are federal moves afoot to bring vast quantities of Midwest wind to the east coast through the construction of high voltage transmission that Maine will be required to help pay for.  A concerted and cohesive regional response by New England and its neighbors . . . will be required to thwart efforts at the national level to impose the costs of Midwest wind on New England ratepayers unilaterally.

Maine, at least for now, sees the importance of participating with rest of New England to respond to this challenge.  It remains to be seen whether New England will take up the PUC's call, though early signs are promising. 

* Pierce Atwood represented CMP throughout this proceeding.

Eliciting a Response

Current ISO-NE demand response (DR) programs are set to expire in one year (June 1, 2010) and ISO-NE has initiated a stakeholder process (pdf) to decide what comes next.  Key features of two of the DR programs currently offered by ISO-NE include: 

• Real-Time Price Response Program, under which participants may interrupt their power use when the forecast price of power reaches $100/MWh or more and the ISO lets participants know the eligibility period is open.  Participants are paid $100/MWh or the LMP at the time of their interruption, whichever is higher. 
• Day-Ahead Load Response Program, which allows participants to submit offers to interrupt power use along with submissions of supply offers in the day-ahead energy market.  Participants are paid the Day-Ahead LMP for the cleared interruptions, and real-time deviations are charged or credited at the Real-Time LMP.

In a recent FERC filing (pdf), ISO-NE noted that this stakeholder process touches on a variety of policy issues.  Many of these policy issues reflect the need to encourage demand response (making it economically advantageous to reduce power use at times of peak load and providing DR opportunities to all customer classes, for example) without distorting the market (by offering DR subsidies disproportionate to their actual benefits to transmission system reliability). 

Market-based capacity programs like those currently available at ISO-NE can inspire huge growth in DR, particularly in the wholesale and industrial customer classes.  According to ISO-NE, DR resources (mostly wholesale and industrial) in the region have gone from 100 MW to 2,500 MW since the inception of these programs.  Still, the FERC estimates (pdf at 33) there could be 41 GW of demand response available in the United States; if that estimate’s right, there should be a lot more to be found in New England, especially among customers who lack direct access to capacity programs, like residential customers.  The rapidly emerging SmartGrid standards will have a large impact on how DR programs are designed – and how much access various customer classes have to them.  Makes sense, then, that the most recent meeting of the ISO-NE Demand Resources Working Group was held jointly with the Demand Resources IT Infrastructure Working Group. 

ISO-NE intends (pdf) to file an updated report on this stakeholder process with the FERC by the end of July, 2009, detailing areas of consensus.  Any rule changes resulting from this discussion will be presented to stakeholders and filed with the FERC by the end of 2009.