News and Analysis
On August 20, PJM issued a “Capacity Performance Proposal” and invited stakeholder comments. The proposal defines a new capacity product, “Capacity Performance,” to address the reliability issues experienced during the winter of 2013/2014.
PJM’s proposal highlights four issues that contributed to the reliability issues in January 2014: 1) Record cold-weather peak electric demand; 2) Limited natural gas availability due to coincident peaking electric and natural gas demand; 3) No availability of warm-weather demand response (DR) capacity; and 4) Cold-weather related operations and maintenance (O&M) shortcomings at generation facilities.
PJM’s proposed Capacity Performance product creates incentives and penalties designed to promote reliable annual capacity resources to meet winter coincident peaks.
In comments submitted to PJM this week, the OMA Energy Group suggests a mismatch of annual products to winter-time reliability ignores several root issues: (1) Cold weather capacity resources are not organized by PJM, and (2) Electric and natural gas peaking are coincident.
The OMA Energy Group recommends to PJM:
- Pricing cold-weather coincident peaks into capacity markets
- Developing cold-weather capacity products, including cold-weather demand response and energy-efficiency
- Allowing combined heat and power (CHP) as an eligible capacity resource
This would allow PJM to procure winter reliability at the least cost to consumers, while simultaneously reducing stress on the natural gas network.
The next OMA CHP/WER/EE work group meeting is via webinar on Wednesday, September 17, from 10:00 – 11:30 a.m. The topic of the meeting is energy-efficient fan systems and dust collection. This session will cover fan energy-efficiency fundamentals, plus ”Top 10″ examples of fan efficiency and dust collection projects.
OMA members can participate in this energy work group led by OMA’s consulting energy engineering partner, Go Sustainable Energy LLC. Access the most up-to-date information, contacts, and opportunities in Ohio in the areas of combined heat and power (CHP), waste heat recovery (WER), and energy efficiency (EE).
A new report from a University of Michigan-led panel, “Shale Gas: A Game-Changer for U.S. Manufacturing,” recommends steps to make the American shale gas boom happen in a responsible manner and in a way that supports domestic manufacturing.
Those steps include increasing public trust of hydraulic fracturing, monitoring and reducing methane emissions, training a next-generation energy workforce, and using shale gas profits to advance renewable energy technologies, among other efforts.
The report summarizes and expands on the U-M-sponsored daylong conference held this spring in Washington, D.C. U-M faculty members, representatives from industry, environmental organizations and government agencies participated.
Mark Barteau, director of the U-M Energy Institute and one of the report authors said about the purpose of the study, “The U.S. lacks a strategic plan and a suite of economically, socially and environmentally viable policies to responsibly leverage the new abundance of low-cost natural gas as both a fuel and a feedstock for a variety of industries.”
On August 26 the Public Utilities Commission Ohio (PUCO) held a workshop to discuss proposed rules for implementing the provision of Senate Bill 310 that requires disclosure to customers via their bills of the costs associated with the renewable energy standards, energy efficiency standards, and peak demand reduction requirements.
At the workshop, parties discussed, among other issues, the calculation of the various costs, inclusion of gross vs. net costs, definitions of the various costs, and affording the utilities time to make bill format changes.
After the PUCO issues proposed rules, there will be an opportunity for parties to file comments. The OMA will participate in the process. The PUCO is required to adopt rules prior to January 1, 2015.
This week the Ohio Supreme Court unanimously upheld a PUCO order that determined how much Ohio Power Company (an AEP-Ohio company) could collect in fuel costs for providing electric generation service to customers in 2009. The PUCO order had originally limited the amount of fuel costs Ohio Power Company could collect from customers that chose to buy generation service from them rather than from an electric service provider.
Writing for the court, Chief Justice Maureen O’Connor noted that before 2009 the American Electric Power Companies – Ohio Power and Columbus Southern Power – were operating under a “rate stabilization plan.” The PUCO approved the rate stabilization plan in 2005, and it was in effect from 2006 through 2008. Under this plan, Ohio Power and Columbus Southern Power recovered their fuel costs though fixed rates that included automatic increases in 2007 and 2008. However, if the cost of fuel to the companies was more than the amount collected in rates, AEP bore the risk of any losses.
Here is more about the decision.
Duke Energy announced the sale of its Midwest merchant power business to Texas-based Dynegy for $2.8 billion in cash. The sale includes ownership of 11 power plants and Duke Energy Retail Sales, the company’s competitive retail business in Ohio.
Nine of the power plants are located in Ohio, one is in Illinois and one in Pennsylvania. Duke Energy Ohio, the regulated distribution utility, is not a part of the transaction.
Duke said it will focus on its regulated businesses. Meanwhile, Dynegy is counting on an improved wholesale market (higher prices) for its new generation.
The transaction continues the consolidation occurring in power markets.