FERC Agrees With CLF About the ISO’s Big Mistake, Not Counting Renewable Energy

Jan 12, 2015 by  | Bio |  Leave a Comment

On October 15, 2014, I posted a blog that explained that the ISO, the entity that operates New England’s electricity grid, had made a huge mistake in neglecting to use its own renewable energy forecast in deciding how much electricity to buy for the period 2018-2019.

On January 2, 2015, the Federal Energy Regulatory Commission, the governmental agency that regulates the ISO, issued an Order that agrees with CLF’s position, and tells the ISO to correct its big mistake when it decides how much electricity to buy for the following year, 2019–2020.

Here are the details of what happened. (If you find some of this discussion confusing, read my October blog first, because that explains many of these terms.)

On November 4, 2014, the ISO filed with FERC its projected figure for the Installed Capacity Requirement (ICR) for FCA-9 (that is, Forward Capacity Auction 9, to be held next month, February 2015, for the Capacity Commitment Period that runs from June 1, 2018, to May 31, 2019). CLF voted against the ISO’s figure in NEPOOL, the ISO’s legally mandated stakeholder group. CLF cast this negative vote specifically because that figure (34,189 MW) improperly failed to account for the ISO’s own forecast of renewable energy distributed generation that would be on the New England electricity grid during the relevant period, 2018–2019.

Significantly, a majority of NEPOOL members sided with CLF on this issue. The problem that both CLF and NEPOOL pointed out was that when the ISO calculates an ICR that totally ignores the ISO’s own distributed generation forecast, the resulting rates cannot, by definition, be “just and reasonable” within the meaning of the Federal Power Act, because the ISO is significantly over-procuring capacity.  This yields unjust rates in at least two separate ways. First, ratepayers are procuring extra capacity that they don’t need. Second, the auction clearing price is likely to be higher than it should be because the demand side of the equation is improperly exaggerated. So it is a double whammy: procuring too much of commodity and at a price that is artificially inflated.

FERC discusses this issue in paragraph 7, page 3, of its Order:

NEPOOL states that it does not support the ICR value because NEPOOL believes the ICR value should be reduced to account for distributed generation, especially solar photovoltaic resources, that is forecasted to be available during the 2018/2019 Capacity Commitment Period. According to NEPOOL, some participants contend that failure to reflect the amount of solar photovoltaic capacity in the ICR calculation will lead to over-procurement of capacity in the FCA.

Although the FERC Order does accept the ISO’s ICR filing for this auction, the Commission also tells the ISO to clean up its act before the ICR filing for the next auction, FCA-10. This is an important victory for renewable energy (and for common sense). The language I am referring to appears in paragraph 20, page 8, of the January 2 FERC Order:

[W]hile we are accepting ISO-NE’s proposed values for FCA 9, we expect ISO-NE to fully explore the incorporation of distributed generation into the ICR calculation in the stakeholder process. We expect ISO-NE to do this on a schedule that will allow these factors to be reflected, if determined appropriate, in the ICR calculation for FCA 10.

Over the coming year, CLF will use this language to push the ISO to correct its huge mistake for its next ICR filing in November 2015, for the next auction, FCA-10, to be held in February 2016. If the ISO does not listen to CLF – and to the overwhelming majority of NEPOOL members – on this issue, there is the very real possibility that next time FERC will reject the ISO’s flawed ICR calculation.

Mapping the Road to a Low-Carbon Future for the Northeast

Dec 23, 2014 by  | Bio |  1 Comment »

“All you need is the plan, the road map, and the courage to press on to your destination.”
–Radio legend Earl Nightingale (1921-1989)

How do we, efficiently and effectively, complete the transition from an energy system rooted in fossil-fuel generation to a much-needed clean energy system for our region? As participants in last week’s Lessons for a Climate & Energy Roadmap 2050 Process for the Northeastern US learned, it takes courage to embark on the collective journey to a low-carbon future, and it helps to bring a map.

Hosted by CLF, CLF Ventures, and The Fletcher School of Law and Diplomacy’s Center for International Environment & Resource Policy, and sponsored by The Oak Foundation and German Consulate General of Boston, the December 16 event at Tufts University brought together business and government leaders and environmental advocates from the Northeast with their counterparts from Germany and the European Union (EU), Canada, California, and beyond. The goal: explore how the EU’s experience pursuing renewable energy, energy efficiency, and climate protection policies and targets could offer lessons for our region’s clean energy and climate transition.

The Northeast Roadmap 2050 event drew inspiration from the EU Roadmap 2050 process, which convened key stakeholders to shape a shared vision for reducing greenhouse gas (GHG) emissions in the EU at least 80% below 1990 levels by 2050. Here in the northeast US/New England, we have a very similar opportunity. The New England states and New York, along with the Eastern Canadian provinces, have adopted climate goals and mandates that mirror the EU mandate. We have a core of business leaders that can be mobilized, and a number of key energy players here are the same companies that sat at the table for the EU Roadmap 2050 process. Though the questions underlying a similar planning process for the Northeast are simple, the challenges are anything but: Can the leaders of our region articulate the vision of a sane energy transition that leaders and decision-makers in Washington have not? If so, how do we achieve essential buy-in from key regional decision makers, like executives and regulators, to move from a shared vision to an implementable course of action?

During the daylong event, participants joined in person and over videoconference to begin to build a foundation of shared knowledge upon which a Roadmap 2050 process can be built for the Northeast. Among the day’s highlights:

  • Tufts emeritus professor of international environmental policy and lead author on several Intergovernmental Panel on Climate Change (IPCC) reports William Moomaw urged participants to accelerate the transition to renewable energy sources and emphasized that such a transformation is essential.
  • Mike Hogan, Senior Advisor to the Regulatory Assistance Project, shared several key lessons learned from the EU Roadmap 2050 process, including:
    • Derive legitimacy from a very broad base of stakeholder participants, including industry, governments, NGOs, governments, and technical experts.
    • Start from a point of broad consensus about the destination. Participants don’t need to agree on how to get there or even if they can get there, as long as they agree on the destination.
    • Focus on shifting the public narrative about what makes sense and re-defining the “middle ground.”
    • Keep everything on the table and take nothing for granted (except the destination).
    • 90 percent of the success of the Roadmap process is just getting people to sit in the room and stay in the room to work together on the process.
  • Dr. Patrick Graichen, Executive Director of Agora Energiewende, a German energy think tank, and Graham Weale, Chief Economist, RWE AG, a leading European utility, presented insights from Germany’s energy transition (Energiewende) and from the German energy industry, including the key role of wind and solar energy, and the importance of building both supply- and demand-side flexibility and strong market mechanisms into a low-carbon energy system.
  • V. John White, Executive Director, Center for Energy Efficiency & Renewable Technologies, offered insights from the ongoing California 2030 Low Carbon Grid Study. Among the Phase I findings:
    • The importance of balancing California’s energy portfolio both technologically and geographically;
    • The need to modernize California’s currently inefficient gas fleet and use gas differently;
    • The increased role of bulk storage and demand response to shift energy demand to different parts of the day and reduce demand on the overall system;
    • The emerging need for California to take a more regional approach to its energy grid.
  • Michael Jasanis (HotZero, LLC and former CEO of National Grid USA),Phil Giudice, CEO and President of Ambri, and Cindy Arcate, CEO and President of PowerOptions, contributed the perspectives of Northeast utility and energy industry leaders.

From the wide range of opinions and insights shared over the course of the day, participants were left with a sense of urgency to accelerate a clean energy transition for the Northeast as well as many questions that remain to be explored. Next steps? Participants expressed interest in a second, follow-up convening that will likely be planned for early 2015, hosted by an organization that can provide a supportive yet outcome-neutral role in advancing a Northeast Roadmap 2050 stakeholder process. Once the process is underway, the group will develop a framework for the multi-sector analysis and modeling work needed to create a powerful vision that will shape governmental and business decision making and that will be owned by a broad and deep regional stakeholder group.

Exciting News on Renewables in New England

Dec 19, 2014 by  | Bio |  3 Comment »

The ISO’s on-going effort to integrate renewable energy into the New England power grid is not only on track but is accelerating. ISO-New England is the FERC-licensed entity that runs the New England power grid.

Specifically, two distinct but related changes are under way right now. First, on December 3, the ISO – for the first time in history – introduced negative price offers into New England’s wholesale electricity markets. You can read about what that means, and why it is so important for renewable energy, in my previous blog post, here. The second change is that the ISO is on a trajectory to make variable output renewable sources (like wind and solar) fully dispatchable in New England’s real time wholesale electricity market. You can read about what this means here.

One more piece of information – about the ISO’s tariff – is crucial to understanding how these two related phenomena are going to radically change New England wholesale electricity markets for the better. The ISO’s tariff is the document that sets out – in exquisite detail – the rules and procedures that govern New England’s electricity markets. The tariff itself runs to 395 pages, and that is without Appendices A through K that add hundreds more pages.

Here is the crucial point: Under the ISO’s tariff, only generation resources that are fully dispatchable get to set the clearing price for electricity. That clearing price, which can be different for every hour of the day, is the price that every generator on the system receives for its electricity output during the relevant hour. Now that renewables are being made fully dispatchable, renewable resources (like wind) will, for the first time in New England history, be able to set the clearing price for electricity. And that is happening at the same time as the ISO is introducing negative pricing!

Because I have the honor of representing CLF on several ISO committees, I have had a close-up view of this process actually working; it is really exciting. At an ISO meeting earlier this month, we went through a line-by-line and word-by-word review of the actual changes in the ISO’s tariff that will make wind and run-of-river hydro power fully dispatchable. ISO will decide on the final tariff language in January, and plans to file the tariff changes with FERC in February. Wind and hydro should be be fully dispatchable in the New England electricity market in late 2015; and the ISO plans to make other renewables, like solar, fully dispatchable by 2018.

And, as I said above, negative prices became possible on December 3. In fact just over a week later, on Thursday, December 11, the wholesale price of electricity in New England dropped to minus $151.73 during one hour of the ISO’s “Operating Day.” Today (December 19) we had a clearing price of zero for an hour this morning, and then the clearing price dropped to minus-$47.67. Negative wholesale electricity prices in New England are not merely a theoretical possibility; they have been happening this month.

Needless to say, owners of conventional, fossil-fueled generating plants are very unhappy about these changes. As I explained in my previous blogs, most clearing prices are set by fuel costs. Because renewable generators have no fuel costs (sunshine and wind is free), it is renewable generators that are most likely to make negative-price bids in electricity markets. But when renewable generators set the clearing price at below zero, that is the clearing price for that hour for all generators (including the fossil-fuel generators which do have fuel costs)!

The old pricing paradigm for electricity changing – and it is renewable energy that is forcing the change. Fossil fuel (and nuclear) generators are not happy about it, because clearing prices below zero will undermine (and may eventually destroy) their entire business model. To its credit, the ISO is moving ahead with the changes, despite the manifest unhappiness of the fossil-fuel industry.

It is very, very cool to see intermittent renewables being made fully dispatchable, able to set prices, and getting integrated like this into the region’s wholesale energy markets. In the past, environmentalists frequently heard the argument that, sure, renewables have some environmental benefits, but they are just too darned expensive. At some time in the foreseeable future, renewables are going to be setting (very low) prices in the wholesale electricity markets, and suddenly everyone will perceive them differently. In the future, we may see renewable energy being extolled for its low prices and direct benefits to ratepayers.


Coming Clean: Strengthening EPA’s Clean Power Plan

Dec 4, 2014 by  | Bio |  Leave a Comment

Even if it’s hard for our brains to accept, we all know the impacts to come from climate change if we don’t significantly reduce greenhouse gas emissions now and throughout the century: food insecurity, species extinction, and dramatically severe weather events. If that news isn’t sobering enough, we’ll also face a rapidly decreasing ability to adapt to these impacts by the year 2100. In spite of these dire predictions, the fact remains that there are actions that we can and must take to have a chance of slowing the effects of climate change and avoiding the most devastating impacts.

The Environmental Protection Agency (EPA) is currently proposing one of these necessary actions with the Clean Power Plan, a rule intended to reduce greenhouse gas emissions from existing power plants that burn fossil fuels. Under the Plan, EPA will lay out the best system of emissions reduction and each state will devise a program to meet those required reductions.

Even before its Monday deadline, EPA had received more than 21,000 comments from interested stakeholders. Given the complexity of the rule and the many interested parties weighing in, CLF submitted a brief, targeted letter highlighting a couple of crucial areas where the Plan should be strengthened to be truly effective. We asked for:

  • a more accurate assessment of the cost-effectiveness of renewable energy sources, energy efficiency, and demand response against which to measure fossil fuel–burning plants, and
  • measures related to natural gas (including regulation of methane emissions from its production, transmission, and distribution).

Without a better strategy for dealing with these two issues, the Plan could backfire and end up fostering powerful economic incentives to simply substitute one polluting fossil fuel for another in our energy system.

Finalizing a strengthened Clean Power Plan would be a step toward fulfilling our country’s responsibility to ourselves and the rest of the world to mitigate climate change. But it’s only one step. Even as we all wait for meaningful federal action on climate change, CLF is continuing to lead crucial efforts to curb harmful greenhouse gas emissions at the state and regional level through smart economic and environmental policy.

Why Is Hydro-Québec So Intent on Overselling Its Hydropower?, Part II

Oct 24, 2014 by  | Bio |  Leave a Comment

CLF has been asking questions about the carbon footprint of large-scale Canadian hydropower since before the Northern Pass project’s inception. I recently raised our concerns in my list of three ugly numbers behind the regional push for more hydropower imports, pointing out that, in the first decade after flooding, greenhouse gas pollution from new hydropower reservoirs can produce 70% as much greenhouse gas pollution as natural gas power plants, according to Hydro-Québec’s own science.

As with our number on new hydropower costs, Hydro-Québec took exception in a press release, asserting that CLF does not understand the science. We obviously disagree. In this post, the second in a series of three, I will break down what Hydro-Québec’s defense of its product gets wrong—on the climate benefits of its hydropower. This will be a deep dive, especially because Hydro-Québec’s press release is so profoundly misleading.


Aurora Borealis over Gouin Reservoir, Québec (photo credit: flickr/-AX-)

Why CLF Cares About Hydropower’s Carbon Footprint

Why is this issue important at all? As our region considers massive new infrastructure to import more hydropower, we need to have a full, honest accounting of the real impacts—on both sides of the border. Greenhouse gas pollution and climate change know no international boundaries, and New England is ultimately responsible for the carbon pollution attributable to its power use.

Getting credible estimates of the climate effects of new imports is especially important because virtually every proponent of new hydropower imports touts reduced emissions as a dominant reason to pursue them. Likewise, federal law and some state statutes require accurate assessments of what new imports of hydropower will mean for New England’s greenhouse gas emissions and how we achieve our short-term and long-term climate goals. To the extent new imports are in the region’s future, something CLF could support with the right conditions, we need honest numbers.

Given that hydropower projects do not have smoke stacks, when I say “carbon pollution” or “greenhouse gas emissions” from hydropower, what do I mean? Reservoirs behind new dams inundate vast geographic areas. For example, the Eastmain reservoir in the James Bay region is roughly 600 square kilometers, or more than three Lake Winnipesaukees. Drowned vegetation and biological material decompose over time and release carbon dioxide and methane into the water column and then into the atmosphere. In addition, the flooding destroys northern forested landscapes that can be potent carbon sinks (and are often called “lungs of the planet”), increasing the net greenhouse gas emissions of the reservoir by the amount of any lost capability to sequester carbon.

The key question is how much net greenhouse gas pollution a reservoir produces for its power output over time. To assess the climate effects of new imports of hydropower, pollution from the facilities supplying the power can be compared with the emissions of displaced power here in New England.

It’s also important to understand the effects in the province supplying the power and in neighboring regions, like New York or Ontario. If Canadian hydropower is merely shifted from those markets to ours and the gap is filled by fossil fuel power plants, the imports won’t reduce greenhouse gas emissions overall.

What Hydro-Québec Gets Wrong About Its Own Research

In its press release, Hydro-Québec says that “CLF asserts that hydropower greenhouse gas (GHG) emissions are much higher than they actually are … by cherry-picking data contained in a scientific study on emissions from a recently created reservoir in Québec…. What that study really indicates is that hydropower is one of the lowest-emission generating options per kilowatthour produced.”

Here again, as with hydropower costs, Hydro-Québec misstates CLF’s point. The number I cited does not pretend to describe all hydropower, or even all Hydro-Québec hydropower.

The 70% number clearly and expressly describes the emissions from a new large-scale hydropower facility during the first ten years of operation. It is taken directly from peer-reviewed scientific analysis by Hydro-Québec and academic researchers of data collected at the Eastmain 1 reservoir, a new hydropower facility in northern Québec. My blog post includes the relevant graph, presented in a scientific paper that a Hydro-Québec scientist co-authored, showing a direct comparison of these emissions with natural gas and supporting CLF’s statement that a new large-scale hydropower facility can emit 70% of the greenhouse gases of natural gas power plants in the decade following development.

A 100-year life-cycle analysis shows lower long-term emissions, but in a world where climate change is accelerating and we desperately need to reduce emissions now, the early emissions of Hydro-Quebec’s new facilities—several of which are under construction and slated for development in the coming few years—are vitally important. Moreover, it is these new facilities that Hydro-Québec intends to rely on to support new exports to the United States, likely making their carbon footprint more relevant to New England’s current decisions to increase imports than the footprints of existing reservoirs that are supplying Québec customers.

It is worth noting that the 100-year emissions described in the research are much higher than the numbers that Hydro-Quebec’s press release implies that the study confirms. The paper says that 100-year emissions are 40% of the emissions of natural gas power plants, about ten times more than the factor Hydro-Québec quotes and much higher than solar and wind power, which emit no pollution once installed.

While Hydro-Québec says CLF is “cherry-picking” a data point from its research, it ignores that the data point is a key finding of what is now seminal research, which Hydro-Quebec touts on its website as the first time ever that researchers have measured the emissions of a landscape developed for hydropower both before and after flooding:

Project EM-1 is a world first, since this is the first time that GHG emissions are measured before and after the creation of a hydroelectric reservoir. This will make it possible to precisely identify the impact hydroelectric reservoirs have on greenhouse gases.

Despite its billing, Hydro-Québec’s Eastmain research does not provide a full picture. In particular, there are many important differences between hydropower facilities in Québec, and the differences’ effects on reservoir emissions haven’t been fully researched.

For example, Hydro-Québec’s new dams along the Romaine River, now under construction, are creating somewhat smaller reservoirs than Eastmain (collectively, only one and a half Lake Winnipesaukees), suggesting that they might produce less net pollution. However, the flooded landscape along the Romaine and the flooded landscape at Eastmain are quite different. Hydro-Québec’s research at Eastmain suggests that the flooded landscape wasn’t a carbon sink prior to reservoir construction, whereas the landscape along the Romaine is more heavily forested and could provide much more vegetation that will decompose over time as well as a greater value as a carbon sink, which is now being lost.

And of course, the project’s emissions rate depends on how much power the reservoir produces. A vast reservoir that produces a relatively small number of megawatts of power will likely have a higher emissions rate than a smaller reservoir in the same landscape that produces a higher number of megawatts. That’s why true “run-of-river” hydropower facilities, which are powered by the flows in existing rivers and do not require enormous dams or flooding, are much lower carbon resources than large-scale hydropower.

Hydro-Québec’s Faulty Math

So why is Hydro-Québec so upset with CLF’s characterization of the utility’s own groundbreaking research? The core of Hydro-Québec’s disagreement with CLF is this: the utility likes to cite a greenhouse gas emission rate (pollution per unit of energy generated) that assumes its Eastmain reservoir alone powers two generation stations (meaning that the emission rate equals the reservoir’s emissions divided by the output of both stations). When the utility is in charge of the presentation, it highlights this number, which reflects a steep drop in the emission rate after the newer generation station came online by early 2012. The peer-reviewed version of the research, published in 2012, refuses to make that assumption and leaves out the newer generation station from the reservoir’s power output. Why?

The new station (Eastmain 1-A) was constructed to include flows made possible and channeled to the Eastmain reservoir by Hydro-Québec’s massive project to divert the Rupert River. That means that the net effects of the landscape changes associated with the diversion project are key to understanding the emissions of the Eastmain complex as a whole. A major element of the diversion project was the creation of two diversion bays totaling about 350 square kilometers, or the flooding of about two additional Lake Winnepauskees. While Hydro-Québec’s favored number assumes that this flooding has no net effect on emissions, the peer-reviewed research says the effects are unknown and therefore does not include the power from Eastmain 1-A in its calculation of the Eastmain emission rate.

That leaves us with the table from the peer-reviewed paper itself, which is where CLF got its number. We are also informed by the thorough research summary from Synapse Energy Economics on this topic that CLF released more than two years ago, which shows that new hydropower facilities have significantly higher emissions than have been assumed and advertised.

CLF has attempted to engage Hydro-Québec in a serious dialogue on this issue. While there have been several interactions—like this one on our blog after CLF released the Synapse report—we have yet to see anything that meaningfully addresses CLF’s concerns or corrects its misleading public relations campaign.

The Need for Honest Numbers

If this all seems complicated to you, you’re right. The research on hydropower emissions is not complete, and it is probably fair to assume there is significant variation from reservoir to reservoir. Some likely have a larger carbon footprint than Eastmain and some smaller; some are decades old, with relatively low emissions going forward, and others are newer, with a larger carbon footprint now and in the near term.

For many years, policymakers and large-scale hydropower boosters have assumed this complexity away. Hydropower emissions were either presumed to be zero or were pegged at a level based on extrapolations from simple measurements of greenhouse gas emissions from reservoir surfaces, including reservoirs flooded many decades ago. In many cases, including in Canada’s inventory of greenhouse gas emissions, a single miniscule emissions figure is used to characterize all large-scale hydropower facilities. These assumptions are at work in Hydro-Québec’s press release, including in its comparisons to other power sources and its statements about avoided emissions from its energy sales.

We know now that the old simplifying assumptions can be way off, which is one reason why CLF and others have identified a need to “tag” the energy from individual power facilities in Québec that are used for exports to the United States and define, with at least some reasonable approximation, the energy’s source and its environmental attributes and emissions profile.

The developers of the Northern Pass transmission project and Hydro-Québec are continuing their campaign to gloss over the very real greenhouse gas pollution that hydropower projects create. Despite Hydro-Québec’s own research, they are advertising numbers and slogans that inaccurately minimize reservoir carbon footprints or deny the pollution even exists. Unfortunately, it’s also the case that many New England policymakers and the federal officials reviewing Northern Pass’s permit application appear thoroughly disinterested in getting to the bottom of what Canadian hydropower projects really mean for the climate or in insisting on an accurate accounting from Hydro-Québec. For example, we have not received a single substantive response to our August 2013 request that the states meaningfully assess this issue as part of their regional efforts around hydropower imports.

As with the costs of Canadian hydropower, New England deserves honest information about the emissions of the product that Hydro-Québec wants to sell us. Instead of impugning CLF for raising questions, Hydro-Québec and American transmission developers like Northern Pass that want to bring New England its power should start offering New England the basic respect of fair dealing and real numbers.

Coming next in this series, what Hydro-Québec’s defense of its product gets wrong—on the reliability benefits of new imports for the New England electric grid.

The ISO’s Big Mistake: Not Counting Renewable Energy

Oct 15, 2014 by  | Bio |  Leave a Comment

On October 3, 2014, the New England Power Pool (NEPOOL) voted overwhelmingly not to support the ISO’s forecast of New England electricity load for an upcoming year.  CLF is a member of NEPOOL, and strongly supported the NEPOOL action.  NEPOOL’s action is both very important and very surprising, but the story is complicated and requires a bit of explanation.

What is the ISO?

“ISO” is the acronym for the Independent System Operator-New England.  For background, you can read more about why CLF works with ISO.

In a nutshell, ISO is the entity that is responsible for keeping the lights on in New England.  ISO operates under the Federal Power Act, and is regulated by the Federal Energy Regulatory Commission (FERC).  ISO has an annual budget of around $178 million (raised from electricity tariffs), has hundreds of staff people, and is based in Holyoke, Massachusetts.

As it says on its website, ISO does three things.  First, it runs the entire electricity grid in New England in real time by turning on and off (and ramping up and down) nearly every electricity generator in New England.  Second, it runs the New England wholesale electricity markets; this sets the price(s) for electricity that all ratepayers will pay.  Third, ISO does future planning, so that the electricity grid here in New England will remain reliable for years into the future.

NEPOOL’s action on October 3 relates to the third of these functions – system planning for future reliability.  Specifically, NEPOOL rejected ISO’s estimate of New England electricity load (the total amount of electricity needed) for the year beginning June 1, 2018 (and running until May 31, 2019).  NEPOOL took this action for only one reason:  the ISO’s total, inexcusable failure to take renewable energy distributed generation into account in calculating its load forecast.

In two recent blog posts, I wrote about how ISO is working to integrate renewable energy into New England’s grid, here and here.

What is NEPOOL?

NEPOOL is the official stakeholder group associated with ISO.  By “official,” I mean is that ISO is legally obligated to consult formally with NEPOOL members before taking any major, new action, and NEPOOL members (like CLF) have a legal right to challenge ISO actions before FERC.

What is a “Forward Capacity Auction” – and Why Does It Matter?

Once a year, ISO holds what it calls a “Forward Capacity Auction” (FCA) for a one-year period of time three years in the future.  The purpose of these FCAs is to ensure that there will be adequate supplies of electricity (that is, enough power generators) in the region to meet the expected load.  ISO’s ninth FCA (called, appropriately enough, FCA-9) is going to be held in February 2015.  And, as I said above, in FCA-9, ISO wants to buy enough electricity to meet New England’s expected load for the year starting on June 1, 2018.  The technical term that ISO uses to describe what it wants to buy in these FCAs is “Installed Capacity Requirement” (ICR).  Don’t be frightened by the name or the acronym:  the ICR is the quantity of electricity generation (“capacity”) that is needed (“requirement”) to meet the expected load (electricity usage) during the relevant period.

The results of these Forward Capacity Auctions matter because a lot of money is involved.  Based on the clearing prices of the eight prior FCAs that ISO has conducted, we can expect FCA-9 to cost New England electricity ratepayers anywhere from $800 million to $2.2 billion!

What Happened on October 3 – and Why Does It Matter?

ISO is legally obligated to present its ICR prediction (how much electricity capacity it plans to purchase) to NEPOOL, and ISO did that on October 3.  ISO’s ICR prediction was 34,189 Megawatts (MW).  In other words, in the upcoming February 2015 Forward Capacity Auction, ISO wants to buy 34,189 MW of electricity, which ISO predicts will be enough future generating capacity (from enough individual generators) to meet all of New England’s electricity needs (“load”) for the period June 1, 2018 to May 31, 2019.

That purchase will cost New England ratepayers anywhere from hundred of millions to billions of dollars.

On October 3, NEPOOL resoundingly rejected ISO’s ICR forecast.  NEPOOL did so for one reason and one reason only:  ISO completely failed to take into account renewable energy Distributed Generation (DG) in its ICR forecast.

All the New England states have incentive programs of one type or another to encourage the growth of renewable energy.  As a result there has been phenomenal growth of renewable energy in New England for several years.  ISO has itself worked hard to forecast the anticipated growth of renewable DG over the next decade, and CLF has been an active member of ISO’s DG Forecast Working Group.

Nevertheless, when ISO calculated the ICR (amount of electricity capacity to buy) in the upcoming Forward Capacity Auction, ISO completely ignored its own forecast of how much renewable DG was getting built.  As a direct result of this failure, NEPOOL voted overwhelmingly to reject ISO’s forecast.

ISO’s Big Mistake

ISO’s big mistake was not accounting for renewable DG when it projected how much electricity to buy in the next Forward Capacity Auction.  ISO’s big mistake is important on several levels.

First, and most directly, ISO’s big mistake will cost ratepayers a lot of money.  For every 100 MW of renewable DG that ISO failed to count, New England ratepayers will overpay $200 million in the upcoming February 2015 FCA.  And ISO’s own estimate (which CLF believes is overly conservative) is that there will be hundreds of megawatts of renewable DG in New England during the relevant period (2018-2019).

Environmentalists promote renewable energy, in part, by citing the cost savings that can accrue from having renewables on the electricity grid.  Everyone knows that renewable energy costs money, but there can also be cost savings to ratepayers from having renewable energy on the electricity grid.  However, ratepayers reap those saving if – and only if! –  ISO accounts for that renewable energy in calculating its ICR.

By not accounting for the renewable DG that is actually on the electricity grid, ISO is forcing ratepayers to pay hundreds of millions of dollars for electricity that they don’t actually need.

There is another reason why ISO’s big mistake is important.  CLF is working hard to close down each and every one of the few remaining coal-fired power plants in New England.  When the ISO over-estimates how much electricity is needed in New England, it makes it harder to shut down dirty, old coal-fired power plants – because it makes it seem that those plants are needed to keep the lights on.

The Predictable Backlash

Immediately after the October 3 NEPOOL meeting, CLF wrote to the ISO to protest the ISO’s big mistake.  (The letter has some technical terms and acronyms in it, but now that you have read this blog you’ll be able to understand those terms!)

And CLF was not the only one to protest. The New England States Committee on Electricity (NESCOE) issued a statement also.

As CLF’s letter points out (page 2, paragraph 2) it is only a matter of time until one or more NEPOOL participants brings a legal challenge before FERC of the ISO’s big mistake.  The Federal Power Act – that governs the ISO, FERC, and all U.S. electricity markets – requires that all electricity rates be “just and reasonable.”  Overcharging ratepayers by hundreds of millions of dollars by ignoring the benefits of renewable energy is not just and reasonable.

Summing It Up

First, renewable energy in New England is here to stay.

Second, the reason renewable energy is here to stay is that each New England state has put into place financial and other incentives for renewable energy.

Third, ISO is just wrong to ignore its own forecast of renewable energy development when deciding how much electricity capacity to buy for the future.

Fourth, ISO’s big mistake costs ratepayers hundreds of millions of dollars.

Fifth, ISO’s big mistake makes it harder to close down dirty, polluting coal-fired power plants.

Sixth, the ISO’s big mistake is legally unsupportable if it is challenged before FERC.  And it is just a matter of time until that happens.

Why Is Hydro-Québec So Intent on Overselling Its Hydropower?, Part I

Oct 14, 2014 by  | Bio |  1 Comment »

For years, Hydro-Québec—the provincially-owned Canadian utility and financial sponsor of the Northern Pass transmission project—has oversold the benefits and downplayed the costs of its large-scale hydropower. This campaign to confuse is profoundly frustrating: new imports from the north will likely be a part of our region’s energy future, and we need honesty, clarity, and integrity from our northern neighbors before we expand New England’s reliance on Canadian hydropower.

Hydro-Québec’s latest gambit: an egregiously misleading press release, directly responding to my post and op-eds on three ugly numbers that lead CLF to concerns about imported hydropower’s price, environmental benefits, and winter reliability. In its release, Hydro-Québec accuses CLF of disseminating “erroneous” information, yet can’t identify a single error in our numbers.

In this post, the first in a series of three, I will break down what Hydro-Québec’s defense of its product gets wrong—on the price of its hydropower.


In July, CLF identified 15.2 cents per kilowatt-hour as the cost of electricity from new Hydro-Québec dams in northeastern Québec, including the costs of the dams and the transmission lines to get their power to southern New England. This is much more than the cost of new land-based wind power or of our cheapest resource—energy efficiency. The cost also has an uncomfortable similarity to this winter’s high electric prices, which is far above the annual average cost New England customers pay.

Tellingly, Hydro-Québec has no public price, or even range of prices, for the product it is offering, saying merely that its price will be “competitive.” But Hydro-Québec disagrees with CLF’s estimate:

CLF claims that the generation and delivery of Hydro-Québec hydropower to the New England market will cost New England an additional $800 million each year, and that the cost of Hydro-Québec electricity would be 15.2¢. [emphasis added] However, it is impossible for CLF to estimate any supplier’s cost or bid price because of the complexity and risk of the marketplace and because energy infrastructure is highly site-specific. This is especially true for a supplier like Hydro-Québec which is connected to four North American electricity markets…. Like other suppliers, Hydro-Québec would establish its bid price based on a range of factors in the New England and neighboring energy marketplaces.

Our calculation was quite specific—the costs, published by Hydro-Québec and Northern Pass developer Northeast Utilities themselves in regulatory filings, of generating and delivering power from Hydro-Québec’s new Romaine River facilities to New England, including the costs of transmission lines north of the border and an American transmission project like Northern Pass. The sources of every element of the calculation were provided on the second page of our fact sheet.


Click on the image for CLF’s full fact sheet on the potential costs of new imports from new hydropower projects in Québec

Our numbers were not, as Hydro-Québec claims, CLF’s estimate of the cost of all “Hydro-Québec electricity,” nor was CLF saying that New England “will” pay $800 million of excess costs if we buy more Hydro-Québec hydropower. Indeed, Hydro-Québec now sells its power to New England over existing lines for market prices—mostly in the regional wholesale market with some energy going to Vermont under a long-term contract that tracks the market. That means CLF’s number doesn’t speak to the potentially lower-cost options for importing more or firmer power from existing hydropower facilities over existing power lines, alternatives CLF has highlighted before.

Most importantly, Hydro-Québec did not dispute the details of CLF’s calculations, which present a plausible picture of the high costs of new hydropower facilities and long-distance transmission lines that New England could pay if that combination is what Hydro-Québec is offering.

But what is it that Hydro-Québec is offering, exactly?

While we do not know for sure, we have a pretty good idea. Building new dams and stepping up exports in tandem are fundamental to Hydro-Québec’s most recent strategic plan. At every opportunity, Hydro-Québec and other hydropower boosters like Northern Pass sponsor Northeast Utilities have cited the abundance of future resources as contributing to Hydro-Québec’s capability to export additional power to the northeastern United States. In fact, Northeast Utilities’ claimed environmental benefits for Northern Pass itself are premised on the availability of power from incremental additions to Hydro-Québec’s dam system over the coming years.

With Northern Pass on the table and new dams rising on the Romaine River as part of Hydro-Québec’s strategy to expand its exports, it’s realistic to expect that, if Hydro-Québec incurs the costs of building these facilities, it will want to recover those costs, with a healthy return. And it is unlikely that the utility will try to recover all of these costs from its domestic customers in Québec, who buy most of the power from the utility’s existing hydropower facilities (and its extraordinarily favorable contract with the Churchill Falls project in Newfoundland/Labrador) and pay a much lower rate than New England electric customers. We also know that Northern Pass partner and New Hampshire electric utility PSNH has been trying to negotiate a power purchase agreement with Hydro-Québec, without success, for about five years; Hydro-Québec clearly hasn’t yet offered a price that PSNH would feel comfortable touting as a bargain that would provide meaningful economic benefits to New Hampshire.

CLF is not alone in raising concerns about the cost of Canadian hydropower; Sue Tierney of the Analysis Group made these very same points in an April white paper (written for the trade association for New England-based power plants). From CLF’s perspective, the burden of proof is on Hydro-Québec, its Canadian hydropower competitors like Nalcor, and the American transmission developers that seek to bring hydropower south; outdated studies and generic assurances of “low cost power” or “competitive” prices aren’t enough.

Before New England spends billions buying vast quantities of anything (and building the transmission projects to carry it), we need a much better understanding of what would be sold to us, at what price and on what terms. Until then, CLF’s calculations counsel greater skepticism and scrutiny of the supposed economic benefit of new hydropower imports.

Coming next in this series: why Hydro-Québec’s defense of its greenhouse gas emissions falls flat.

Holyoke’s Coal-Fired Mt. Tom Power Plant Announces Formal Shutdown Date

Sep 24, 2014 by  | Bio |  1 Comment »

Mt. Tom’s owners announced this summer that they would retire the 54-year-old coal plant, and yesterday, GDF Suez filed the official request with the electric system operator to retire this last Massachusetts coal-fired power plant by June 2018. This is great news for the residents who have breathed the pollution from Mt. Tom since it first began operation in 1960. This follows the recent announcement by Somerset’s Brayton Point, the largest coal-fired power plant in New England, that it will retire by June 2017, and the final shutdown of Salem Harbor Station earlier this year.

This request to retire, if approved, will obligate Mt. Tom’s owners to retire the facility permanently, and marks the formal finish for coal in Massachusetts. Conservation Law Foundation has been fighting for decades to reveal the dismal economics of coal and to support an effective transition to sustainable clean energy in New England. This announcement comes only a year after Mt. Tom’s owners were required to install new monitors to measure soot from the facility as the result of a 2011 call by CLF for enforcement of more than 2,500 Clean Air Act violations at the facility.

Holyoke is better prepared than most communities for this retirement because of the work of a local coalition, Action for a Healthy Holyoke, and the statewide Coal Free Massachusetts coalition. These groups, along with CLF, have been working to create a better future for Holyoke for years, and, as a result, the City has been evaluating potential impacts of retirement and potential re-use options for more than two years. Recent legislation will help them further that work with a formal re-use study supported by the Massachusetts Clean Energy Center.

Renewable energy is on the horizon for Holyoke. Earlier this year, based on CLF’s coal pant retirement work in Salem and Somerset, CLF garnered an important commitment from the Executive Office of Energy and Environmental Affairs to direct the Department of Energy Resources (DOER) to offer host communities, like Holyoke, up to $2 million to develop a clean energy strategy, including the construction of a renewable energy project within the community. Thanks to that commitment, Holyoke will have the opportunity to work with DOER to move toward cleaner energy either on the site of the retired plant or elsewhere within the community.

CLF will work to ensure that Mt. Tom’s request to retire permanently is approved in the coming months to create an opportunity for new resources to come on-line, and will continue to work to build a clean and sustainable energy future for New England.

Working with the ISO to Integrate Renewable Energy in New England

Sep 15, 2014 by  | Bio |  3 Comment »

The ISO is the organization that operates the New England-wide electricity grid and runs New England’s wholesale electricity markets.

You can read more about what the ISO is, and why CLF works on ISO committees and working groups.

I have written before about CLF’s work with the ISO. You can read those prior blog posts here, here, and here.

As I have said before, CLF is one of the very few environmental organizations to work with the ISO, and no other environmental organization is as heavily engaged in the ISO as CLF is.

A few days ago, I wrote about one of the major criticisms of renewable energy – that it is too expensive – and how changes that CLF is seeing at the ISO are, even now, making that argument a thing of the past. Today I want to describe another frequently heard criticism of renewable energy, that it is not always available and so it cannot be relied upon like fossil-fuel generation can.

We renewable energy advocates hear that argument a lot. For example, the nationally prominent, anti-renewable-energy Heritage Foundation wrote on May 5, 2010:

Wind, like solar energy, is not a dispatchable power source; that is, it cannot be turned on at will. As a result, increasing dependence on wind adds variability and uncertainty to the power grid that must be offset by quick-ramping power sources like natural gas turbines to maintain a relatively constant flow of electricity.

When the Heritage Foundation discusses an electricity source being “dispatchable,” it means both being turned on and off at will, and being able to increase or decrease its electricity output at will. Here in New England, the ISO, which runs our electricity grid, “dispatches” every electricity generator in the region. The ISO tells those generators when to run and when not to run; and it tells them exactly how much electricity to churn out. This is essential to maintaining the reliability of the electricity grid, because the aggregate supply produced by all the generators in the region has to be exactly equal to the aggregate demand of tens of millions of customers every minute of every hour of every day of the year.

What the Heritage Foundation means to say here is that the wind does not always blow and the sun does not always shine. For these reasons, up until now, renewable energy has not been a dispatchable power source.

But here is the really cool news from the ISO: the ISO is now on an irreversible track to make intermittent renewable energy sources like wind fully dispatchable in the New England power grid. In fact, the ISO expects to have wind fully dispatchable in New England by late 2015 or early 2016!

According to the ISO, there are three requirements, or prerequisites, for making wind (and, eventually, other intermittent renewable energy sources) fully dispatchable.

The first requirement is that the wind farms, wherever they are located, be in constant electronic communication with the ISO’s control room in Holyoke, Massachusetts. The ISO refers to this requirement as “telemetry.” The telemetry between wind farms and the ISO control room is already in place; it exists today.

The second requirement for making renewable energy fully dispatchable is that the ISO needs to have reliable, accurate five-minute-ahead weather forecasts for things like wind speed and sunshine intensity. The ISO has been running trials for months now of five-minute-ahead forecasts; and at a meeting I attended this month, the ISO reported that the five-minute-ahead weather forecasts it has been receiving have been completely reliable and accurate and fully satisfy the requirements of the ISO control room.

The third, and final, requirement for making renewable energy fully dispatchable in New England is the creation of the actual computer algorithms that the ISO control room will use to dispatch renewable generators when the time comes. The ISO plans to issue a so-called “DNE Order” to every dispatchable renewable generator for every five-minute interval of every day. This DNE Order will set an upper limit (i.e., “Do Not Exceed,” hence, DNE) for that generator for that five-minute interval. As long as the generator does not go above its DNE limit, the generator will be considered (by the ISO) to be operating “within dispatch,” and will get paid for its electricity output.

It is this third, and final, part that is still needed to make renewable energy fully dispatchable. And at the ISO meeting I attended this month, the ISO decided to start the actual work on those computer algorithms. These algorithms will take some time to complete; but when they are done, the ISO will treat wind as fully dispatchable in New England.

Many owners of fossil-fuel-fired power plants are very unhappy that the ISO is moving so inexorably toward making renewable energy fully dispatchable. Those fossil generators know, correctly, that having renewable energy fully dispatchable by the ISO will tend to undermine the economic viability of their dirty, old power plants. This is especially true now because the ISO-New England, like other ISOs in other parts of the country, is also rolling out “negative price offers” that will make renewable energy resources even more economically competitive compared to fossil-fuel plants. (I discussed that development in my blog post a few days ago, which you can see, here.)

This is a very exciting time for CLF to be participating in ISO matters, because the ISO is moving on multiple fronts to integrate new renewable energy resources in to New England’s electricity grid.

For years, opponents of renewable energy have claimed that renewable energy, while clean and non-polluting, is too expensive for average ratepayers. But on December 3, 2014, ISO is introducing negative price offers, that will make renewable energy cheaper than ever before and drive down the cost of electricity for all New England ratepayers.

And for years, opponents (like the Heritage Foundation) have argued that renewable energy is not dispatchable. But even now the ISO is taking the final steps to make intermittent renewable energy resources fully dispatchable – and is writing the computer algorithms that the ISO control room will soon use to dispatch wind farms.

These are exciting times in the world of renewable energy development, and CLF is playing an active role in those developments.