Month: April 2019

FERC issued Directions to NYISO and PJM to Implement Tariff Changes

FERC issued Directions to NYISO and PJM to Implement Tariff Changes

On April 18, the Federal Energy Regulatory Commission (FERC) directed the New York Independent System Operator (NYISO) and PJM Interconnection (PJM) to begin implementing tariff changes in order to ensure that their pricing for fast-start resources is both reasonable and just. This concludes FERC’s investigations into PJM and NYISO regarding section 206 of the Federal Power Act; these investigations began in December 2017.

In the preliminary findings, FERC found both NYISO and PJM’s current practices to be “unjust and unreasonable because those practices do not allow prices to accurately reflect the marginal cost of serving load when a fast-start resource is needed to quickly respond to unforeseen system needs.”

These reforms are part of FERC’s broader price formation initiative. “Fast-start resources are typically committed in real-time, very close to the interval when needed, and can respond quickly to unforeseen system needs.” However, when there is no fast-start pricing, “some fast-start resources are ineligible to set prices, often due to inflexible operating limits.”

They also found that “even when fast-start resources can set prices, they may not be able to recover their commitment costs, such as start-up and no-load costs, through prices.” Because of this, “prices may not reflect the marginal cost of serving load, muting price signals for efficient investments. Several RTOs and ISOs have already implemented fast-start pricing practices to address these issues.”

In the April 18 order, FERC found that PJM and NYISO’s “fast-start pricing practices are unjust and unreasonable because they do not allow prices to reflect the marginal cost of serving load.” FERC addressed these findings by directing the “grid operators to change their fast-start pricing practices.”

“Specifically, the Commission is directing NYISO to make the following tariff revisions to its fast-start pricing practices: 

  • Modify its pricing logic to allow the start-up costs of fast-start resources to be reflected in prices;
  • Relax the economic minimum operating limits of all fast-start resources, including dispatchable fast-start resources, by up to 100 percent for the purpose of setting price.”

NYISO is required to make a compliance filing by the end of 2019, and it has to implement the tariff changes by the end of 2020.

“The Commission is requiring PJM to make the following tariff revisions: 

  • Implement software changes so that fast-start resources are considered dispatchable from zero to their economic maximum operating limits for the purpose of setting prices;
  • Apply fast-start pricing to all fast-start resources;
  • Alter its real-time energy market clearing process to consider fast-start resources in a way that is consistent with minimizing production costs;
  • Restrict eligibility for fast-start pricing to fast-start resources that have a start-up time (including notification time) of one hour or less and a minimum run time of one hour or less;
  • Include commitment costs in energy prices for fast-start resources in both the day-ahead and real-time markets;
  • Implement its proposal to use lost opportunity cost payments to offset the incentive for over-generation or price chasing.”

PJM has to make their compliance filing by the end of July 2019. PJM also has to “file a one-time informational report by August 30, 2019, explaining how the proposed tariff provisions do not raise new market power concerns.”

FERC has Approved Two New LNG Pipeline Projects

FERC has Approved Two New LNG Pipeline Projects

On April 18, the Federal Energy Regulatory Commission (FERC) approved two new liquefied natural gas (LNG) export pipeline projects, the Port Arthur LNG and Pipeline projects and the Driftwood LNG and Pipeline projects.

“Today’s orders show that FERC is making a lot of headway on processing LNG applications in a more efficient manner, and I’m proud of the work that we are doing,” FERC Chairman Neil Chatterjee said. “LNG exports can help increase the availability of inexpensive, clean-burning fuel to our global allies who are looking for an efficient, affordable, environmentally friendly source of generation. FERC continues to focus on developing a regulatory ecosystem that allows new technologies to flourish.”

The Driftwood LNG project will be located in Calcasieu Parish, La and it has been authorized to construct LNG facilities that “would export an estimated 27.6 million metric tons of liquefied natural gas per year.” Driftwood’s Pipeline project will consist of “6 miles of mainline pipeline, 3.4 miles of lateral pipeline, 15 new meter stations, and three new compressor stations to transport up to 3.9 billion cubic feet (Bcf) of natural gas per day to feed the LNG facilities.”

The Port Arthur LNG project will have a “total production capacity of an estimated 13.5 million metric tons per year,” and it will be located near Port Arthur, Texas. The Port Arthur Pipeline project will “consist of two pipelines – the 130.9-mile Louisiana Connector Project and the 34.2-mile Texas Connector Pipeline, each with a capacity to transport up to 2 Bcf of gas per day to feed the LNG facilities.” There will also be “three compressor stations and other related facilities” in the Pipeline project.

Both the Driftwood project and the Port Arthur project will “export gas to Free Trade Agreement (FTA) countries.” The sponsors for both projects currently “have applications pending before the U.S. Department of Energy seeking authorization to export gas to non-FTA countries.”

FERC currently has 10 LNG export projects pending.

The concurrence for the Driftwood Projects can be read here. The concurrence for the Port Arthur Projects can be read here.

FERC Released Recommendations to Improve Security

FERC Released Recommendations to Improve Security

On March 29, the Federal Energy Regulatory Commission (FERC) issued a report that had recommendations to help the “users, owners and operators of the bulk-power system assess their risks, compliance efforts and overall cyber security posture.” The suggestions in the report are all based upon the lessons FERC learned during the 2018 fiscal year from “non-public audits of several registered entities of the Bulk Electric System and staff reviews of emerging advanced cyber and physical threats to energy infrastructure.” Those lessons will help FERC improve security for “the nation’s electric grid, strengthen cyber security and help facilitate compliance with mandatory reliability standards.”

“FERC’s Office of Electric Reliability, with assistance from its Office of Enforcement, conducted the audits in collaboration with the North American Electric Reliability Corporation (NERC) and its regional entities.” The FERC Office of Energy Infrastructure also assisted with analyzing the data obtained by the audit.

The report’s recommendations are:

  • “Enhance documented processes and procedures for security awareness training to consider NIST SP 800-50, ‘Building an Information Technology Security Awareness and Training Program’ guidance.
  • Consider implementing valid Security Certificates within the boundaries of BES Cyber Systems with encryption sufficiently strong enough to ensure proper authentication of internal connections.
  • Consider implementing encryption for Interactive Remote Access (IRA) that is sufficiently strong enough to protect the data that is sent between the remote access client and the BES Cyber System’s Intermediate System.
  • Consider Internet Control Message Protocol (ICMP) as a logical access port for all the BES Cyber Assets.
  • Enhance documented processes and procedures for incident response to consider the NIST SP 800-61, “Computer Security Incident Handling Guide.”
  • Consider the remote configuration of applicable Cyber Assets via a TCP/IP-toRS232 Bridge during vulnerability assessments.
  • Consider the use of secure administrative hosts to perform administrative tasks when accessing either Electronic Access Control or Monitoring Systems (EACMS) or Physical Access Control Systems (PACS).
  • Consider replacing or upgrading “End-of-Life” system components of an applicable Cyber Asset.
  • Consider incorporating file verification methods, such as hashing, during manual patching processes and procedures, where appropriate.
  • Consider using automated mechanisms that enforce asset inventory updates during configuration management.”

The report also notes some lessons they previously learned:

  • “Conduct a thorough review of CIP Reliability Standards compliance documentation to identify where the documented instructional processes are inconsistent with actual processes employed.
  • For each remote cyber asset conducting IRA, disable all other network access outside of the connection to the applicable Cyber System that is being remotely accessed, unless there is a documented business or operational need.
  • Enhance documented processes and procedures for identifying BES Cyber System Information to consider the NERC Critical Infrastructure Protection Committee guidance document, ‘Security Guideline for the Electricity Sector: Protecting Sensitive Information.’”

“The audits evaluated the registered entities’ compliance with the applicable Critical Infrastructure Protection (CIP) Reliability Standards and identified other possible areas for improvement not specifically addressed by the CIP reliability standards.”