Iowa Industrial Energy GroupELECTRIC SUPPLY AND RELIABILITY ISSUES

October 14, 2014Don Stursma

Manager, Safety & Engineering

Iowa Utilities Board

Reliability is:

• Physical Infrastructure

- IUB

- NERC/FERC• Supply

- Generation and Fuel

- Midcontinent Independent System Operator (MISO)

IUB

• Franchise of Transmission Lines

- Review route and design

• Generating Certificates

- Review new projects for need and benefits

• Electric Safety Inspection Program- 2.5 full time IUB positions- Inspection and Maintenance Plans required- Electrical facilities inspected

Safety Standards

• NESC requirements

Conductor Clearance (Above ground, From buildings, From other wires)

Grounding

Support Structures

Enclosures

• Additional Board Requirements (Examples)Support cable (guy) markers – must be highly visible color.Grain bin clearance (Information campaign, can deny service clearance inadequate)Warning signs on above ground equipmentSafety of workers in fenced substations

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North American Electric Reliability Corporation (NERC)

NERC’s mission is to ensure the reliability of the North American Bulk Power System (BPS)

Reliability - A reliable bulk power system is able to meet the electricity needs of end-use customers even when unexpected equipment failures or other factors reduce the amount of available electricity

Bulk Power System – NERC defines the bulk power system as electric power generation facilities combined with the high-voltage transmission system

NERC Responsibilities

• Develop reliability standards with stakeholder input – Annual compliance report, regional audit report, vegetation management report

• Monitor bulk power system status in real time• Assess bulk power reliability and adequacy – long-term 10

year assessment report, summer and winter assessment reports

• Analyze system events (e.g., multi-state outages) – issue lessons learned

• Coordinate physical cyber security needs• Train and certify system operators• Enforce reliability standard compliance – assessing

penalties

FERC, NERC Initiate Review of Electric Industry Recovery and Restoration Plans

News Release: September 30, 2014

The Federal Energy Regulatory Commission (FERC), working with the North American Electric Reliability Corporation (NERC) and the Regional Entities, has initiated a joint staff review to assess and verify the electric utility industry’s bulk power system recovery and restoration planning, and to test the efficacy of the relevant Reliability Standards in achieving and maintaining reliability. Staff selected a sample of registered entities with bulk power system significance to participate in the voluntary review.

Effective system recovery and restoration plans are essential to a quick and orderly recovery from reliability events caused by weather, bulk power system disturbances or possible cyber/physical attacks. The objective of the review is to support registered entities in ensuring reliable restoration of the bulk power system following a reliability event. The review is not a compliance and enforcement initiative.

But There is Only So Much You Can Do to Prevent Outages

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Board Permits (Contd.) Generating Certificates

Iowa Code Chapter 476A requires that Certificate of Public Convenience, Use, and Necessity (CPCN) may be required for• Any plant (or combination of plants at a

single site) with total generating capacity of 25 MW or more (GCU Dockets)

• Waivers can be issued for any plant if the Board finds that the public interest would not be adversely affected

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Generating Certificate Process (Contd.)

Main decision criteria:Whether the proposed facility will promote adequate and reliable electric service

Whether the proposed facility will be consistent with environmental policies, considering

• The available technologies and• The economics of any alternatives

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Advance Ratemaking – Decision Criteria

• Board has to make two findings before utility

can receive advance ratemaking principles:

- Utility has in effect a Board approved energy efficiency plan.

- Utility must demonstrate that the facility is “reasonable” as compared to other resources.

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Creation of Midcontinent Independent System Operator (MISO) &

Organization of MISO States (OMS)

• FERC approved MISO as an RTO in 2001 (non-profit)• Had the effect of accelerating regional transmission planning

efforts• MISO has an elaborate stakeholder process• Regulatory Sector is one of the nine sectors which Advise

the MISO Board• Midwest state regulators through OMS participate in MISO

processes -- provide leader ship and guidance• Regulators are now a part of interconnection-wide planning

process• OMS also represents states’ interests before FERC

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Iowa Electric Energy Happenings

• Wind• Distributed Generation• EPA 111(d) Rule Development• OMS/MISO Resource Adequacy Survey• Multi-Value Projects• Other proposed transmission and pipeline

projects

Iowa Action on Renewable Energy

IOWA ACTED EARLY AND OFTEN TO ADOPT POLICIES TO ENCOURAGE RENEWABLE ENERGY

– Alternate Energy Production Law (1983, as amended) (Iowa Code

§ 476.41 et. seq.) • Requires IOUs to interconnect with and purchase from AEPs at avoided cost • Includes net metering option (500 kW individual capacity limit) • Includes an RPS of sorts (105 MW combined obligation)

– Advanced Ratemaking Principles (2001, as amended) (Iowa Code

§ 476.53)• Applies to new/significantly altered 200+ MW baseload generating facilities and utility-

owned or purchased renewable energy generation• Approval in advance of the ratemaking principles that will apply when generation goes

into base rates• E.g., jurisdictional allocation, accounting for environmental credits/wholesale revenues,

depreciation, ROE, cancellation cost recovery

Iowa Action on Renewable Energy

– Renewable Electric Generation Law (2011) (Iowa Code § 476.53A)

• Specifically states that the State’s intent is to encourage development of renewable electric power generation, to encourage the use of renewable power to meet local electric needs and to develop transmission capacity to export Iowa-generated wind power

– IUB Rules for Interconnection of Distributed Generation (2010) (199 Iowa Admin. Code Ch. 45, as amended)

• Some expedited review possible• Differing levels of review, depending upon size of the facility

Iowa Action on Renewable Energy

Other Laws Designed to Encourage Development of Alternate/Renewable Energy

Iowa Code § 476.47 Customer Contributions to AEP Development

Iowa Code § 476A Generation Siting Exemption for Small (< 25MW) Facilities

Iowa Code § 476.48 Small Wind Innovation Zones

Iowa Code § 476.46 Alternate Energy Revolving Loan Program

Iowa Code Ch. 564A Solar Access Easements

Iowa Code § 427.1(29) Property Tax Exemption - Methane Gas Conversion Property

Iowa Code § 427B.26 Special Property Tax Valuation and Assessment - Wind Energy Conversion Property

Iowa Code § 441.21(8) Property Tax Exemption - Renewable Energy Systems

Iowa Code §§ 437A.6 , 437A.3(27)

Replacement Tax Exemptions - Methane Gas Conversion Property, Large Hydro Facilities, Self-Generators and Wind Energy Conversion Property

Iowa Code §§ 423.3(54), (90) Sales Tax Exemptions - Wind Energy Conversion Property & Solar Energy Equipment

Iowa Code §§ 476B, 476C Wind Energy Tax Credit; Renewable Energy Tax Credit

The Results -Iowa’s Energy Resource Mix

Source: 2012 EIA Data

The Results – Wind Energy

• Iowa is #1 in the nation for the percentage of electricity generated by wind energy at 27.4%

• Iowa ranks 2nd in total wind generation

• Installed wind capacity: 5,177 megawatts (MW). Iowa ranks 3rd for total MW installed

• Number of wind turbines: 3,216 turbines. Iowa ranks 3rd for number of utility-scale wind turbines

• Wind projects online: 101 wind projects

• Wind capacity under construction: over 1,055 MW

Source: AWEA State Energy Statistics – Iowa , http://www.awea.org/Resources/state.aspx?ItemNumber=5224

Top 10 Wind Power States

State      Megawatts/Hour   Percent of total output

Texas -       35,937 ------------ 8.3 percent

Iowa -        15,571 ------------27.4 percent

California - 13,230 -------------6.6 percent

Oklahoma - 10,881 -----------14.8 percent

Illinois -         9,607 -------------4.7 percent

Kansas -       9,430 ------------19.4 percent

Minnesota -   8,065 -----------15.7 percent

Oregon -       7,452 ------------12.4 percent

Colorado -     7,382 -----------13.8 percent

Washington - 7,008 -------------6.2 percent

Currently the U.S. overall gets three percent of its energy from wind power. .

Courtesy of the American Wind Energy Association, All statistics are for 2013

Iowa has 3,216 wind turbines in service

The Results – Other Renewables

Installed Renewable Energy Capacity (2012)

Solar PV 1.2 MW

Hydro 131.3 MW

Biomass/Waste 14.6 MW

Ethanol 3,848 mGy

Biodiesel 305 mGy

Source: American Council On Renewable Energy (ACORE), Renewable Energy in the 50 States: Midwestern Region (Updated October 2013)

Renewable Fuels MandatesIowa is 105 MW mandatory 1983, Governor 1000 MW voluntary 2001 (the

3000 shown below is an error), 5177 MW installed 2013

DG Issues

• Many small providers wanting to sell to the system– solar/wind/biomass

• Is on way to being significant contributor• Interconnection issues – safety and

synchronization• Variable load/delivery • Is net metering causing improper cross-

subsidization (Are utilities able to recover cost of facilities involved)?

NOI on Distributed GenerationDocket No. NOI-2014-0001

– Grew out of EEP proceedings – debate whether utilities should have incentive-based renewable energy programs.

– Initiated January 7, 2014, in recognition of the response to increasing interest in Solar PV, CHP, biomass, and other forms of distributed generation.

– Purpose to consider the technical and policy issues associated with potential widespread use of DG. Goal to determine extent of interest, existence of opportunities and barriers, existence and extent of consumer protection, safety and/or interconnection issues, and IUB’s role in dealing with any such issues.

– Working definition: Generation fueled by renewable or fossil-fuel sources built in order to serve load located at or near the generator and capable of delivering power to a utility’s distribution system.

– So far, two rounds of comments on questions presented by the IUB.

Eagle Point Solar Decision

• Eagle Point Solar installed PV solar panels on a Dubuque city-owned building.

• Eagle Point Solar would finance, install, own, operate, and maintain the solar system.

• PV generated energy will be sold to Dubuque, on a cents-per-kWh basis through a third party agreement.

• The solar energy remained “behind” Interstate Power and Light’s (IPL) meters. The building would continue to remain connected to the electric grid and purchase some energy from IPL to satisfy some of the electric energy needs of the building.

• Alliant claimed the agreement violated Alliant’s exclusive service territory rights.

• The Board agreed with Alliant and issued an order in 2012.

Eagle Point Solar Decision (Contd.)

• A Polk County District Court Judge reversed the ruling a year later.

• On July 11, 2014 the Iowa Supreme Court held that the “behind the meter” direct sale of electricity generated from solar arrays and using a power purchase agreement that sold the electricity on a cents-per-kWh basis did not automatically render the seller a “public utility.” 

• SZ Enterprises, LLC, d/b/a Eagle Point Solar v. Iowa Utilities Board, ___ N.W.2d. ____ (July 11, 2014)

EPA’s Proposed 111(d) Regulations For Existing Power Plants

• Iowa Department of Natural Resources is responsible for Iowa’s environmental regulation.

• Board has authority over some environmental activities by utilities. For example, Utilities’ Emission Plan and Budget (Iowa Code Section 476.6(21)).

• Proposed 111(d) regulations affecting existing power plants are different - These rules could have significant adverse effects on the reliability and cost of providing electric service.

• Also, the EPA specifically invited public utility commissions to engage with the EPA in the development of the proposed rules.

EPA’s Proposed 111(d) RegulationsBoard Actions to Date

• Iowa Utilities Board sent comments to EPA in December 2013 on how the regulations should be drafted.

• IUB is interested in that the final 111(d) rules are written and implemented such that they do not:• create disruptions in the provision of electric service and;• create significant, unnecessary increases in the cost of electric service

• IUB is working jointly on comments with IDNR and Iowa Economic Development Authority (IEDA).

• IUB is an active participant in IDNR’s 111(d) collaborative process, and will be actively involved in the development of Iowa’s compliance plan after the rules are final.

MISO/OMS Resource Adequacy Survey

• MISO and OMS initiated a resource adequacy survey in summer of 2013.

• Surveyed Load Serving Entities (LSEs) to gain better understanding of Long-Term Resource Plans.

• Survey: • Was a first-of-its-kind collaborative effort for MISO, LSEs and OMS• Sought information about all existing and future resources • Updated demand forecasts including projected Demand Side Management

Programs • Asked respondents to identify confidence factors for a better

understanding of certainty on LSE side • Sought longer-term information (10 years out)

 

Survey Results

June 4, 2014 survey update shows:

• For MISO Resource Zone 3 (Iowa and parts of IL and MN) • 2016 resources equal 10.1 GW• 2016 resource requirements equal 10.6 GW• Projected shortfall equals 0.5 GW

• For MISO North and Central Region• 2016 resources equal 110.1 GW

• 2016 resource requirements equal 112.4 GW• Projected shortfall equals 2.3 GW• A shortfall figure means increased probability of a loss of load event • A 2.3 GW shortfall means approximately a .2 day/year probability of a

loss of load event, which is higher than .1 day/year industry standard

(A projected shortfall means MISO would have to import power – not loss of service)

Survey Future - MISO Proposal

• MISO proposes:• continuing the survey in 2014-15 (and

potentially beyond). • matching the survey process with the work

MISO performs as part of the Long Term Reliability Assessment (LTRA).

• OMS will vote in October whether it continues to serve as a survey partner

Transmission - Multi-Value Projects(MVP Projects)

• Main purpose is to integrate growing wind power into the upper Midwest transmission system

• Roughly 500 miles of new 345,000 volt electric transmission circuit in Iowa alone

• 17 projects in all, four in Iowa requiring IUB approval in Iowa

• In Iowa as much as possible will be built on existing transmission rights-of-way – often double-circuited with existing 161 kV

• Will reinforce electric transmission capacity and reliability overall by looping the system as well as integrating wind power

Transmission - Multi-Value Projects

MVP 3 - MEC/ITC joint ownership • MEC will construct approx. 120 miles of 345 kV line, rebuild existing 161

kV, build two new substation modify one substation – in service date is end 2016.

• ITC will construct 145 miles in Iowa and 75 miles in MN.

• Board issued franchise for MEC’s portion of MVP 3 on August 19 for O’Brien, Clay, Palo Alto, Kossuth, Humboldt and Webster counties (Docket Nos. E-22106, E-22103, E-22107, E-22105, E-22104 E-22108)

• ITC has filed franchise petitions for projects in Kossuth, Winnebago, ands Worth counties (E-22116, E-22140, E-22142, and E-22141).

• Board issued franchise for a section of ITC’s share (11.43 miles) on May 1 in Cerro Gordo County (Docket No. E-21894.2))

Transmission - Multi-Value Projects(Cont.)

MVP 4 -- MEC/ITC joint ownership• Consists of several sections (new additions, upgrades, rebuilds)• For each section, an electric franchise petition or an amendment of a franchise petition

has been filed with the Board. • Board issued franchise for MEC’s section on June 22

• approx. 22 miles in Black Hawk County (Docket No. E-22099)• Board issued franchise for ITC’s section on June 17

• 9.5 miles addition in Buchanan County (Docket No. E-22011.1)• 2.5 miles addition in Black Hawk County (Docket No. E-22034.1)

• Board issued franchise for ITC’s section on May 1• 11.5 miles addition and rebuild in Cerro Gordo County (Docket No. E-22034.1)

• Three MEC petitions and two related petitions by ITC for sections of MVP 4 are under review by the Board. Hearing is scheduled for December 9 in Franklin county. (Docket Nos. E-22097, E-22098, E-22099.1, E-22153, and E-22152)

Transmission - Multi-Value Projects(Cont.)

• MVP 7 – Ottumwa, IA to Adair, MO• MEC has not filed with the Board

• MVP 5 – Dubuque County into Wisconsin • ITCM and ATC – no Iowa filings yet

Other ProjectsRock Island Clean Line

• 500 mile, ±600kV HVDC line• A Direct Current line to minimize line loss• Designed to transport wind power from NW Iowa and adjoining

states.• 375 miles in Iowa, 125 miles in Illinois• Proposed to deliver 3500 MW from O’Brien County, Iowa, to

Grundy County, Illinois.• Estimated cost: $2B• $7B in new wind development possible• Facing heavy opposition in Iowa and Illinois• IUB has received 1,148 objections at last count

Rock Island Clean Line Route in Iowa

• Rock Island Clean Line•500 mile, ±600kV HVDC line•Proposed to deliver 3500 MW from O’Brien County, Iowa, to Grundy County, Illinois.

•Estimated cost: $2B

• 500 mile, ±600kV HVDC line• Proposed to deliver 3500 MW from O’Brien County, Iowa, to Grundy County, Illinois.• Estimated cost: $2B – plus $7B in new wind development

Other ProjectsEnergy Transfer Partners Pipeline Project(Bakken Pipeline a.k.a Dakota Access Pipeline)

• Energy Transfer is name of sponsor company • 1,100 mile crude oil pipeline (343 mi. in Iowa)• Estimated cost $3.7 billion• Bakken ND area to Patoka, IL through ND, SD, IA, IL• 30 inch pipe, 320,000 barrels/day initially• In service in 2016 (?)• IUB has routing/siting and eminent domain authority• IUB does not have safety authority• Expected to be controversial• An alleged project benefit is reducing railroad oil shipments -

making more rail capacity available for coal and grain.

ccBakken (aka Dakota Access) Pipeline

Where will your electricity come from?

• WIND POWER Available, supply growing, cost competitive, green, intermittent/variable, what happens if subsidies end

• DISTRIBUTED GENERATION Growing more common, many players, variable, subsidization/safety issues

• NATURAL GAS Affordable to build and fuel, flexible output, greener than coal, peak gas supply issues

• COAL Economical base load, not green/unpopular, being regulated into minority status, coal transportation issues

• NUCLEAR Economical base load, green but unpopular/not trusted, costly to operate and build, having trouble in competitive markets, heavy regulation

• HYDROPOWER Economical, green, reliable, flexible, limited supply, limited growth opportunity

• SOLAR/BIOMASS/ETC Small but growing, green, popular, DG

The Results -Iowa’s Energy Resource Mix

Source: 2012 EIA Data

Questions?