On behalf of its New England consumer advocacy clients, Synapse prepared a paper reviewing the structure and history of the New England wholesale electricity markets, examining market design, and reviewing various options for pricing capacity resources. The paper concludes with a brief review of future market design initiatives.
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Synapse and Resource Insight prepared estimates of the market value of eight hydro-electric generation facilities in Vermont. These facilities were assessed using the income approach, the replacement cost approach and the comparable sales approach. The income approach relied upon computer simulation modeling of the New England electricity market. Project completed in 1999, with subsequent support following negotiations continuing until May 2003
Synapse worked with Resource Insight to estimate the value of a power plant site leased by the regulated utility company to its affiliate generating company for use at a new combustion turbine generating facility. Project completed in February 2003.
Synapse reviewed the plans of two large Iowa utilities to comply with environmental regulations. This included the analysis of generating plant air emission control options, costs, and effectiveness. Project completed in June 2002.
Synapse worked on a two-phase project focusing on electricity industry policies on clean power and energy efficiency. Phase one identified and summarized clean power and energy efficiency programs that were planned or on-going. The survey focused on initiatives within the Ozone Transport Commission (OTC) States, but also identified certain promising options from other states. The purpose of the survey was to provide information in a consistent format on each of the programs, and to identify which programs or program aspects were worthy of additional study as OTC continued its clean energy initiative. The survey was submitted to OTC in January 2002. The second phase was a more in-depth review and technical analysis of specific policies or issues pertaining to clean power and energy efficiency. Project completed in July 2002.
Predicting Avoided Emissions from Policies that Encourage Energy Efficiency and Clean Power
Survey of Clean Power and Energy Efficiency Programs
Synapse developed a quantitative tool to estimate emission reductions from a wide variety of energy policies in the Northeast. The tool was designed to assess three types of energy policies: policies that encourage energy efficiency and new clean generation, emissions portfolio standards, and multi-pollutant regulations targeting groups of existing power plants. Synapse used the PROSYM/PROMOD dispatch model to perform detailed marginal emissions analyses of the New England, New York, and PJM power control areas. The quantitative results of these analyses were embedded in a Microsoft Excel workbook designed to allow users to estimate emission reductions from different energy programs. Users of the workbook have the option to use the data on marginal emission rates developed by Synapse or to use other input data. Changes can easily be made in the workbook to represent different policy design decisions and assess the results of these decisions. The "OTC Emission Reduction Workbook" is available on both the OTC and Synapse websites. Project completed in December 2002.
Synapse worked with Brower and Company and Tellus Institute to develop a plan for the aggressive implementation of energy efficiency and renewables resources in six southeastern states. The analysis included electricity market simulation modeling, a technical assessment of cost-effective energy efficiency opportunities, a technical and economic assessment of renewable resource potential, and development of policies for overcoming market barriers to these clean resources.
Synapse assisted with the development of a green power aggregation program in the metropolitan Boston area, as a part of an effort funded by the Massachusetts Renewable Trust Fund. Synapse primarily focused on whether and how towns and cities might purchase green power through municipal aggregation. Project completed in June 2002.
Synapse assisted MassEnergy in its response to a Request for Information from the Massachusetts Technology Collaborative concerning distributed generation. The Renewable Trust, part of the MTC, issued a Request for Information which asked what role DG might play in alleviating transmission congestion in Massachusetts. MassEnergy submitted detailed comments in response to the RFI. Following this work, Synapse worked with Mass Energy Consumers Alliance, the Conservation Law Foundation, the Union of Concerned Scientists, and others to draft initial and reply comments in default service and distributed generation proceedings at the Massachusetts Department of Telecommunications and Energy. Synapse staff were the primary drafters of the comments and also played a significant role in coordinating the responses and positions of the group. Project completed in August 2002.
Synapse conducted an economic analysis of Citizens Utilities Company’s power purchase from Hydro Quebec, and made recommendations about the rate treatment appropriate for above market power costs. Project completed in May 2002.
Synapse reviewed the terms of a proposed settlement agreement in a rate case of Northern Indiana Public Service Company. The analysis addressed NiSource’s financial condition, service quality, environmental commitment, and electric rate impacts. The results were presented in testimony before the Indiana Utility Regulatory Commission. Project completed in August 2002.
Synapse evaluated locational market prices projected for electricity markets in the upper Midwest in order to evaluate the costs of a Renewable Portfolio Standard proposed for the State of Wisconsin. Project completed in December 2002.
At the request of Conservation Services Group (CSG), Synapse performed an independent audit of CSG’s ReGen product, for the time frame of January 1, 2001 through December 31, 2001. The purpose of this audit was to verify that CSG purchased a sufficient amount of energy from the designated renewable sources to meet its obligations to its ReGen customers. In addition, Synapse was asked to verify the claimed air emissions benefits of the generation from the designated renewable resources and to evaluate the potential impact of recent Massachusetts’ regulations establishing a renewable portfolio standard (RPS) for retail electric suppliers. Project completed August 2002
Synapse reviewed the projected costs of decommissioning Diablo Canyon and the adequacy of PG&E's funding plan for decommissioning in the context of PG&E's bankruptcy. Project completed in April 2002.
Synapse conducted an economic comparison of transmitting wind energy in the Dakotas to load centers via a hydrogen pipeline versus high voltage direct current (HVDC) power lines. A key aspect of this study was the valuation of the energy storage capacity offered by the hydrogen pipeline capacity which would allow a larger portion of electricity to be sold during high-priced periods than would power lines. The analysis consolidated available cost information on hydrogen pipeline and HVDC technology and modeled annual energy sales to determine which energy transmission options would generate net revenue. Project completed in January 2002.
Synapse analyzed the use of wet/dry or dry cooling options for Mirant’s proposed Potrero Expansion Project in San Francisco. Project completed in October 2002.
Synapse assisted the Council in developing a proposal for a renewable portfolio standard in New Brunswick. The proposal was presented to the Market Design Committee, which investigated several aspects of the restructuring of the New Brunswick electricity market. The presentation also included discussions of energy efficiency policies for a restructured electricity industry. Project completed in January 2002.
Synapse assisted Riverkeeper in EPA’s rulemaking for its proposed Section 316(b) Phase II rule concerning cooling water intake structures at existing electric generating facilities. Synapse reviewed the cost and reliability impacts of both the proposed EPA option for reducing the impact of these facilities on aquatic life and of reasonable alternative options involving the conversion of certain facilities to closed cycle cooling systems. Project completed in August 2002.
Synapse assisted the Consumer Advocate in evaluating whether South Carolina Electric & Gas Company was over-collecting from ratepayers for the funds that would be needed to decommission the Summer Nuclear Plant at the projected end of its service life. Project completed in November 2002.
Synapse assisted the Arizona Commission in their reconsideration of their restructuring plan in light of the problems encountered in the California electricity market. Synapse conducted a survey of restructuring activities in other states, as well as assisted the Staff in developing policy positions on whether and how to proceed with restructuring. Synapse also assisted the Staff with a review of an all-requirements power purchase of Arizona Public Service Company from its affiliated generation company. Project completed in July 2002.
Synapse assisted the Staff in reviewing proposals from Green Mountain Power and Conectiv Energy to offer an innovative green power program to residential electricity customers. Project completed in October 2002.
Synapse prepared a report which examined the goals of load response programs under development in wholesale markets. This report detailed existing programs in the Northeast, describing in general terms the mechanisms available to meet those goals, presented issues that could be barriers to efficient programs, and offered recommendations for moving toward a market in which demand could influence the supply curve through customer opportunities to respond to peak prices and reliability concerns. Synapse participated in stakeholder meetings in New England to develop a load response program for the summer of 2001. Project completed in January 2002.
Synapse reviewed the performance-based ratemaking proposal of United Illuminating Company. This review focused on performance standards necessary to ensure that incentives to cut costs would not result in a degradation of reliability, customer services or customer satisfaction. The results were presented in the testimony of Tim Woolf before the Connecticut Department of Public Utility Control, in Docket No. 01-10-10. Project completed in March 2002.
Synapse reviewed the power procurement and risk management practices of Nevada Power Company and Sierra Pacific Power Company in the western markets for a test year that included the summer of 2001. The results of this review were presented in the testimony of Bruce Biewald (PUCN Dockets 01-11029 and 02-2002) and Paul Peterson (PUCN Docket 01-11029). Synapse concluded (a) that the Companies relied too much upon standard products (e.g., 6x16 purchase blocks), (b) that the Companies overlooked or discounted indications that market forces or regulatory actions would address high summer prices in the western markets prior to the summer of 2001, and (c) that specific forward purchases made in early 2001 had costs in excess value of $225 million (NPC) and $38 million (SPPC). Project completed in May 2002.
Exhibits of Testimony Reviewing Power Procurement and Risk Management
Synapse reviewed a proposal by the Tennessee Valley Authority and Middle Tennessee Electric Membership Corporation to construct a new transmission line and a new distribution substation in the area of Nashville, TN. The analysis included an investigation of the need for the new line for reliability purposes, as well as an assessment of developing energy efficiency resources as an alternative to the new line. Project completed in May 2002.
Synapse reviewed Northeast Utility's proposed treatment for the $829 million it received from the sale of the Millstone nuclear power plant. The review focused on the reasonableness of a number of adjustments sought by Northeast Utility that would enable it to keep more than one-half of the sale proceeds instead of passing them through to ratepayers as a reduction in nuclear stranded costs. Project completed in January 2002.
Synapse investigated the causes of the November 24, 2000 fire and generator failure at PacifiCorp’s Hunter Unit 1 coal-fired power plant. This analysis was presented in testimony in a Utah Public Service Commission proceeding, investigating whether PacifiCorp should be allowed to pass through replacement power costs from the outage to its Utah ratepayers. Project completed in June 2002.
Synapse quantified the net revenues that PG&E, the owner of the Brayton Point Station, likely earned during the years 1999 to 2002 and would likely earn during the years 2003 to 2013. Synapse also conducted an independent assessment of whether the conversion of the Brayton Point Station to a closed cycle water cooling system would adversely affect electric system reliability. The results of Synapse’s analyses were presented in a series of memoranda that the Attorney General submitted to the U.S. EPA. Project completed in October 2002.
Synapse investigated whether the permanent retirement of Indian Point Units 2 and 3 would lead to any electric system reliability problems in New York City, Westchester County or New York State. Synapse also found that the implementation of aggressive conservation programs in conjunction with the retirement of Indian Point Units 2 and 3 could significantly enhance the reliability of the electric systems in New York City, Westchester County and New York State. Project completed in June 2002.
Weaknesses in the Entergy Study of the Reliability Impacts of Closing Indian Points Units 2 and 3
Revised Indian Point Retirement Reliability Assessment
Entergy’s Lost Revenues During Cooling System Conversion-related Outages
The Impact of Converting Indian Point Units 2 and 3 to Closed-Loop Cooling Systems with Cooling Towers on Entergy’s Likely Future Earnings
The Impact of Converting the Cooling Systems at Indian Point Units 2 and 3 on Electric System Reliability
Synapse surveyed the increasing use of complex corporate ownership structures and LLCs to own and operate nuclear power plants and reviewed the NRC’s oversight of these developments. Synapse also identified those areas in which changes need to be made to assure that there are adequate funds available to meet NRC-imposed requirements, including post September 11, 2001 security-related requirements and Price-Anderson Act nuclear accident insurance obligations, and to assure that decommissioning funds are adequate and are protected. Project completed in August 2002.
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