In the ongoing discussion regarding the proposed PNM-Avangrid merger, the parties have promised to work with Public Regulation Commission staff and others to create new reliability standards, with annual reporting on compliance. Actually, there’s no need to create new standards; national reliability standards already exist. As per the Energy Policy Act of 2005, the Federal Energy Regulatory Commission (FERC) designated the North American Electric Reliability Corporation (NERC) as the organization to maintain reliability standards or criteria for all U.S. power systems. Conformance is monitored by the six regional entities, aka regional reliability councils. Compliance is mandatory. Failure to comply is considered a violation of federal law and is punishable by fines up to $1 million per incident per day. However, standards regarding installed generating capacity are something of a mixed bag.
NERC standards for generating resources are based on probability. They use what’s called a “one day in 10 years” criterion — sufficient generating capacity, whether conventional capacity like nuclear and fossil, renewable capacity such as wind and solar, or storage capacity like batteries and pumped storage hydro, must be provided such that the need to disconnect customers (e.g. through rolling blackouts) will occur less frequently than once every 10 years. In “engineer speak,” this is called Loss of Load Expectation (LOLE). The result is usually expressed as a reserve margin, a percentage of peak customer demand.
In some of the regional entities, the one-in-10 standard is mandatory for everyone; in others, it’s up to the various control areas – power pools, independent system operators and similar organizations, or individual utilities. PNM is a member of the Western Electricity Coordinating Council (WECC). As an independent control area within WECC, PNM is not required to conform with the one-in-10 standard for installed generation; it uses a separately derived percent reserve instead. The value used by PNM in recent years would result in a lower standard than the one-in-10.
The electric utilities already owned by Avangrid are all located in New England and New York. All are members of the Northeast Power Coordinating Council (NPCC), a Regional Entity that requires full conformance with the one-in-10 standard by all members. Thus Avangrid’s other electric utilities all must comply with the one-in-10 criterion. They do this through participation in either the Independent System Operator of New England (ISO-NE), or the New York Independent System Operator (NYISO).
As an electrical engineer with more than 50 years of experience in power system reliability, I strongly recommend that, as a condition to the proposed merger, PNM be required to subscribe to the “one day in 10 years” standard for installed generating capacity. Further, PNM needs to regularly conduct Loss of Load Expectation (LOLE) studies to determine the reserve margin required to satisfy the LOLE standard.
PNM is already required to conform with other NERC standards – i.e. those that address high voltage bulk power transmission and cybersecurity. This commitment must also be maintained after the merger is effected.
Failure to implement and observe the one-in-10 LOLE standard was a factor in the recent power shortages in both California and Texas. Let’s not see it repeated in New Mexico.