In the electric power industry, the urge to merge has gained a new lease on life. These combinations are witness to the powerful forces of consolidation let loose when deregulation makes...
Electricity Transmission and Emerging Competition
of major power plants, loads, and transmission lines (opposite page). The schematic includes three interfaces with associated maximum transfer limits: The East of River (EOR), with a maximum of 5,700 Mw; West of River (WOR), with a maximum of 8,206 Mw; and Southern California Import Transmission (SCIT), with a maximum of 16,974 Mw.
Under the contract-path model, presumably it would be possible to post these interface capacities and allow individual utilities or users to make decisions on how much capacity to use on each interface. In principle, the participants might assume that they could use both the 5,700 Mw on EOR and the 16,974 Mw on SCIT simultaneously. Unfortunately, the indicated capacities are not all achievable simultaneously. Actual use of the system imposes further limits that are summarized in the "nomogram" of Figure 2. This figure indicates the net effect of limits on simultaneous flows on the EOR and SCIT interfaces. Due to the interaction of load patterns with a number of physical limits, such as stability and voltage control, the allowable flow on one interface cannot be determined without knowing the flow on another. Furthermore, the limits on the flows depend on other factors such as the "inertia" of the available power plants operating in southern California and the status of the nuclear units at Palo Verde.
The interactions are complicated and large. To achieve the full SCIT limit, the EOR capability must be reduced from 5,700 to 700 Mw. Or, to use the full EOR limit, the SCIT flows must be cut in half. And when we note that the flows over the EOR would be counted again in the SCIT flows, the non-EOR imports across the SCIT could be reduced by as much as a factor of seven.
There are related dangers here, with ample worries for everyone. New entrants to the market should fear that the incumbents would decide to guarantee a path-based right under a wide range of circumstances by defining a very low transmission capacity, all of which is currently committed. Then new transmission capacity could be obtained only through expensive expansion, or not at all. For the incumbents the danger is that the larger nonsimultaneous limits may be allocated by regulators, with the cost of meeting them under different conditions imposed on the incumbents. At a minimum, incumbents would carry the burden of proof in demonstrating that capacity sometimes used would not always be available. For the regulator, the concern should be that capacity rights might be allocated in ways that artificially constrain available dispatch, increasing the cost due to congestion as the system operators stumble to keep up with the information that for every 1 Mw on the EOR interface someone may have to back off 2.13 Mw on the remaining SCIT flows.
as a Way Forward
Clearly it is impossible to identify separately the capacities of individual paths and then allow third parties to make their own decisions on how to use those paths. The real system doesn't work that way. The real system is a network that requires careful coordination