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Electricity Transmission and Emerging Competition

Fortnightly Magazine - July 1 1995

had very little to do with what actually happened in the power grid. But as integrated monopolies it was easy for them to manage the few problems and handle the cost-shifting that was often implicit rather than explicit. In the new world of the competitive electricity market, however, this happy accommodation will not survive.

Under the contract-path model, and the assumptions of the Mega-NOPR, it would be possible to provide information in the RIN about the capacity of the various paths and the scheduled usage of the paths. The capacity would be defined in industry parlance as the "interface limit" for a set of lines, if not an individual line. Presumably, any user of the transmission system could look up the available capacity on an interface and commit to use some of that capacity independently of any consideration of the limits on other interfaces elsewhere in the system. The new power flow could be identified and the change on that interface recorded. Moving megawatts of electricity would be much like moving bushels of wheat.

How close is this stylized model to the real world? And how much would the differences matter? The answers are that the model is not at all close to the real world, and the differences matter a great deal. An interesting case is when the transmission system is congested. When the system is used only a little, anything can be done and the contract-path fiction can be accommodated. However, a constrained system leads to a dramatic result totally at odds with the contract-path model.

The system operators in the eastern interconnected grid regularly conduct joint studies of the transmission transfer capabilities of various interfaces. One of these exercises was conducted by the VEM Study Committee, which examined the impact of various power transfers under peak-load operating conditions.7 A central task was to evaluate the impacts of a power transfer across one interface on the transfer capabilities across other interfaces. For example, what would be the impact of a 1,000-megawatt (Mw) transfer from the Virginia-Carolinas (VACAR) region to Baltimore Gas & Electric and Potomac Electric Power?

The contract-path model assumes no impact on the transfer capability of other interfaces. As Figure 1 illustrates, however, the actual effects elsewhere would be far from zero, and certainly not negligible. The impacts would range from a gain of 50 Mw to a loss of 2,400 Mw, depending on the locations of the other interfaces. Clearly, parties quite distant from the transaction would experience major effects, sometimes larger than the originating transaction.

The complex network interaction or "loop flow" effect is caused by the nature of the highly interconnected grid and the current state of technology governing power flows. There are many interacting, nonlinear constraints that limit operations in power systems. The reduction to "interfaces" is a simplification used for network management in a highly coordinated system.

Further, the problems arise in any interconnected grid, not just in the highly networked system in the eastern part of the United States. Consider, for example, the simplified map of southern California that illustrates the location