Allocating the costs of new transmission investments requires accurately assessing the value of those new lines, and identifying the primary beneficiaries. But formulaic approaches rely too much...
For a good half a century, electric regulation has meant law, accounting, and economics. But no more. Now it's all about computers, telecommunications, and file-transfer protocols. Forget about CWIP, AFUDC, double leverage, and interest synchronization. They are all irrelevant. In their place, say hello to "bulk-power transmission protocol" (BPTP) and a host of new terms even more perplexing (em such as ICCP, TCP/IP, API, ATC, and FCTTC.*
Several weeks ago I sat in on the Technical Conference for Real-Time Information Networks (RINs), held July 27-28 in Washington, DC, at a modest hotel a few blocks away from the Federal Energy Regulatory Commission (FERC). The FERC had set up the meeting to gather comments on how to design and coordinate new computerized data networks to help power traders gain access to electric transmission. Sometime after mid-October, it expects to issue a formal Notice of Proposed Rulemaking (NOPR) on what information RINs should contain, and how to harness technology to deliver that information to market players.
The discussion was informative. But it also showed how far the electric industry has moved beyond regulatory constructs. In fact, RINs will probably usher in a host of new free-market vendors selling information services and "interfaces" to help transmission users gain access to the grid. Showing herself a skeptic, Commissioner Vicky A. Bailey asked at one point, "Who is the free market?" The witnesses assured her that, given the chance, "they" would come, just as the Internet has exploded with private-access vendors. Another witness couldn't resist: "Internet access will be too cheap to meter."
Commissioner Bailey was left to ponder: "I just wanted to know if there was a job for me."
The RINs conference trained the spotlight on a new group of technocrats, representing some of the electric industry's newest players: John Stojka of Continental Power Exchange (CPEXO), Ronald McMahan of Resource Data International (RDI), and Robert Levin of the New York Mercantile Exchange (NYMEX). These new barons of information aren't waiting for the FERC to resolve jurisdictional conflicts, stranded investment, or a new electric regulatory structure. Instead, they are gathering market information and pushing hard for standardization of computer formats. That standardization will help them and their ilk sell information services to real-time power traders, brokers, and marketers.
Ironically, by concentrating their efforts on information technology, these new players may end up influencing the form and tenor of electric restructuring. One theme arose time and again: Choice of software must reflect information requirements, which in turn must reflect industry structure, which begs the question, "Just what is the structure?" Will electric utilities spin off generation? Who ultimately, will own and operate transmission? Should the FERC be concerned with these questions in its RINs docket?
During his five-minute presentation, Geoffrey Gaebe from San Diego Gas & Electric Co. described plans to open a Western Power Exchange (WPE) by January 1997, a structure that would operate in conjunction with the California pool and the independent system operator (ISO). According to Gaebe, WPE would dictate two types of electronic information networks (EIN): 1) a private network connecting