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Fortnightly Magazine - May 1 1996

specifically a "data request" (discovery will follow later), the letter does serve as a preview of points that the FERC may open in the Primergy case.

Clearly, FERC staff appear fixated on the MAPP-MAIN interface (referred to in the letter as "MAPP/WUMS" since the interface actually connects MAPP to the Wisconsin Upper Michigan Systems (WUMS) subregion within MAIN. The letter presents no less than 34 numbered questions concerning MAPP/WUMS, but since some contain multiple parts, we're really talking about 49 questions (see sidebar for excerpts).

And they said that open access would leave the FERC with nothing more to do.

Zones and Pancakes

If you think you know a little about electric utility regulation, but are baffled nonetheless by all the new "paradigms" (em PoolCo, nodal pricing, transmission congestion contracts, and so forth (em then I've got the book for you.

In their new work on electric restructuring, Competition and Choice in Electricity (1996, John Wiley & Sons), authors Sally Hunt and Graham Shuttleworth (of National Economic Research Associates, Inc., New York City, now a part of the Mercer Consulting Group) shed some light on what's really going on.

A "paradigm" is nothing more than a "convenient fiction," say Hunt and Shuttleworth (em like the so-called difference between the transmission and distribution functions. The authors see those two functions as "the same business at different voltage levels." More than that, Hunt and Shuttleworth take their experience gained in the United Kingdom with National Power and translate it to offer the best explanation I've come across on how the transmission sector (operation, markets, and pricing) holds the key to electric utility restructuring.

Hunt and Shuttleworth walk the reader step by step through an explanation of the differences between bilateral contracting and pooling, plus the political ramifications. (Bilateralists come primarily from the gas side, say the authors, and start with markets. They worry about operations later. On the other hand, pooling people come mainly from system operations; they're concerned largely with the physics.) The authors also reveal the secrets of transmission congestion contracts and locational (nodal) pricing.

From California, I've heard rumors of disputes over how to define the size of node in a nodal pricing regime for electric transmission. When I asked her, Hunt saw that dispute as encouraging: "It's absolutely stunning in California that they are arguing about zones versus nodes," she said. "It's a great move forward in the debate. In other parts of the United States the argument is between pancaking and not pancaking."

"Zones seem to capture most of the differences that matter," says Hunt. "The California argument is miles above what has gone on before. This is not an insoluble problem."



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