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Fortnightly Magazine - January 15 1997

are thinly staffed," adds Hayslip.

Carol Cunningham is a civil engineer with a Masters degree in soil dynamics and earthquake engineering. She is responsible for developing three hydro pumped storage projects. Why does she go to NERC meetings?

"I try and view my role as representing the IPP industry [but] I can't give you a specific example where IPPs may differ from utilities on policy. A lot of the value [for me] comes from understanding the technical issues." Hayslip adds, "We don't have some group of IPPs telling us 'Here's what we want to happen.' That's what I'm concerned with."

A big issue for pumped storage is policy on ancillary services: What rules will the regional councils adopt on reserve requirements or geographic restrictions on spinning reserve that may favor or discriminate against pumped storage?

"Hydro pumped storage marks of the few resources that can provide ancillary services directly. We believe that as services get unbundled, some of the products from pumped storage will become very valuable," says Cunningham.

"A year ago, in the UK, the national grid spun off its pumped storage business to a company called "First Hydro," which later sold the assets to Mission Energy. We know that approximately 40 percent of their revenues now come from the sale of ancillary services."

By coincidence, Hayslip adds that Destec has done a "fair amount of work" looking at energy storage, but with compressed air, the flipside of pumped hydro: "As owners and operators of assets that can provide energy, capacity, and ancillary services, we're looking to put the full deal together."

From "Standard" to "Policy"

In its latest Future Course of NERC report, the Task Force noted that standards should reflect the interests of those accountable for following the rules, as well those affected by them. The key may lie in NERC's complicated policymaking procedures.

Says Hayslip: "When the operating committee looks at modifying a policy, we vote and then send the policy to the regions, who will either approve the policy or reject it. That's where the stumbling blocks may lie. The big question has always been, 'How many regions need to approve a policy for it to pass?'

"Here in ERCOT, we have members from co-ops, IPPs, IOU's, muni's and marketers, etc., and we all have votes. But other regions may not work the same way. So the way we operate now does not necessarily ensure that all segments of the industry will get some input.

"Certainly, it tends to be a bit ridiculous that you have to do the same thing two different ways in different regions. A lot of the regions do things on the basis of the contract path. It's difficult to see how you're going to have a system that doesn't reflect real flow studies and calculations."

What about the problem of manpower-of IPPs and marketers lacking the resources to participate fully?

"Do we really need a committee of 30 or so members? Can we reduce the size of committees to free up some of these resources?" asks Hayslip.

"Obviously, if cost means anything