But not for long (em as power producers and

customers get more creative in matching plants with loads Dynamic scheduling is a "sleeper" issue in the move toward electric competition. Industry players are debating independent system operators. They are focusing on issues of governance and the form of transmission pricing. Consequently, they are ignoring critical issues concerning ancillary services. These services are not receiving the attention they deserve.

Although electric utilities have used dynamic scheduling for at least two decades, it has taken this long to start growing in popularity and importance. This growth is a consequence of major changes under way in U.S. bulk-power markets, and, in particular, efforts to unbundle generation from transmission and increase competition among generation providers. It is an issue that will grow in importance over the next few years, primarily because of its potential to expand the geographic scope of competition in bulk-power markets.

Because of the growing importance of dynamic scheduling in bulk-power markets, we collected and analyzed data on utility experiences with this practice. We spoke with individuals from 32 investor-owned utilities, federal and state utilities, public power utilities and other regional and national entities about the following issues:

• Alternative definitions and applications of dynamic scheduling;

• Size of loads and generation that are dynamically scheduled;

• Any differences between dynamically scheduling loads vs. generation;

• Possible limits on the distance (or the number of intervening control areas) between the control area in which the load is located and the control area providing the generation services for that load (or by dynamically scheduled generation);

• Possible limits on the number of schedules that can reasonably be accommodated;

• Speed of response, reliability, and cost of sensors, telecommunications, computing and other equipment required to accomplish dynamic scheduling;

• Indicators of the success of dynamic scheduling (and the metrics used to measure success);

• Contingency actions taken when metering, communications, or computer equipment fails or when transmission outages occur; and

• Cost-causation factors and the costs to dynamically schedule loads and generators.

Reasons for Implementation

Perhaps the most powerful reason to offer dynamic scheduling is that it promotes competition and increases choice. It allows electricity consumers to purchase certain services from entities outside the control area of their native distribution utility and allows generators to sell certain services to entities other than the host distribuor. Increasing the number of possible suppliers and consumers increases competition, which should encourage innovation and reduce costs and prices. If such choice becomes widely available and used throughout the country, the Federal Energy Regulatory Commission may decide to relax the requirements it now imposes on transmission providers to offer six ancillary services to transmission customers at regulated prices. Instead, companies could provide some of these services voluntarily at market-determined prices.

Various factors might motivate the use of dynamic scheduling. The most frequent example is for jointly owned generating units. Dynamic scheduling of a load (e.g., a municipality) from one control area to another also is common.

An electric customer that manages loads in more than one control area (e.g., a manufacturer with several facilities) might want to aggregate its