(November 2011) Our annual survey of rate cases shows that despite volatility in financial markets, state regulators are holding utilities to a high standard for boosting their returns on...
Reliability in Flux
NERC Assessments are Fine, but DOE Task Force Gets Last Word
Go figure. Plans to shut down nuclear generation in Ontario should not affect electricity supplies this winter within the United States, despite early rumors of chaos and rising natural gas prices. However, an unexpected slowdown in coal delivery by some U.S. railroads has "seriously reduced" on-site stockpiles of coal at some generating plants in three regional reliability councils - ERCOT, SERC and SPP - particularly those dependent on coal from the Powder River Basin in Wyoming.
Even El Niño may have a role to play. Flow rates are up on the Missouri River, forcing hydro plants to spill reservoirs and boosting generation above expected levels in the MAPP region, where a near-term capacity shortfall had been expected because of increase marketing activity from MAPP to MAIN, and where transfer capability on the transmission network was said to have become "marginal on some interfaces."
These findings come from the 1997-98 Winter Assessment of Reliability of Bulk Electricity Supply in North America, released in November by the North American Electric Reliability Council, or NERC, the umbrella organization for the 10 (at last count) regional councils. (The assessment of MAPP capacity and transmission conditions comes from NERC's Reliability Assessment 1997-2006, issued in October.)
Assessments are fine, but the targets are moving. Some regional councils are reorganizing - the aim being to form or support regional independent system operators and/or wholesale spot markets or power exchanges. (See, "ISOs: A Grid-by-Grid Comparison," this issue. p. 44.) In fact, on November 24, the Mid-Continent Area Power Pool mailed new drafts of its revised restated agreement to its members, indicating changes necessary to accommodate an ISO. Transmission owners would give up operation authority of their lines to the MAPP ISO under a new transmission system control agreement. Both documents - the restated agreement and the TSCA - were posted on the internet the day before Thanksgiving.
The most vulnerable target, however, is NERC itself. As the umbrella organization for the regional reliability councils (including those mentioned above, the Electric Reliability Council of Texas, Southwest Power Pool, Southeastern Electric Reliability Council, and the Mid-Continent Area Power Pool), NERC operates as a nonprofit, voluntary organization. As the demand rises for electricity competition, and as doubt grows about who runs reliability, NERC's voluntary feature has attracted much attention.
Rethinking the Current Scheme
Does NERC violate antitrust law?
On Nov. 6, in Washington, D.C., at the sixth meeting of the Task Force on Electric System Reliability (formed by the Secretary of Energy to recommend federal policy on electric system reliability), task force member John Anderson suggested that NERC is vulnerable to a well-devised challenge on the basis of antitrust law.
At a pause in the meeting, as Anderson walked around the room, he distributed by hand a copy of a 13-page legal opinion prepared for the Electricity Consumers Resource Council (where Anderson is executive director) by the law firm of Cleary, Gottlieb, Steen & Hamilton, implying that NERC