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Electric Reliability Sanctions or Commerce?

Fortnightly Magazine - May 1 1998

ISOs will supplant the regional councils.

The comments revealed certain surprises. For instance, the Edison Electric Institute found itself aligned with Enron Power Marketing and John Anderson's Electric Consumers Resource Council. All three questioned why NAERO should continue to oversee adequacy of electric system supply or transmission capacity, since generation is becoming competitive, and in a very real sense can serve as a substitute for transmission. In a similar vein, the Public Generating Pool (Seattle City Light and the Douglas and Chelan County PUDs) noted: "The proposal does not contain a single reference to ancillary services and ignores the potential for a market."

Some of the most interesting comments came from James F. Wilson, a consultant with ICF Resources, who helped prepare the background report on independent system operators for the DOE Task Force on Electric Reliability, headed by former Congressman Phil Sharp. Wilson offered backhanded praise for the panel's switch to top-down governance: "If regional organizations are to have the primary enforcement role, it is not clear to what extent NERC's present role and status, along with enhanced government support¼ would be insufficient."

Wilson also felt the report failed to justify why the new NAERO must be self-regulating, patterned after the NASD: "[It] did not [show] why, if NAERO needs certain exclusive authorities that derive from government, it should be an SRO rather than a government entity¼ The reasons given were that an SRO will be more able to attract and retain sufficient technical expertise (em that is, pay higher salaries."

In fact, many comments from RRCs stressed the importance of continued voluntary participation by industry experts. F

Bruce W. Radford is editor of Public Utilities Fortnightly.

Favoring Commerce: The Grid for Sale?

POWER MARKETERS ask FERC to do away with "network" transmission service, forging a cash market in reliability.

1. Eliminate notion of "native load," or any preferences for load-based transmission.

2. Eliminate concepts of point-to-point and network transmission services, as understood in Order 888.

3. Broaden concept of "functional unbundling"; separate transmission entirely from merchant activity.

4. Regulate "retail" portion of transmission in bundled retail energy service.

5. Require transmission owners to post all transmission service on OASIS.

6. Create single tariff for transmission, keyed not to load, contract paths or delivery or receipt points, but to rights at constrained interfaces.

7. Allow trading of transmission capacity reservations in secondary market.

8. Standardize rules for defining, identifying and measuring ATC (available transfer capacity) and TRM (transmission reliability margin).

9. Combine "Balkanized" control areas; mandate larger areas for ISOs, system control and ATC.

10. Allow all transmission customers to pool or batch energy transactions, without reserving and scheduling each deal separately.

11. Disallow "private" transmission tariffs (em rules imposed by NERC, power pools or regional reliability councils not filed at FERC.

12. Regulate all terms and conditions of transmission service, including rules linked to reliability, system security and system adequacy imposed by NERC and regional reliability councils.

Source: Petition for a Rulemaking on Electric Power Industry Structure and Commercial Practices and Motion to Clarify or Reconsider Certain Open-Access Commercial Practices,