The electric utility industry offers up a wealth of ideas on how the Federal Energy Regulatory Commission might reform its policy, adopted under FERC Order 679 in 2006, of granting financial...
Did you hear the one about the utility dispatcher who downed one too many and paid too much for power? He said his system was loaded.
But his customers weren't. To learn more, I refer you to Kati Sasseville, the recently, though only somewhat, retired general counsel of Otter Tail Power Co., who believes that she and other colleagues at her former company have discovered something that everyone else has overlooked. The story begins in 1924, when Allegheny Power and Philadelphia Electric became the first utilities in the country to interconnnect their lines.
"When more power was needed on one system," explains Sasseville, "every generator on both systems would contribute to meet the demand. Power flowed automatically. Literally, the workers would be shoveling more coal to increase the speed of the turbines. [But] if you're Philadelphia Electric, and you start shoveling, and it's [for] an Allegheny customer, then your costs go up."
They solved that problem by metering the tie lines, measuring the flow and settling the imbalances. "But that old 1924 meter can't cope with retail choice," Sasseville says. "It identifies only the disco lines on which loads exist. It does not identify or allocate the costs to the retail customers whose demand caused them."
What if utilities buy into a price spike to serve a rival's client? "Let's do some math," says Sasseville. "There are 720 hours in a month. Assume power costs $20 per megawatt-hour ($14,400 per month). But now the spot jumps to $6,000 for five hours. Total cost triples to $44,300. Who ought to pay for that?"
Led by Ward Uggerud, v.p. for production, and Don Davenport, customer choice project manager, Otter Tail seeks to patent software it has developed called the Energy Accounting System and will present a paper this December in Orlando, at the National Energy Services Conference, sponsored by the Edison Electric Institute and the Electric Power Research Institute.
"It's been a problem this summer, adds Davenport. "There's been huge imbalance costs. The ISOs haven't bothered to do anything about this. They were wrapped up in their committees and so forth."
I asked Sasseville whether she thought it ironic - that after losing the big test case on wheeling at the U.S. Supreme Court back in 1973, Otter Tail is now writing wheeling software.
"You're the first one who has suggested that, but I've pointed it out before to others. That decision changed minds at Otter Tail - and this is my observation - it had a big psychological effect."
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