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Transmission 2000: Can ISOs Iron Out the Seams?

One Market? The Case for Consolidation
Fortnightly Magazine - May 1 2000

trampling on existing contracts, and wonders whether the FERC's desire might not require RTOs to allocate a certain share of FTRs to parties holding those grandfathered rights.

"I think in large measure what we have created around [the protection of existing contracts] is a perfect way to give some folks some financial hedging capability on transmission congestion rights," he says.

Pellegrino also notes a dichotomy between (a) the contract path approach commonly used to schedule transactions (which assumes power moves in a straight line between grid segments) and (b) the flow-based approach used by the security coordinator to evaluate the need for curtailments under rules for transmission-loading relief (TLR).

Here Pellegrino supplies a whimsical analogy. "We assume that during rush hour, drivers will use all available roads to exit the city of Boston. But in reality, everyone takes the Mass Pike (I-90 West), and we have gridlock."

Instead, he advises taking a flow-based view from the outset. "We really need to enhance our tools so that when we schedule a transaction, that [deal] is flow-based rather than contract-path. As we expand the bulk transmission system, I firmly believe we are going to have a much firmer base of power electronic devices that enable us to more actively regulate the flow through the transmission system."

Meanwhile, Barber explains how even recent improvements to business practice standards ordered by the FERC for OASIS (the Open Access Same Time Information System) will not remedy these so-called "seams issues."

"OASIS business practice standards do not solve these problems. The standards for the OASIS are more or less cleaning up how a transmission customer communicates with a transmission provider through the OASIS," Barber says.

"I don't think it really helps how one transmission provider interacts with another one. The OASIS is not meant to define that interface," he adds.

Instead, Barber believes the approach used for solving seams issues will depend on the size of the control region and degree of operational control in that region.

"The grid is extensively interconnected. The Eastern Interconnection reaches almost to the Rocky Mountains and comes down and excludes Texas. Anything that goes on in any part of that grid has some affect, sometimes rather miniscule, but still some affect," Barber says.


Location Is Everything

The asks William J. Museler, CEO at the New York ISO, if congestion pricing cuts profits for renewables and distributed generation.

Q. Will distributed generation and renewable generation in rural areas be valued at less than generation near the city as a result of using locational marginal pricing?

A. You are right in terms of the location. It doesn't mean that they won't get paid; it just means they won't get paid the very high prices that the people on the constrained side of the interface get paid.

But that is not discrimination, because you can have a coal plant or gas plant upstate, and they are in exactly the same situation. It is a locational thing. Power plants, in general, are easier to site in rural areas than in city areas.

When the price