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News Digest

Transmission & ISOs
Fortnightly Magazine - June 1 2000

had no other source of funds but a short-term letter of credit from UNICOM, and that it could not meet the FERC's test for independence with its only funding source coming from its largest transmission owner.

MISO said the debt would be rated "A3" by Moody's and "BBB" by Standard & Poor's. The ISO said it was "at the point of executing contracts with vendors" for telecommunications and integrated control center systems, and needed financing to "demonstrate the ability" to fund such purchases.

Congestion Pricing. On March 31, ISO New England filed amendments to the New England Power Pool's restated agreement containing a proposed congestion management system (CMS) and a multi-settlement system (MSS) for the New England control area, as did a splinter group of NEPOOL participants, identifying themselves as the "Supporting Generators."

But NEPOOL itself was unable to file a CMS or MSS plan, as it required a two-thirds vote of its participants committee, but only 64.88 percent had agreed to put the question on the ballot.

So the FERC voted 3-1 to extend authority to NEPOOL until June 1 to continue to apply its current method for allocating congestion management costs as a stopgap measure. Commissioner Curt Hébert dissented, pointing to the "familiar routine" of NEPOOL filing for more time, and complained that FERC had tied the lifting of price caps to filing of a redesign. "With price caps in place, NEPOOL has no incentive to submit a redesign," he complained. Docket No. ER00-1659-000, April 12, 2000 (F.E.R.C.).

Meanwhile, a group of utilities in the Northeast (the so-called "Anti-Subsidy Complainants) had anticipated the ISO's action and already filed a complaint attacking the plan.

The ASC group (including Central Maine Power, Northeast Utilities, United Illuminating, Unitil Power Corp., and Vermont Electric Power), said they expected to be able to support "most of the ISO proposal," including the adoption of locational marginal pricing. As the group noted, "there is a clear consensus in NEPOOL in favor of adopting LMP." However, they noted that some NEPOOL members wanted to retain the current "socialized" method for assigning congestion costs until the ISO actually could implement LMP, which they said could take two years.

As the ASC group explained, "this continued 'socialization' of congestion ... creates a subsidy that has no economic or other justification ... no participant that supports LMP should be opposed to the earlier implementation of a more efficient and cost-justified CMS that eliminates 'socialized' congestion immediately." Docket No. EL00-59-000, complaint filed March 31, 2000.

Retailer Access. Noting that firm transmission capacity was scarce for the upcoming summer peak season, the Michigan PSC set aside requirements in the tariffs of Consumers Energy and Detroit Edison that had given Nordic Electric (a retail marketer) only 180 days to procure grid access and meet credit requirements after Nordic was declared the winning bidder in a supplier solicitation held in September.

According to the PSC, "the lack of firm transmission capacity into [Michigan] during the summer ... may be hindering, at least temporarily, the entry of new suppliers."

Detroit Edison said it would not oppose