In thinking about transmission pricing for a competitive electric industry, we should remember that the fundamental objective of competition is to increase economic efficiency. Improved economic...
for calculation of such negative balances, and asked its staff to produce a final order to deal with the possibility.
With recent price runups in natural gas and wholesale power markets, the PUC predicted a higher-than-expected value for nuclear generation owned by utilities. It questioned whether it would have to "undo" various mitigation measures it had adopted earlier (e.g., allowing accelerated depreciation on power plants liable to stranding). P.C.
Mandatory Federal Standards. Acknowledging failure in trying to get Congress to pass federal legislation, the Department of Energy asked for comments on whether it should open its own rulemaking case to compel the Federal Energy Regulatory Commission to impose mandatory standards for electric reliability. The DOE asked for comments on several questions, including:
- Current Rules. What's wrong with the current system, and have violations of standards jeopardized reliability?
- FERC Authority. What can the FERC do under current authority? Can it impose standards or delegate that task to a separate, self-regulating, reliability organization (SRRO)?
- RTO Issues. How would regional transmission organizations interact with an SRRO? .
NERC 10-Year Assessment. The North American Electric Reliability Council (NERC) released its reliability assessment for the years 2000-2009, predicting a sharp turnaround in availability of generation supply, with higher summer reserve margins by 2004 in most of the country-in the Eastern and Western Interconnections, but not in ERCOT, where NERC projects that margins will rise slightly through 2002, but then begin to fall. Consistent with that prediction, NERC projects greater growth in demand and load in the ERCOT than in the West or East. The study also reveals a sharply higher incidence nationwide of requests for transmission line loading relief (TLR), beginning in April 2000, and continuing through the remainder of the year at a much higher plateau than in prior years.
- Study projects 1.9 percent annual growth nationwide in both electric demand and load, but stronger rates in the West (2.1 percent increase) and ERCOT (2.7 percent) than in the East (1.7 percent).
- Increasing through 2004, especially in the Northeast (NPCC) and the Mid-Atlantic (MAAC), and to a lesser degree in Florida (FRCC) and the West (WSCC), but flat or falling slightly during the same time frame in the Midwest (ECAR and MAPP), and the South- east (SERC). Margins are projected at dangerously low levels in Texas (ERCOT) by 2009, based on announced construction plans for new merchant generation.
- TLR logs show a steady growth in requests for line relief since 1997, plus an approximate tripling of TLR events from 1999 to 2000 during almost all months.
- NERC projects that production of natural gas in the Western Canadian Sedimentary Basin (and Canadian exports to the United States) will remain roughly constant through about 2012, when each will begin to fall, with WCSB production unable to fill export pipeline capacity by 2018. See www.nerc.com/~filez/rasreports.html.
Michigan Grid Constraints. The Michigan PSC directed the state's three largest electric utilities (Consumers Energy, Detroit Edison, and Indiana Michigan Power) to assess and report on near-term generation and transmission capacities, plus any planned upgrades or additions, and how such capacity