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A Vision for Trasmission: How the RTOs Stand

And where the trouble spots lie in FERC's grid plan.
Fortnightly Magazine - August 2002

in the RTO West geographic area, and the multi-use nature of the hydro system, make it a poor candidate for FERC's SMD concepts."

The co-op notes that even the grid system is different: "In the West, path rating changes after day-ahead [market clearing] occur frequently due to events like ambient temperature changes, range or forest fires, and lightening storms, etc." The co-op also points out that de-rating operational transfer capability based on these factors occurs far more frequently in the West than in the Eastern Interconnection, due to the long distances traversed by transmission lines. Thus, the co-op said, "marginal bus prices should not be used to send price signals to path users."

The sponsoring utilities for RTO West acknowledge their differences with FERC, but defend their novel proposal as workable. "The process for clearing congestion that arises during the scheduling process will rely on a system of voluntary bids … . Participation in the inc/dec bidding process must be voluntary to avoid disrupting the system of hydroelectric and thermal optimization that is fundamental … in the RTO West geographical area." According to the RTO West sponsoring utilities, this optimization process relies on operator self-commitment of resources. To the extent that a voluntary bidding structure raises concerns that markets may not be as deep and liquid as needed for competitive outcomes, the RTO West proponents says that their proposal provides several tools to address these concerns.

Yet opponents are not convinced.

Serious doubts are voiced by the Northwest IPP/Marketers Group, which includes Calpine, Reliant, PPL Energy Plus, PG&E National Energy Group, UBS AG, TransAlta Energy Marketing, and the Western Power Trading Forum, among others. The group fears the lack of a day-ahead market forged in a bid-based, security-constrained computer run.

"Without a full day-ahead energy market there will be no assurance that locational prices set in the RTO West congestion redispatch market will match prices in bilateral trading hubs [e.g., COB, Mid-Columbia]. … If the RTO-determined prices do not match hub prices, the transmission rights sold by RTO West will be imperfect hedges and RTO West will pose needless risk to participants," the RTO West doubters said.

For what it's worth, the LBP concept claims support from a group of Canadian planners, including ESBI Alberta, Ltd., the Alberta Dept. of Energy, and the Power Pool of Alberta. Again, they point to physical differences in the grid: "In the West, transmission networks are sparser and less meshed than for electric systems on the eastern seaboard. The system is characterized by stability issues rather than thermal issues; hence the determination of available transmission capacity is less transparent and in many cases there are no generators physically present downstream of a constraint."

They would favor the RTO West model for Canada, too.

"In Alberta, due to the geographically dispersed loads and centralized generation resources, the LBP model would provide more re-dispatch options than LMP." In an interesting twist, RTO West proposes no ICAP or ACAP model to assure g eneration supply. Perhaps that is due to the region's dependence on hydroelectric plants, which are energy