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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

for every five-minute interval of the real-time dispatch," says the ISO. "Adding an additional impact test run is not feasible with the current capabilities of the system."

But opponents say that will force mitigation on many suppliers who did nothing wrong. (See Fig. 1, Price Mitigation in New York) Dynegy lawyer Steve Huntoon added more examples of how New York's AMP rule might lead to arbitrary price controls:

  • Bidding History. It sets reference levels for bids based on the previous 90-day period, instead of comparing bids only for similar hours and similar seasons of the year;
  • Out-of-State Generation. It exempts external generation that bids into the day-ahead market; and
  • Network Resources. The ISO requires mitigation for generator capacity that fails to qualify as a network resource, since it applies AMP to installed capacity levels, without discounting for historical forced outages to calculate the net UCAP (unforced capacity) amount.

Huntoon asked why an in-state generator should suffer a greater threat of price mitigation than an out-of-state generator that does not qualify as a network resource and yet can bid into the New York market like a carpetbagger.

"A PJM generator," as Huntoon explains, "has the flexibility of bidding its unit up to $1,000/MWh, giving it the flexibility to sell energy into the highest-priced region … .

"In-state generators should be treated no worse."

California: New Design Wins Few Friends

In California, the bitterness left behind from the flawed market design that created the power market debacle there appeared quite evident in the way the electric industry reacted to CAISO's new market design (MD02), proposed with fanfare on May 1. "Untenable," said the City of San Francisco.

"Mayhem," said the Transmission Agency of Northern California (TANC).

"MD02 is an apple that falls near its roots and offers only incremental change that is unlikely to remedy the problems it identifies, rather than a fundamental rethinking of what has been proven to be a fatally flawed system," TANC added.

And the criticism cuts across all sides, from generators to utilities to marketers to regulators. Few appear happy.

And CAISO went a step further than called for under FERC's SMD structure, volunteering a new test to determine whether wholesale power prices qualify as "just and reasonable" under the Federal Power Act. That test would center not so much on a bid-based market but on producer profit margins.

Meanwhile, CAISO itself has seen its own budget soar out of control, putting the question to FERC on how much leeway to afford to RTOs in collecting their administrative costs through a grid management charge.

Generator Behavior. Williams Energy saw CAISO's proposed market design as aimed more to control power costs and generator behavior than to create a structure in which competition might flourish.

"It is clear from the filing that the politically motivated ISO is seeking a full return to heavy-handed command and control regulation, and the filing appears to be aimed more at controlling wholesale power costs than providing comprehensive market design proposals."

The Independent Energy Producers felt that CAISO had strayed too far from the SMD, as