A face-to-face interview with FERC Chairman Pat Wood III.
Bold. Fearless. Relentless. These are the words now being used by both critics...
for future load growth. 8
The white paper's promise on the subject of FTRs was, in my view, an effort to ensure those on the fence that our federal brethren would not force low-cost states like Wisconsin to pay more for their existing transmission under any standard market design (SMD) proposal that relied on LMP as the primary congestion management tool. The demise of FERC's SMD rulemaking 9 has not diminished the interest of those who want to keep FERC's and MISO's feet to the fire when it comes to ensuring that LSEs receive FTRs equivalent to the firm transmission rights they enjoy today. Implementing LMP in load pockets like Wisconsin without that assurance likely would be economically harmful to our LSEs and their customers.
How will MISO implement significant aspects of its market plans while maintaining fidelity to the principles described in FERC's white paper and its Feb. 24, 2003, order, with respect to the appropriate allocation of FTRs? 10 Resolution of this issue will drive future stakeholder support for MISO's efforts, as well as any effort to expand MISO membership in its western footprint.
Apart from the concerns over FTRs, Wisconsin regulators and utilities also recognize our congested transmission system cannot be wished away. Wisconsin utilities are working together to alleviate transmission constraints through new construction and improved local transmission operations. Wisconsin's stand-alone transmission company, American Transmission Co. LLC (ATC), 11 plans to roughly quadruple its rate-base transmission assets over the next decade. The Wisconsin PSC recently approved a new 345-kV line that could, once it is placed in service in 2008, nearly double Wisconsin's import capability. 12 These planned transmission upgrades will not, however, provide any meaningful benefit before the currently scheduled Dec. 1, 2004, start-up date of MISO's Day 2 markets.
Wisconsin utilities also are examining other ways to improve the efficiency of congestion management prior to the introduction of an LMP model. ATC not only has improved local congestion management, but it makes congestion costs explicit to its members. Making congestion costs explicit sends cost signals to Wisconsin utilities and improves their grid operations to minimize these costs. Wisconsin's LSEs and ATC are constructing billions of dollars of new generation close to load, as well as planning billions of dollars of new transmission infrastructure that will reduce congestion in and around Wisconsin and expand the accessibility of MISO's regional markets. 13 Wisconsin is making the correct infrastructure investment decisions prior to the introduction of LMP-driven price signals.
Other Missing Parts in the Tariff & Seams
Since withdrawing the tariff, MISO has acknowledged a great deal more work is needed to be done before it could start up a real-time or day-ahead energy market. In addition to the missing provisions related to FTR allocations, the proposed tariff left out several other crucial elements needed to gain stakeholder support. 14 MISO identified "a list of gaps in the tariff and unresolved, market design issues that required policy direction from stakeholders. 15 For example, MISO identified 24 market design issues that will require more stakeholder work, including broad issues like