"THESE ARE THE DOG DAYS OF DEREGULATION." That's how Federal Energy Regulatory Commission chairman James Hoecker put it last month in Houston at his luncheon talk at the Sixth DOE/NARUC National...
Northwest Passage: BPA's Changing Role
lot of issues arise from uncertainties in the generating capacity of the system," Kempton says. "In a hydro system, you have some advantage in the reserve capacity, but you compromise other parts of the program." In other words, a hydro plant can reduce spill or draw down the reservoir to produce more power on demand, but doing so will affect fish migration and reservoir levels.
"You are pulling water out of the system, and it will have to be replaced later," Kempton says. "The integrated network is very complex, and it can't meet the same standards you can meet in a system with mostly thermal plants."
A second problem with the SMD was the dominance in the Northwest by entities not regulated under FERC's jurisdiction, including BPA and numerous cooperatives, municipals, and other public power utilities. As a result, FERC would have limited ability to ensure that the bulk of the market's participants were complying with its market behavior standards.
"We agreed to be in voluntary compliance with Order No. 2000," Wright says. "We've shown that we are doing everything possible to get the most out of the existing system, and that investments are being made in a cost-effective way. We have managed to deal with the issues that have arisen, but there always will be a concern about whether Bonneville will choose at some future date to operate transmission systems for its own benefit."
FERC provided RTO West with flexibility on a number of issues; for example, the commission accepted the RTO's proposed eight-year transition period, and its alternative plans for handling congestion management, in the context of the region's hydro-intensive system. Nevertheless, consensus for RTO West had deteriorated as various stakeholders became disenchanted with the process, and the effort stalled.
Then FERC published its wholesale-market white paper in April 2003, signaling that the commission was open to significant regional flexibility. This revitalized the effort, and allowed the stakeholders-embodied in the regional representatives group (RRG)-to regroup and begin their efforts again. But this time, the process would start with a clean slate.
"If we were going to be successful, we realized we were going to have to start by looking at the problems and opportunities facing the region, and develop broad regional consensus on the process and the solutions," says John Carr, a vice president with Pacificorp in Portland, Ore. "We went back to re-engage the region and reached out more directly to the state commissions and governors' offices."
The result was the Grid West proposal, which now is being developed as a homegrown RTO, rather than one based on a model handed down by federal regulators.
"Grid West came out of a bottom-up approach, from the grist of the regional problems that we were experiencing," Carr says. "Where RTO West was a full package with consolidated control areas, financial transmission rights, etc., Grid West is a staged approach that has a well-defined beginning state and a process for moving further. It's a much more evolutionary approach."
The Grid West structure is still in development, but in general, the first stage