(November 2006)Our annual return on equity (ROE) survey broadly shows a continuing decline in the level of debate over issues specific to restructuring of the electric market. It also...
FERC says it won’t ‘change’ the native-load preference, but don’t bet on it.
hourly transmission service, to match the hourly granularity of some regional spot markets.
One commonly hears the argument, rather, that grid congestion and lack of infrastructure—lack of enough investment in the transmission grid to keep up with load—poses much greater problems than does behavioral discrimination.
For example, the Old Dominion Electric Co-op argues that FERC should amend the OATT to force RTOs to build new transmission capacity if gross congestion costs for a particular transaction or path will outweigh the construction and facility cost of curing the constraint.
Southern Co., meanwhile, urges FERC to keep rules flexible and allow transmission providers to negotiate one-on-one deals with power producers and grid customers to overcome obstacles. It cites several examples of how it was able to craft creative agreements for transmission-access service, with curtailments allowed, but only on specified conditions that would mitigate loss to the customer:
• Customer 1 . Firm PTP service conditioned on the availability of capacity for the customer to export power out of its region (accepted by customer);
• Customers 2&3 . Firm long-term service curtailable only if alternative capacity not available during specified intervals for scheduled maintenance outages for key high-voltage lines (accepted);
• Customers 4&5 . Firm PTP service conditioned on customer’s agreement to reduce gen output or accept curtailment if certain contingencies occurred on certain identified key grid lines (declined);
• Customer 6 . One-year PTP service offered as temporary substitute for requested long-term service after certain upgrades could not be completed in time to honor the original request (declined);
• Customer 7 . Long-term PTP allowing Southern to direct customer to reduce output in event of certain contingencies on key line, closure of which could damage customer’s facility (declined initially, but offer still pending).
Most of the industry appears to believe that FERC’s rules regarding rollover rights for expired transmission contracts are a disaster. FERC policy supposedly allows LSEs to recall contract rights if capacity needs to serve future load growth preclude renewing the contract for a third party, such as an IPP. Yet opponents (such as Duke Power) complain that FERC conveniently ignores their pleas, even when state regulatory authorities have conducted resource planning studies and have certified that the LSE’s need to serve future load growth is genuine:
“To the best of Duke Power’s knowledge, not one transmission provider has been able to satisfy the commission that native/network load growth dictate that rollover rights should be limited.”
Another key issue involves calculation of ATC, or available transfer capability. FERC’s inquiry asks for comment on whether improved standards for ATC calculation would improve fairness in granting and denying grid access. However, ATC remains a non-zero-sum moving target whose calculation is circular.
From San Diego Gas & Electric, attorney Don Garber sees ATC as a bankrupt concept:
“Static concepts like ‘available transmission capacity’ fail to capture the real-world circumstances that control-area operators face in providing transmission service. The dynamic, ever-changing grid seldom has so much excess capacity that the operator can confidently predict that a new transaction can be accommodated.”
Garber and SDG&E apparently would