(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
Calling EPACT's Bluff
How Congress opened another can of worms with its call for regional joint boards to study power-plant dispatch.
Smitherman, FERC Docket No. AD05-13, filed May 19, 2006.)
Of course, the RTOs concede room for improvement in some areas.
Exelon suggests, for example, that better load-forecasting techniques could improve economic dispatch by avoiding an over-commitment of generation to reserve requirements, which can remove resources from the dispatch stack and thus increase out-of-merit uplift. (PJM/MISO Report, p. 32.)
Second, certain improvements in software, to allow for a so-called optimal power-flow (OPF) model, might allow RTOs to include consideration of voltage and stability constraints in the dispatch runs for the alternating current (AC) grid, rather than having to adopt a simplified power-flow model that treats the grid as a DC (direct current) network. (Northeast Report, p. 15.)
Finally, PJM and MISO say they might consider combining efforts to conduct a single dispatch run across their joint operating territories, to secure additional economies of scale. But they warn that such an increase in the volume of generation and load committed to the dispatch would require upgrades in computing and data storage capabilities. One stumbling block to such a combined dispatch might be the differing modeling methods for recognizing line losses—marginal in MISO, averaged in PJM, but eventually set to change to marginal in PJM by virtue of a recent order. (See, FERC Docket No. EL06-55, May 1, 2006.)
The PJM/MISO joint board report states that both RTOs declined to speculate on the technical feasibility of managing dispatch runs with resource and load volumes increased by a magnitude of 100,000 MW to 150,000 MW, but American Electric Power was reported to have suggested a study to identify the potential benefits of such capabilities. (PJM/MISO Report, pp. 25, 45.)
Efficiency and Markets
The EPACT process (especially the DOE report) led some at first to question whether the new law requires a so-called “efficient” dispatch (minimizing fuel consumption as a condition of a least-cost dispatch solution), but weight of opinion in the various regional board reports now has largely dismissed the idea as a “red herring.” Under the better view, resource efficiency is seen as a partial subset of the true economic solution, since fuel use, for example, represents only one of dozens of variables (fuel cost, start and ramp times, emissions restrictions, minimum run costs, maintenance requirements, etc.) that affect the fully integrated dispatch algorithm.
By contrast, however, the need to adhere to state-mandated renewable portfolio standards helped convince the West regional board to forgo any attempt at prescribing a required dispatch regime, and likely promise to play a greater role in the future, though the Northeast and PJM/MISO board reports have chosen more or less to ignore the problem.
Mark Spitzer, an Arizona utility commissioner and member of the West Region Joint Board (and slated to take over an empty seat at FERC) has gone on record as agreeing with California regulators that state preferences for renewables should require FERC to respect a “broad view” of dispatch. Spitzer adds, for example, that Arizona has negotiated agreements with the U.S. Environmental Protection Agency that impose limitations on power-plant operations, notwithstanding traditional dispatch protocols. (See e-mail message