To the Editor:
In “Rate-Base Cleansings: Rolling Over Ratepayers” (November 2005, p.58), Michael Majoros urges state public utility commissions to recognize a refundable regulatory...
Bruce Radford’s December 2006 article, “ An Inconvenient Fact ,” provides a helpful critique of a fundamental element of open-access transmission reform, one of the most important rulemaking cases affecting electricity regulation at the Federal Energy Regulatory Commission (FERC). The possibility of requiring non-RTO utilities to offer efficient balancing and congestion management through a security constrained economic (re)dispatch service including third parties would indeed be a helpful albeit modest reform of current rules. It would remedy an obvious type of discrimination utilities still can use to prevent third parties from gaining comparable access to the nation’s transmission systems. Furthermore, it would provide incentives for other constructive reforms rather than creating arbitrary obstacles to transmission access. However, the discussion of these matters would benefit from clarification of a few simple points.
First, the common element of what your article refers to as the “Chandley/Hogan” proposal for open real-time dispatch, as well at the “Transparent Dispatch Advocates” (TDA) proposal, is that non-RTO utilities should include third parties in an essential transmission service—redispatch—that these same utilities now provide to themselves. Utilities routinely use economic security-constrained redispatch every day to avoid curtailments of their own service so as to reliably serve load. No party has denied this. But they do not typically allow third parties access to the same redispatch to avoid curtailments to serve the third parties’ loads.
Because this transmission service helps avoid curtailments, the provision of this service to some and the denial of that service to others is inherently “undue discrimination,” the problem FERC is statutorily obligated to prevent. Discussion of this topic needs to start from that premise. Redispatch is not sufficient for open access without undue discrimination, but it is surely necessary. Unfortunately, FERC never acknowledges this point in its Open Access Notice of Proposed Rulemaking (NOPR). Ignoring what is necessary ensures failure of the policy.
Second, denial of this essential transmission service is a critical element of undue discrimination. FERC’s focus on how non-RTO utilities calculate essentially arbitrary available transfer capability (ATC) in different ways is trivial in comparison. As you note, the “inconvenient fact” is that standardizing ATC calculations fails to address the fundamental fact that ATC cannot even be defined, much less measured, independent of the dispatch.
Third, and this is critically important to understanding what is going on, FERC persistently ignores the first two points, as well as the physics underlying its explanations of “transmission.” Every control area’s security-constrained dispatch, of which “redispatch” to relieve congestion and provide balancing is an integral and necessary part, is the quintessential transmission service. It is vacuous to talk about “transmission service” without referring to the dispatch. When FERC purports to reform the rules for “open access to transmission service,” but never mentions access to the essential transmission service of (re)dispatch, FERC is either misdirected or misdirecting.
Fourth, those not granting third parties comparable access to their economic (re)dispatch service routinely use security constrained economic dispatch (including redispatch to relieve congestion) to serve their own loads. All control areas use