By some measures, merchant power assets look like a bargain, selling for well below their replacement cost. But whether low prices signal a buying opportunity or a value trap depends on the...
One Nation, Two Markets
EEI’s David K. Owens seeks incremental improvements to competitive markets.
to get the right signals, and that also is a state role. FERC has a vital role for wholesale customers on appropriate rate design, but it’s primarily an issue for state policy-makers. The third thing is the planning issue. RTOs have a major planning responsibility in the organized markets, and in unorganized markets the vertically integrated utility is responsible for it.
There needs to be a level of consistency in coordination and cooperation between FERC and the states in planning investments in energy efficiency and DSM infrastructure.
Fortnightly: With respect to renewables, do you see a conflict between expanding renewable portfolio standard (RPS) mandates and the desire for greater competition? Wind-power facilities must be built where the wind blows, not necessarily where there are load pockets.
Owens: There is no national RPS. Right now, 22 states and the District of Columbia have RPS, and each one is different from the others. That is a big challenge for FERC. The best thing FERC can do is start a dialogue with state public utility commissions to see if they can work together to encourage renewables in a consistent way.
Commissioners recognize the importance of working with state commissions to increase the role of renewable energy. But the theme came out a little distorted. There was a viewpoint that renewables are being better utilized in structured markets, compared with unstructured markets [see sidebar, “RTOs Are Greener?”] . Jeff Sterba from Public Service of New Mexico challenged that.
The fundamental point is whether renewables have the opportunity to participate in both markets, and how we can encourage the construction of transmission to bring renewable energy from remote areas and integrate it into the grid. That theme came through fairly well.
Fortnightly: As part of that theme, FERC in Order 890 says transmission owners must provide conditional-firm services. Can your members live with that?
Owens: It’s not that problematic. The challenge our members were arguing about is that if you have a customer that needs to use the system, you also need certainty that you will be able to serve your native load.
One of the other things Order 890 did was to clarify the issue of ATC, available transmission capacity. Order 890 will seek consistency on how you determine you have available capacity for others to use, and that is important.
The commission’s planning process will be the most challenging part of Order 890. We’ll be working on some important details, and we may need more time than [the 60 days] Order 890 provides. But on balance the commission did a good job. We will see additional solutions for gaining access to the grid for renewables.