(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...
Titans of Transmission
ITC and AEP jockey for the lead in building the grid of tomorrow.
Quebec across the border to New Hampshire. The three named companies would build the line, which is not needed for reliability purposes, and so would appear to be an “economic” project amenable to region-wide cost-sharing. But in this case, the two U.S. load-serving utilities would be selling all their transmission rights back to Hydro-Quebec, at negotiated, market-based transmission rates (not through an OATT). Hydro-Quebec then would use those purchased grid rights to ship clean, renewable hydropower south to the NSTAR and NE Utilities, for ultimate consumption by native-load retail customers of NSTAR and NE Utilities. The parties did not submit any rate schedules, but asked only that FERC approve the “basic structure” of the deal (Petition for Declaratory order, Northeast Utils., Serv. Co. & NSTAR Elec. Co., FERC Dkt. EL09-20, filed Dec. 12, 2008) .
There would be no open season at all. There would be no process to allocate transmission capacity rights to bidders at large through an OASIS site. And there would be no sale of the transmitted energy through the day-ahead or real-time energy markets run by the ISO New England RTO.
The energy marketer, Cargill Power Markets LLC, calls the project a “hybrid between a traditional anchor-shipper model long used in the natural gas industry and a traditional merchant-transmission line.”
A group of generators operating in New England, including FPL and Mirant, protested that they would not be given a chance to bid on access to the line, and call the plan “a thinly masked attempt to evade fundamental Commission unbundling and anti-monopoly policies.”
Call it what you will: 1) a 100-percent anchor tenant deal; 2) an electric-side “gray market” deal bundling energy with transmission service; or 3) a merchant-transmission project where the “merchant” is actually a regulated electric utility with a native-load service obligation. Surely FERC will find the deal too radical to approve.
However, by taking grid development completely private, and reserving all renewables and grid capacity to sponsoring parties through private sweetheart deals, the project does avoid the biggest question of all:
Who pays for all that stimulus?