Transmission and ISOs
Dot.Com Favoritism. A group of Pennsylvania electric utilities (UGI, Metropolitan Edison, PECO Energy, Pennelec, and PPL) accused the PJM Independent System Operator (ISO) of violating its own rules by allowing the competitive electric retailer Utility.com to prematurely terminate its operating agreements with the ISO after the supplier ceased operations in the state in a manner, say the utilities, that "violated its obligations under Pennsylvania law."
According to the utilities, the success of the Pennsylvania market has stemmed in part because PJM has synchronized its tariffs with the state's retail access rules, but that in this case, they allege that PJM coddled Utility.com and its withdrawal from markets by allowing transmission service to shift from one load-serving entity outside the window of the meter read date required by PJM and state market rules. .-B.W.R.
NEPOOL Governance. A broad coalition of New England electric consumers, including industrial companies (National Semiconductor, Georgia-Pacific, and Chinet) and the Maine Public Advocate have asked the Federal Energy Regulatory Commission (FERC) immediately to reform the governance of the New England Power Pool, saying that the 66.6 percent minimum vote required to approve major policies (congestion management system, for example) is simply unworkable and will interfere with the development of a collaborative plan for a New England regional transmission organization.
The coalition expressed appreciation that NEPOOL had given end users a "place at the table," and also saw no problem with equal 20-percent voting shares for five different industry segments, but insisted that "common sense principles must prevail so that rough justice can be achieved." .
Alliance Transco. Nearly every interested party has asked for a rehearing of the FERC's Jan. 24 decision that OK'd certain aspects of the proposed Alliance transmission organization, including state PUCs (Michigan, Illinois, Ohio, Indiana, Pennsylvania), marketers (Enron Power Marketing), electric associations (APPA, NRECA), consumer advocates (NASUCA), customer coalitions (industrial and transmission-dependent utilities) and, of course, the Alliance sponsors themselves. The parties challenge FERC rulings on several points:
- Alliance Sponsors. Insist on rights for Class B (passive) owners to veto future RTO merger or dissolution, and for Class C (non-divesting) participants to veto rate design changes during a moratorium period set up to attract new members. Accuse FERC of pre-judging rate design matters before Alliance files its tariff-specifically, on whether the "regional through and out" rate (RTOR) should exceed the highest zonal rate.
- Electric Associations. Claim that new proposed "stated rate" method for network transmission service violates FERC's previously accepted method (in Order 888) based on load ratio. Also argue that new single RTOR rate will not remedy problem of rate pancaking on internal transactions within the Alliance region. Question why FERC lauds expansion of Alliance when two new members (Dayton P&L and NIPSCO) lack extensive transmission networks, and when additional member growth (Illinois Power, for example) erodes the already approved Midwest ISO.
- State PUCs. Claim Alliance still lacks scope and size, and still functions as a "toll gate," collecting an added transmission charge for power trades between the western ECAR and MAIN regions to the West, and PJM, the New York ISO and PJM West (Allegheny Power and Duquesne Light) to the East. Oppose broad discretionary right of Alliance members to accept or deny new members that could "improve efficiency" of the transco.
- Transmission Customers. Also attack proposed RTOR, but say key problem is external pancaking, not internal, as suggested by electric associations. Say attorneys Robert Weishaar and Sam Randazzo, representing Coalition of Midwest Transmission Customers, "The Alliance Companies' RTOR is akin to replacing two toll booths, each charging a fifty-cent fare, with a single toll booth charging a dollar." .-B.W.R.
Underscheduling. Universal Studios lodged a complaint with the FERC seeking to redress tariff violations and outages that it attributed to "deliberate underscheduling of power needs" by Southern California Edison, which delivers electricity to Universal at retail.
The movie studio said that Edison's underscheduling "directly caused" the ISO to handle "a constant crisis in both reliability and supply," that, according to Universal, led Edison to impose curtailments on the movie studio under an interruptible retail tariff, when no curtailment was really necessary.
Public Power Participants. The FERC accepted an operating agreement and a transmission control agreement between the California ISO and the City of Vernon, Calif.. The city is believed to be the first municipal entity to become a participating transmission owner in the ISO. .-B.W.R.
Virtual Bidding. Enron Power Marketing lodged a protest against the New York ISO's Feb. 2 progress report to introduce so-called "virtual bidding" (buying and selling by marketers who have no obligation to serve load), saying it would be discriminatory for the ISO to introduce price-capped load bidding by May 1 (as stated in the report), while delaying virtual bidding until November.
Enron argued that each new program should be introduced simultaneously. "Physical market participants [entities who serve load] are currently engaging in implicit virtual bidding," said Enron, "every time their day-ahead load bids deviate from their realized load." .-B.W.R.
Creditworthiness. In the wake of the Valentine's Day order by the FERC, which sought to limit the extent to which the California Independent System Operator could waive credit requirements for scheduling coordinators, and the commotion that followed (generators accused the ISO of ignoring the order; the Power Exchange said the power producers and many others had misinterpreted the order), the ISO said it had amended its tariff in an attempt to squelch the confusion.
New tariff section 18.104.22.168 says the ISO may accept schedules to serve load of a utility that no longer meets creditworthiness requirements if the load is served by (1) resources the utility owns, (2) a resource under utility contract to serve utility load, or (3) a resource bought from a third party who has provided assurance of payment on behalf of the utility. .-B.W.R.
Northeast Price Caps. New York PSC chairman Maureen Helmer said the state would ask the FERC to examine whether the existing bid cap of $1,000 per megawatt-hour (MWh) in northeast bulk power markets is adequate to protect consumers, as part of a five-part plan announced Feb. 20 to boost energy competition and ensure adequate electricity supply.-L.A.B.
California Property Seizures. Showing problems stemming from defaults on power purchases, Tucson Electric complained to FERC that California Gov. Gray Davis violated federal law in two Executive Orders issued Jan. 31 (D-20-01, D-21-01). In those orders, the Governor barred the California Power Exchange from liquidating certain contract interests and instead commandeered as state property certain block forward "matches" representing power purchased transactions conducted through the PX by Southern California Edison Co. and Pacific Gas & Electric.
- Alleged Illegal Acts. Tucson Electric claims injury, as it sold power to the California utilities through the PX, but says the Governor's orders prevent the company from gaining access to collateral as security for the losses. The Arizona utility claims the transfer of the PX contract interests required FERC approval under Federal Power Act section 203 because the PX qualifies as a "public utility" under the Act. Tucson Electric also claims that by jeopardizing its right to collect payment for power sales through the PX, the Governor's action violates the filed rate doctrine, since PX market prices set by PX computer algorithms represent valid FERC-approved utility rates that carry force of law.
- Suggested Remedy. At a minimum, Tucson Electric asked the FERC to force the state of California to step into the shoes of Edison and PG&E and assume financial:
"Specifically, this would entail the assumption of Edison's and PG&E's full extent of indebtedness to the PX, generators and independent suppliers, including any debts PG&E and Edison may default on in the future."
Tucson added, "By seizing part of PG&E's and Edison's assets, without assuming responsibility for their liabilities, Governor Davis and the State of California have pushed the utilities closer to bankruptcy and eradicated any possibility that suppliers will be reasonably compensated for future deliveries."
Earlier, on Feb. 2, the PX had estimated the value of seized forward positions held by Edison at $651 million, representing 2.846 million MWh (average value equals $228.75/MWh). .-B.W.R.
Ameren Corp. has licensed Caminus Corp.'s Zai*Net Manager, Zai*Net Risk Analytics, and Zai*Net WeatherDelta products to address its energy trading, marketing, and risk management requirements. AmerenEnergy Inc., the power trading and marketing subsidiary of Ameren Corp., will deploy Caminus' Zai*Net Manager for deal capture, scheduling, and accounting, and Zai*Net Risk Analytics for risk management in its power operations.
Pantellos, an independent online marketplace for the utility and energy services industries, and, a provider of collaborative workforce management solutions, have entered into an exclusive partnership intended to further enhance Pantellos' integrated suite of supply chain capabilities. The partnership will enable Pantellos members to manage their contingent workforce, or staff augmentation requirements, and supplier relationships through a collaborative, web-based solution.
First Union Securities has provided financing for Universal Compression Inc., a natural gas compression services company, to acquire Weatherford Global Compression. First Union's roles in the financing included: (1) sole lead arranger, asset-backed securitization; (2) administrative agent and sole arranger, senior secured revolving credit facility; and (3) co-lead manager, high-yield synthetic lease offering.
World Wireless Communications' XtraWeb subsidiary has signed a letter of understanding with Texaco Natural Gas Inc. for the co-development, marketing and sale of the World Wireless embedded X-traWeb technology to selected gas distribution customers of Texaco Natural Gas. Under the terms of the agreement, X-traWeb and Texaco Natural Gas have committed to the development and sale of natural gas metering equipment for use by natural gas distributors, resellers, and gas service providers.
edocs, a provider of Internet billing and customer management solutions, has announced its support for Siebel Systems Inc.'s eCommunications 2000.3 and eEnergy 2000.3, a family of eBusiness applications software designed specifically for the communications and energy industries. Siebel eCommunications and eEnergy allow organizations to manage, synchronize, and coordinate all customer touchpoints including the Web, call center, field organization, and distribution channels.-C.J. L.
Vermont Yankee Plant. Finding the price too low to reflect fair market value, the Vermont Public Service Board rejected the deal for Vermont Yankee Nuclear Power Corp. (which provides one-third of all power used in Vermont), to sell its namesake nuclear plant to AmerGen Energy Co., and dismissed the application to allow the owner "to reevaluate its decision to sell the station." It acted after Entergy Nuclear Corp. offered on Jan. 12 to pay $50 million, more than double AmerGen's November offer of $23.8 million. AmerGen upped its bid to $51.5 million on Jan. 22, but that did not sway the board, which concluded that "this bid demonstrates a value for Vermont Yankee that is significantly in excess of AmerGen's second proposal." .-B.W.R.
Need Determinations. The Florida PSC found need for capacity to justify the Brandy Branch (three gas turbines, each rated at about 173 megawatts) proposed by JEA (formerly Jacksonville Electric Authority), based on the utility's proposed 15 percent reserve margin criterion. .-B.W.R.
Merchant Plant Certification. Florida regulators also issued its final order certifying need for the 529-megawatt Osprey merchant generating plant proposed jointly by Calpine and Seminole Electric Co-op. to get around the state's requirements for competitive alternative bids and its policy that need must be shown through an obligation to serve. .-B.W.R.
Competitive Metering. New York adopted its final practices and procedures manual to govern competitive electric metering. Among other points, it adopted policies to require that:
- Customers may choose whether to contract directly with a Meter Service Provider (MSP) or Meter Data Service Provider (MDSP), rather than indirectly through the utility or the retail energy supply company (ESCO), which in turn would deal with the MSP or MDSP.
- Direct customers who buy power in wholesale markets and serve as their own retail supplier perform their own MSP or MDSP functions, but may purchase metering services from either ESCOs or utilities.
- Large-volume time-of-use customers may continue to own their own meters (though the regulators understood that no eligible customer had ever chosen that option). .-B.W.R.
Natural Gas Unbundling. Connecticut regulators rejected a petition by the state's consumer counsel to open a docket to study issues arising from competitive natural gas service, including (1) shifting of costs, (2) supplier of last resort, and (3) methods to reduce need for redundant purchases of firm pipeline capacity by both distribution utilities and competitive marketers. .-B.W.R.
Ancillary Generation Services. Citing conflicts with theory on electric restructuring, New York rejected a proposal by Strategic Power Management Inc., to set up a pilot program within Orange & Rockland's PowerPick Plus Program for customer choice that would recover ancillary services (regulation, load following, etc.) through delivery charges paid to utilities, rather than through the electric commodity charge controlled by competitive retail power suppliers..-B.W.R.
Negotiated Contract Rates. New York agreed to calculate its minimum floor for retail electric rates negotiated individually by contract on an annual basis, rather than monthly, as before, so as to mitigate effects of price volatility. The floor equals marginal costs (the calculation) plus one cent per kilowatt-hour. .-B.W.R.
Other February Orders.
- Florida. Opened rulemaking docket to set new standard for accuracy of natural gas meters..
- Maine. Opened rulemaking to create statewide, needs-based assistance program for low-income electric customers. .
- Massachusetts. Opened docket to develop generic terms and conditions for advanced metering services by electric utilities. .
- Michigan. Adopted guidelines proposed by staff and orders all electric utilities to develop standards for interconnection of merchant generating plants to regulated transmission and distribution systems. .
- Michigan. Opened docket to hear request by advocacy group to block move by Detroit Edison to transfer all grid assets to its affiliate, International Transmission Co., or else force utility to remove all transmission costs from retail electric rates. .
- North Carolina. Asked for staff proposal and public comments to develop policy on what evidence to require for certification of new "merchant" power plants. .
- North Carolina. Opened case to study possible voluntary check-off options on energy bills for customers to designate funding support for green power and public benefit programs. .
- Oregon. Opened docket to set legal standards for merger approval. .
- Virginia. Set hearing for Oct. 1 on request by Virginia Power to form separate generating subsidiary. Asked for cost estimate to "better understand" the transaction..-B.W.R.
Ferc Order 888. The U.S. Supreme Court agreed to review the case of a federal appeals court decision (225 F.3d 667, Nov. 14, 2000) that upheld FERC 888. The high court will review the FERC's interpretation of conflicting state and federal jurisdiction over electric transmission. .-B.W.R.
Non-profit Solicitations. A North Carolina appeals court denied standing to the Gas Research Institute to ask the state utility commission to authorize local gas utilities to make voluntary contributions for research and development. .-B.W.R.
Gas Storage Certification. Reversing and remanding a trial order by a federal district court judge, a U.S. federal appeals court ruled that where the operator of a natural gas storage facility had already obtained certification from the FERC, the operator had standing to seek an injunction against a state environmental board on the ground that federal law preempted any additional state permitting process. .-L.A.B.
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