Commission Watch

When FERC opened wholesale power markets to competition a decade ago in Order No. 888, it codified a system for awarding grid access known as the pro forma Open-Access Transmission Tariff (OATT), founded on physical rights, and on the fiction that electrons travel along a “contract path.” Should the commission “tinker” with the OATT, making only surgical changes to make it current? Or, do events instead warrant a complete overhaul?

PJM applied to FERC for authority to impose a new regime of requirements for reserves of electric generating capacity. This new construct, known as the reliability pricing model (RPM), would replace PJM’s current capacity market.

FERC, the ISO, and many other parties had seen no reason for further debate over the need for a location-specific capacity market. By limiting debate, FERC had foreclosed a raft of competing ideas. When the moment finally arrived for the oral argument at FERC, attorneys and witnesses attempted valiantly in the precious few minutes allotted each speaker to flesh out new ideas, and the commissioners struggled as well to keep up. This highly unusual situation made for a helter-skelter hearing, with new topics seeming to come out of the woodwork.

Now comes Entergy’s pending plan to create an “Independent Coordinator of Transmission” to manage certain grid operations. On the surface, the plan would create independent accountability for the transmission grid, as called for in FERC Order No. 2000, with special attention paid to planning and expansion. Will the model work? Can it improve grid access for IPPs and reduce energy costs for Entergy’s ratepayers?

RTO practice creates less risk and uncertainty over the nominal short-term wholesale price of power, but more risk and uncertainty over the long-term cost of transmission. That spells trouble for the coal-fired plant, sited far off at the mine mouth, needing long-haul transmission over a long-enough term to pay back the capital costs.

What good is a penalty that does nothing to deter the crime? For wind turbines, generation imbalances are caused primarily by variations in weather. Even if these imbalances are indeed a bad thing, no $100 penalty will make them go away.