News Digest

Fortnightly Magazine - November 1 2000

News Digest


Transmission & ISOs

Arizona System Administrator. The Federal Energy Regulatory Commission told representatives of the Arizona Independent System Administrator that its proposed package of tariff and protocols was deficient, as it failed to show how Arizona Public Service and Tucson Electric (the ISA's two leading members) would amend their own open-access transmission tariffs (OATTs) to coordinate operations with the ISA.

Meanwhile, a group of irrigation districts in Arizona attacked the ISA plan, challenging the ISA's claim that it is exempt from filing its own OATT, and claiming that the ISA itself lacks legal standing, since local state court in Maricopa County last summer struck down the state PUC's entire regulatory scheme for electric deregulation (which included plans for the ISA), saying that the rules were never certified by the state attorney general.

Unlike other ISO proposals, the Arizona ISA is designed expressly (and only) to facilitate the state's plan for retail electric choice, and says it will operate only as an interim agency, pending formation of the Desert Star Regional Transmission Organization. The ISA plans to reserve 300 megawatts of firm transmission capacity provided by its members for competitive service offerings for consumers, called allocated retail network transmission (ARNT), which comes out of capacity already dedicated to retail service by the various utility transmission providers. Thus the ISA claims it need not file an OATT with the FERC, since it will not own, maintain or control transmission facilities, and since it believes that its ARNT concept "will not impede any wholesale uses of the system."

Salt River Project, the largest Arizona utility remaining outside the ISA (and working with others to form Desert Star), has not opposed the plan, but has its doubts.

"SRP is concerned that in acting upon the ISA's filing, the FERC may inadvertently _ circumvent the ongoing stakeholder process with Desert Star." .

Locational Marginal Pricing. The FERC reaffirmed its November 1997 order that approved the PJM ISO, denying virtually every material request for rehearing or modification, including attacks on PJM's model for locational marginal pricing, its designation of zones for zonal license plate pricing, and its allocation of fixed transmission rights (FTRs) to hedge against congestion costs (but see story below). .

PJM Congestion Rights. The FERC accepted an offer from the PJM Interconnection to remove "grandfather" preferences and reallocate fixed transmission rights (FTRs) on a load-ratio basis effective June 2001, marking a partial victory for Old Dominion Electric Co-op, which had claimed injury from locational marginal pricing (LMP) and an alleged preferential allocation of FTRs for hedging grid congestion to vertically integrated investor-owned electric utilities. .

Michigan Transco. The FERC OK'd a proposal by DTE Energy Co., to form a stand-alone, for-profit transmission company known as International Transmission Co. with an unusual rate structure, despite the drawback that ITC had not yet turned over control of grid facilities to an approved regional transmission organization.

Concurring commissioner Linda Breathitt admitted that approval was "difficult" without an RTO structure, but rationalized that DTE was taking "true and sure steps" toward participating in an RTO.