Beware even the best of attempts at apportioning grid rights and costs.
Bruce W. Radford is editor-in-chief for Public Utilities Fortnightly.
Consider the fate of the borough of Chambersburg, Pa., population about 17,800, and its not-for-profit municipal electric utility, which serves about 10,000 retail customers, give or take.
Earlier this year, the town heard from the PJM regional grid operator that for the 2006-2007 planning year it would receive only about 53 percent of its nominated and requested auction revenue rights (ARRs). That news came despite the fact that Chambersburg had not experienced significant load growth, nor changed its pattern of power-supply sources or ARR nominations in any material way from recent prior years, when typically it had received 100 percent of its requested hedging rights.
(ARRs, allocated to load-serving entities and keyed to identified source/sink pairs, serve within the PJM scheme of things as a financial derivative exchangeable for an equivalent share of FTRs—financial transmission rights—as the more commonly known term. PJM chooses to allocate ARRs, rather than FTRs, as the practice affords more flexibility to the recipients.)