Merchant Transmission Redux

Financial transmission rights and regulated returns have not induced needed construction. Presenting an alternative model.

By almost any measure, the nation is running short of transmission, and the existing volume of investment cannot long continue to reliably accommodate retail-load growth and larger wholesale volumes. Factors like environmental opposition also have caused declines and delays in transmission investment, but it seems clear that financial transmission rights and regulated returns have not sufficed to induce the necessary construction. The authors propose a new model to reward investors who lower congestion costs.

The Ontario Coal Conundrum

Tough plant-retirement decisions being made in Canada to reduce its carbon footprint contrasts with America’s embrace of coal-based generation.

There is a certain irony in Ontario’s decision to phase out its coal-fired generation at a time when the demand for new coal-fired plants is growing in the rest of North America. Global Energy’s analysis of demand for coal for power generation suggests that growth in demand for coal is likely to continue and even challenge coal producers to step up their productive capacity and deliverability to meet that demand.

Calling EPACT's Bluff

How Congress opened another can of worms with its call for regional joint boards to study power-plant dispatch.

Did Congress really invite the industry to re-examine the concept of economic dispatch, as practiced by the regional grid operators and RTOs, through market bids, day-ahead markets, a centralized auction, and a uniform market-clearing price? Perhaps not, but skeptics of RTO practice have called the bluff, if that’s what it was.

Kicked Off and On Schedule

Cal-ISO files a new market design, but has it traded efficiency for software?

Eyeing a launch date of November 2007, Cal-ISO at last has come forward with plans for revamping its widely disparaged wholesale market design. The formal proposal, known as the MRTU (Market Redesign and Technology Upgrade), was filed this past February at FERC.

Pondering PJM's Energy Price Run-Up

Does inappropriate market power explain the increase during late 2005?

Beginning around June 2005, prices in the PJM day-ahead locational market pricing energy markets and real-time pricing markets rose precipitously. Based on publicly available information, our study concludes that these price increases are not fully explained by higher loads and higher commodity fuel prices. Could higher energy prices be the result of the inappropriate exercise of market power rather than the appropriate result of market dynamics operating in the presence of scarcity?

The Too-Perfect Hedge

Congress gives FERC an impossible task: Craft long-term transmission rights to save native load from paying grid congestion costs.

If “perfect” be the enemy of the “good,” then look no further for proof than in Federal Power Act section 217(b)(4), enacted by Congress in EPACT 2005.

East Vs. West: Growing the Grid

The models and motives behind tomorrow’s transmission expansion.

Major transmission projects based on two distinct models are showing signs of life. What can these projects teach us about future transmission investment?

A Candy-Coated Grid

Incentives for transmission investment could boost postage-stamp pricing over license-plate rates.

FERC proposed a new set of regulations, under the new section 219 of the Federal Power Act, explaining in broad outline how it might approve generous financial incentives for new investments in transmission—incentives once dubbed as “candy.” As of mid-January, the new NOPR had spawned more industry comment than just about any other FERC proposal in recent memory.

Long-Term Transmission Rights: A High-Stakes Debate

The absence of long-term transmission rights could exclude potential competition—and cause higher electricity costs.

Power-industry restructuring redistributed financial uncertainties that discourage generation investment and ultimately raise the price of electricity to consumers.

Encore for Negawatts?

Congress renews PURPA’s call for conservation and load management, but the world has changed since the 1970s.

The “N-word” in the title first appeared in this journal more than 20 years ago, courtesy of the celebrated environmentalist Amory Lovins and his widely quoted piece, “Saving Gigabucks with Negawatts” (Fortnightly, 1985). Scroll forward a few decades. With restructuring of wholesale electric markets at FERC, plus formation of regional transmission organizations and independent system operators, the game was changed.