trans_rto2.html

NW Energy Coalition - Transmission

Progress Report and Unresolved Issues
NW Regional Transmission Organization (RTO West)

NW Energy Coalition October 2000

Background

This summer's regional collaborative process has resulted in a set of recommendations to the filing utilities covering the structure and operation of the new RTO. It is now up to each of the filing utilities to incorporateÑor notÑthose recommendations into its FERC filing on Oct. 16. Following will be a 30-day period where other parties can respond to the filing and offer alternatives.

Major consensus recommendations

Many of the major issues were resolved in a satisfactory manner for all parties:

Independent Board of Directors. Election is by five classes having six votes each. One vote is reserved for enviro groups, one for tribes, one for residential users, one for small commercial customers, four for state regulators, six for transmission owners (including BPA), six for distribution utilities, six for marketers and IPPs, four for large end-users. 24 of 30 votes are needed to elect. Board members are obtained from executive search firm, 2/3rds must have experience with large corporations or public agencies.

Lease of all high voltage transmission facilities goes to the RTO, which will have all operational control, including scheduling of maintenance.

Load-based access fees. Loads will pay their current transmission rates for the ability to get power delivered from anywhere in the RTO. No "pancaked" rates, mileage-based rates or other charges for use of uncongested paths; no charges to generators.

Transmission rights for usage beyond current contracts or to serve native loads is priced competitively through auction of rights. Rights-holders not allowed to hoard rights (unused rights must be released to market day ahead).

"Real-time" balancing market will allow intermittent resources such as wind to compete without penalty.

Non-transmission options for providing reliability, such as DSM and distributed generation, are to be treated equally with transmission solutions.

Market monitoring unit will be implemented to watch for market-power abuses.

RTO will forecast transmission and generation adequacy problems, analyzing transmission and non-transmission solutions on an equal basis. Still open question on who will actually pay to solve the problems (see 4 below), but the RTO will have the authority to compel any transmission owner to do the work if someone brings a checkbook.

BPA (and other transmission owners) maintain legal authority to put stranded costs on wires.

Open Issues Requiring Resolution. What's our position?

Governance Some IOU utilities want the transmission owners and the transmission-dependent utilities (TDU) classes to be weighted by investment or load, rather than just one member one vote.This tends to give IOU distribution utilities dominant control over the publics in the TDU class, and BPA and Pacific major control over the transmission-owning class. IOUs fear that many small publics will pack the meetings. Does NWEC have a dog in this fight?

Will the transmission market work? By giving existing transmission rights to load-serving entities, including those with merchant generation, will there be hoarding of rights to benefit incumbents in order to shut out generation competitors? The non-incumbent representatives believe the filing utilities' proposal will be a disaster and inhibit the market. Another complication is, who owns the rights if there is retail direct access?

What gets turned over to the RTO? The current proposal is somewhat vague on this issue. Does only the high voltage stuff get run by the RTO? Developers of small renewables and distributed generation (and, in the future, interruptible loads) are afraid that because they often interconnect at lower voltagesÑtraditionally distribution-level), they will be discriminated against in trying to sell on the grid. They want to have the "one-stop shopping" convenience and fairness of dealing directly with the RTO, and not having to fight through FERC to get access through the lower-voltage system.

Expanding the system and ensuring the lights stay onÑat the least cost. Should the RTO have the ability to actually fund, from transmission charges, transmission and non-transmission solutions to reliability constraints? Or should the RTO simply provide information to the region so individual utilities will know that problems are arisingÑand therefore should pony up the cash to do something about it? Does NWEC prefer regional planning or local planning? Which might be more effective in funding efficient solutions?

Prepared by Steven Weiss, NW Energy Coalition Senior Policy Associate