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Northwest RTO Proposal Heads to FERC
The summer's collaborative discussions to design a Regional Transmission Organization (RTO ) for the Northwest concluded early last month. The group's conclusions are by and large expected to be carried over into a filing the region's transmission-owning utilities must make with the Federal Energy Regulatory Commission (FERC ) this month.
FERC ordered the nation's utilities to form RTOs to facilitate fair and nondiscriminatory use of electricity transmission systems, a key component of a properly functioning open power market. Creating the RTO will turn over operation of utility-owned transmission facilities to an independent entity and ensure those utilities don't manipulate access to the wires to the disadvantage of competing power generators.
In addition, FERC will direct RTOs to send price signals to power plant operators and consumers that reflect the cost and limitations of transmission and generation facilities. The goal is to stimulate new power plant development, investments in energy conservation and transmission upgrades at the right location in a way that results in the least overall cost to the electricity system while maintaining or enhancing reliability. (See the August Report for more background.)
The Northwest group came to consensus on a centralized model. First, the RTO would develop forecasts of the region's overall power needs. If the board decided market-driven investments in energy conservation and new power plant construction weren't reacting in time to stave off outages, the RTO could step in and provide incentives to add new resources and/or fund transmission upgrades whichever was most cost effective. The costs would then be incorporated into the transmission rates of the utilities that benefited from the improvements.
While the group was able to reach consensus on most of the issues, several remain outstanding. Renewable energy advocates joined other power marketers in expressing concern about the amount of control the current or incumbent transmission-owning utilities would keep under the proposed RTO structure and could not concur with some of those utilities' recommendations on how the market in transmission rights would operate. In the end no resolution was reached on who ultimately would be responsible and accountable for actually keeping the lights on.
The parties, including the NW Energy Coalition , agreed on a voting scheme for the RTO's governing board which reserves votes for utilities, state regulators, power marketers, consumers and environmental interests. The board would have a strict conflict-of-interest requirement meant to prevent electric market participants from being represented.
The incumbent utilities, which filed the RTO proposal with FERC on October 16, agreed to follow the collaborative's recommendations only where there was a consensus. Those utilities made their own recommendations on the outstanding issues but their conclusions were not available as the Report went to press. FERC will accept comments from all parties for 30 days before deciding whether to reject, modify or adopt the plan.
The Bonneville Power Administration owns and operates 11,000 miles or about 70% of the high-voltage transmission lines in Washington, Oregon, Idaho and Western Montana . The other transmission owners included in RTO West , which extends beyond the borders of the four Northwest states, are Avista Corporation, Idaho Power Company, Montana Power Company, Nevada Power Company, PacifiCorp, Portland General Electric, Puget Sound Energy and Sierra Pacific Power .
Steven Weiss