rp_0203_3.html
Gulf Separates Stakeholders in RTO West
After more than two years of intense deliberation, the Bonneville Power Administration
(BPA
), transmission-owning utilities in the Northwest
, and other energy stakeholders are finalizing their proposal to form a Regional Transmission Organization
(RTO
). The plan, to be submitted to the Federal Energy Regulatory Commission
(FERC
) at the end of March, is a major step forward in the federal government’s push to create independent operators for the country’s major transmission grids. If approved by FERC and state public utility commissions, management of the Northwest’s high-voltage transmission system would be turned over to RTO West
. The new organization’s responsibilities would include scheduling transmission, tackling congestion problems, and ensuring reliability of the region’s aging power grid.
Northwest Tribes, state regulators, the NW Energy Coalition
(NWEC
) and other public interest representatives participated in developing the RTO West proposal. NWEC initially favored the approach with hopes that congestion transmission pricing, fair treatment of intermittent resources such as wind and solar power, region-wide planning, and independent oversight could lead to better resource decisions. But recent changes in the plan have called into question whether the RTO will push targeted energy efficiency and other alternatives to building new transmission lines. The proposal would allow BPA to retain it's current rights to Columbia
and Snake River
operations so RTO West decisions should not interfere with salmon recovery efforts.
FERC has pushed the region hard to find middle ground, if not consensus, on a proposed RTO, but final approval for this major shift in energy management will not be easy. And while opponents of RTO West may not convince FERC the plan is flawed, they may find a sympathetic ear at state utility commissions. Some end-user groups, along with many non-transmission-owning publicly-owned utilities, are expected to oppose the plan. The states may also be reluctant to hand over their authority to a new organization that answers only to FERC. A just-released cost-benefit study by FERC and RTO West is expected to support critics' concerns. The report argues the potential risks of RTO formation outweigh the potential benefits. In particular, opponents point to the California
“experiment” as evidence that even good plans developed by smart people can backfire severely. They fear the RTO West proposal relies too much on markets and pricing mechanisms to ease congestion through major transmission paths. The traditional approach to congestion management is to build new transmission, or upgrade existing lines.
A fundamental issue yet to be resolved relates to responsibility for upgrading the system to meet growing energy demands. Should RTO West act like a huge utility, making resource decisions for the whole region? Or should the RTO simply send appropriate price signals to existing utilities and their regulators, and let them decide how to manage their portion of the grid?
Another challenge still before RTO West is how to deal with market power. Some critics point to a situation where a single generating plant, located at a strategic point on the grid could manipulate prices for months or even years before competitive forces counteract it. They argue the RTO needs the authority to impose price caps or other measures to deal with these possibilities.
A fundamental rift also exists between the transmission-owning utilities and FERC regarding how much control the utilities will maintain over their own lines. Utilities want to maintain their current transmission rate structures under strict contracts but much of the operation of RTO hinges on giving the organization flexibility to adjust transmission prices. For example, FERC argues the RTO must be able to send price signals to encourage line upgrades where needed or alternative congestion management tools such as energy efficiency and on-site, or distributed, generation.
The ultimate outcome of RTO West formation will have a big impact on Northwest energy resource decisions and power prices. The initial filing has brought the major unresolved issues into stark relief.
– Steven Weiss and Mark Glyde