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Power Resources Adequate, Utilities Tell FERC
Utility and regulatory officials from across the Northwest convened in Portland January 27 to thumb their noses at a major component of the Federal Energy Regulatory Commission's (FERC) plan to reform the national electric grid. That provision – dubbed the "Adequacy Requirement" – would require utilities to prove that they've locked in sufficient power resources to meet their anticipated demand 3 years up the road. FERC's plan has divided utilities on some issues, but all despise the Adequacy Requirement. "We don't need a baby sitter," utility representatives sounded in a unified chorus. "We've provided reliable service for decades."
The utilities' customers, who've suffered double-digit rate increases because utilities were forced to buy expensive power on the market in 2001, might have disagreed. But the confab included no public interest representatives, some of whom agree with FERC that utilities do in fact need a push back toward old-fashioned planning.
FERC's Adequacy Requirement, one of many regulatory components included in the commission's proposed Standard Market Design, is meant to ensure that utilities don't leave themselves overly dependent on the spot market for power. FERC argues that utilities need a universal mandate to invest in power generation to prevent some from trying to gain a rate advantage by ducking out of capital commitments. "That's how we ended up in crisis in 2001 – because, left to their own devices, utilities didn't invest in new resources," argues NW Energy Coalition senior policy analyst Steve Weiss. FERC hasn't said what penalties would be imposed on utilities that fail to meet its adequacy standards, but the commission suggests that a Regional Transmission Organization should enforce it.
Along with consumers who've paid the price for utilities' misguided belief that the deregulated market would deliver reliable, low-cost power, salmon advocates also support FERC's intentions. Better resource planning would help prevent power emergencies during which hydroelectric dams sacrifice fish to keep the lights on, they say.
The disagreement over the Adequacy Requirement is an unusual development in the Northwest's response to FERC's SMD. Typically, the NW Energy Coalition and other public interests have agreed with utilities's reservations about the plan. The utilities and regulators have pledged to issue a joint letter to FERC expressing the region's resolve to deal with this issue on its own.
— Steven Weiss and Kevin Fullerton