Energy    Transmission 

This paper addresses the RTO West submittal by:

• examining the transmission system as it is currently structured;
• identifying whether any problems with the current system are addressed in the RTO West framework;
• and suggesting how they might be addressed in a non-RTO framework.

read the full paper > (70kb PDF)

System Operations, Access and Reliability

Economic Efficiency

Unscheduled (Loop) flow managed by curtailments in real time that ignore value relative value of transactions. Transactions that might be willing to be curtailed for a price are not curtailed and those that would be willing to pay the price are curtailed

Instead of schedules based on contractually defined paths, schedules are based on evaluating the physical power flows across entire network. All schedules with financial rights or willing to pay applicable congestion charges accepted -- higher value transactions accommodated. 

Contract path approach and control area scheduling limits probably maintained. More market oriented solutions required to avoid uneconomic curtailments.

Reliability

Loop flow problems managed by real-time curtailments, the consequences of which may can threaten reliability. Entity expecting load service will have to scramble to find alternative supplies in near real-time. May not solve loop flow problem and may create additional problems.

RTO will implement scheduling based on actual power flows virtually eliminates need to manage loop flow in real time (big effort ? heart of RTO).

New tools required to show actual flows resulting from schedules to permit control areas to cut schedules in a timely fashion. E-tagging will provide faster transfer of information across control area boundaries but won't eliminate loop flow. 

Complexity/ reliability

Already 16 control areas. System for reconciling imbalance charges creates incentive for merchant generators to form control areas. Increasing numbers of transactions further increases complexity. Complexity of scheduling potentially risks reliability.

Filing utilities 11 control areas combined into one ? reducing complexity. Imbalance market removes incentive for generators to form control areas. 

Potential change in settlement of imbalance charges will eliminate one incentive for new control areas but complexity  of multiple control areas remains.

Reliability

Regional security (reliability) coordinator can see the entire system in real time but not ahead of time but must order actions to be taken by individual control areas. 

Single control area operator can see entire system a day ahead as well as real time and take action directly to control reliability problems.

None proposed.

Pancaking of volume-based transmission charges across 2 or more systems adds cost to transactions and can prevent the most economic dispatch of the system. 

Rate pancaking within the RTO is eliminated. At the boundaries of the RTO there is still pancaking unless there is a reciprocity agreement.

Rate pancaking will continue unless eliminated under FERC's pro forma tariff.

System access/ utilization

Available short-term transmission capacity goes unused when there is no long-term ATC or scheduling limits between control areas doesn't reflect actual flow constraints. This thwarts possible transactions and can result in higher costs. 

Surveys over past several years show actual availability of transmission capacity when posted ATC was zero. 

Not a problems since all schedules are accommodated that either have firm rights or are willing to pay applicable congestion charges. 

Active marketing of ATC and active third party redispatch market might reduce problem.

Operating reserve requirements

Reliability standards set by NERC and WECC directed at control area operators. Operating reserves met through reserve sharing, however reserves not allocated to local areas to ensure availability despite possible congestion. 

RTO would allocate reserve requirements to local areas to account for transmission constraints.

Modify reserve sharing to account for transmission constraints. 

Load/resource balance

Load serving entities may not carry sufficient capacity/energy to cover periods of extreme load growth or drought. There is an incentive to ?free-ride? on others ? hoping that others will carry sufficient supplies to cover them. Example: 2000-2001 regional utilities clearly did not have sufficient supplies.

RTO could be a vehicle for implementing capacity requirement that avoided the free-rider problem. Not part of current RTO proposal. 

Individual systems can protect themselves if they carry sufficient capacity.

Lack of investment

Regulatory uncertainty disincentive to transmission investment -- uncertainty about future ownership/control of transmission. 

Going forward with RTO will remove some level of uncertainty.

Transmission will be built for specific requests for service and costs most likely allocated to the requester. If FERC continues pressure for separation of generation and transmission, uncertainty remains.

Lack of investment

Generation planned and sited by independent generators. Lead time for siting/building generation less than that for many transmission solutions. Risk that generation will displace need for transmission. 

Problem remains. 

Problem remains. 

Least cost solutions

No integrated planning of generation, transmission and load management.

RTO will carry out a comprehensive, forward looking least cost planning approach to identify problems and solutions, both wires and non-wires. Primary reliance on market solutions (responding to congestion costs) but RTO backup in specific cases. 

Bonneville TBL trying to implement a comprehensive evaluation wires and non-wires solutions,  However, TBL does not propose to fund alternatives to wires.

Information for decision-making

No explicit congestion pricing means no economic signals regarding the location of generation or the relative effectiveness of demand side solutions.

Transparent location pricing based on redispatch costs would provide economic signal for alternative solutions.

Bonneville has proposed crude form of locational pricing.  However, it could not be comprehensive if only Bonneville did it. 

Most efficient transmission solutions

Least cost solution may exist on another transmission owner's system.

Puget Sound area ? Bonneville forced to pursue solutions on their system that could be implemented cheaper on others? systems.

RTO would probably have ability to cause implementation of least cost solutions within RTO if the situation fits the criteria for one of the backups. 

One would think money would solve the problem but it hasn't yet.

Market power

No single independent entity outside of FERC has the access to the information to identify instances market power abuse. FERC has limited jurisdiction (IOUs only).

Independent market monitoring unit with access to information and ability to report appropriate authorities, e.g. FERC, DOJ. More comprehensive than FERC.

FERC has just issued order to require reporting of quarterly data by jurisdictional utilities and is increasing size of market monitoring staff. 

Accountability

Independent board with stakeholder advisory groups that include customers and state regulators. RTO Board is under the authority of FERC.

State and Local regulators and local political influence on Bonneville. FERC regulation of interstate transmission of IOUs, limited regulation of Bonneville transmission.