FERC Filings
MOTION OF EPSA FOR LEAVE TO INTERVENE AND PROTEST, TAMPA ELECTRIC COMPANY, Docket No. ER00-801-000
IV.
In its December15th filing, Tampa Electric states that GSI Service is intended to address imbalances between the amount of energy scheduled for transmission from a generator located in Tampa Electric's control area and the amount of energy actually received by the utility at the interconnection. If the amount of energy received is less than that scheduled Tampa Electric will make up the difference and charge the generator 110% of its system incremental cost. If the amount received is more than what was scheduled, Tampa Electric will absorb the energy and credit the generator at the lesser of 90% of the system decremental cost or 100% of the customer's incremental cost for that period. Imbalances will be calculated on a minute-by-minute basis.
While EPSA is not disputing the need for imbalance tariffs, EPSA has several specific concerns with Tampa Electric's proposal.
1. Generators Should Not Be Required To Obtain Imbalance Service From Tampa Electric
First, while Tampa Electric's proposal allows generators to self-supply or arrange alternatives for GSI Service, as a practical matter, the Commission must ensure that Tampa does not improperly "tie" back-up and transmission services, requiring new generators to take imbalance service in order to receive transmission service. As a practical matter, few sources may be available to provide imbalance services, particularly in Florida where opposition to merchant plant development has been strong. Thus, new generators may have no choice but to allow Tampa Electric to effectively control their resources, thereby creating an untenable market power position by the incumbent utility that will greatly handicap competitive wholesale markets.
2.The Commission Should Develop a Pro Forma Generator Imbalance Tariff
EPSA urges the Commission to open a new proceeding to develop uniform and standardized generator imbalance tariffs as a new ancillary service. While Order No. 888 envisioned developing generator imbalance tariffs individually, recent experience has shown that to be an expensive and troubling approach. EPSA's latest merchant plant matrix shows more than 132,000 megawatts of new merchant capacity planned for development across the United States. Every one of those facilities may need imbalance service. Currently, at least seven utilities have proposals that have either been approved by the Commission or are pending before it. Each one contains different provisions. Some, like Tampa Electric's, are amendments to the pro forma Open Access Transmission Tariff. Others are linked to interconnection or power supply agreements.
Adoption of the proposed Tampa Electric tariff is likely to further chill investment in new competitive generation in Florida and raises serious concern about a case-by-case approach to generator imbalance services. Competitive generation, in the form of new or expanded merchant facilities, provides important benefits to consumers through the development of competitive wholesale electricity markets. New projects inject competition into pricing for power, promote diversity in products and services offered to the market, and mitigate the vertical and horizontal market power of incumbent utilities. Fair, workable, well-established and consistent imbalance rules are needed to support investment in new generation.
A company involved in developing new generation across the country, as many EPSA members are, is forced to negotiate different agreements with numerous utilities. In each instance the terms may vary and the relative negotiating positions of the parties may vary. The result is a poorly developed, ad hoc policy that hampers new generation interconnections and that ultimately raises costs to consumers. Consequently, there is a hodge-podge of varying and inconsistent rules, many of which may competitively disadvantage new market entrants. EPSA would urge the Commission to short-circuit this process, which is expensive and time-consuming for both market participants and the Commission, in favor of a generic proceeding to develop a pro forma tariff for generator imbalances.
3. Tampa Electric's Proposal Gives a Competitive Advantage To Its Own Generation
EPSA is concerned that the GSI Service appears designed to give Tampa Electric's own generation a competitive advantage. The proposed GSI Service would unnecessarily increase the cost and decrease the reliability of new generation, encouraging customers to obtain the power supply from Tampa Electric. By imposing a minute-by-minute - as opposed to hour-by-hour -- balancing obligation, Tampa Electric will be able to preclude its competitors from offering comparably reliable service at a competitive price. Clearly this creates a significant market advantage for Tampa Electric. Generation imbalance charges should be imposed on a consistent basis with scheduling requirements. Thus, minute-by-minute balancing should be allowed - if at all - only in conjunction with customer access to a real-time balancing market, which presently does not exist.
Tampa Electric has failed to justify its request for this approach to the GIS Service. As the Commission pointed out with respect to a generator imbalance service proposal by Entergy Services, Inc., which, like the Tampa Electric proposal, was couched in terms of providing "incentives" for efficient generator scheduling, the utility has the burden of showing that the rates are "sufficient to discourage inappropriate practices without being exorbitant or exploitative." Entergy Services, Inc., 88 FERC 61,098 (1999).
While the goal is to minimize use of the back-up service and encourage Generators to efficiently match scheduled and actual generation, Tampa Electric should not be permitted to use this proposed tariff to bolster its dominant market position and create barriers to entry by competitive generators.
4.Conclusion
The Commission needs to carefully review and analyze Tampa Electric's proposal GSI Service in this proceeding. To encourage robust, competitive wholesale markets, new generators must be able to enter the market and offer products to customers in an efficient and expeditious manner. If Tampa Electric is able to unfairly tie back-up generation and transmission services, or to impose onerous conditions on the services that generators are, as a practical matter, required to obtain from Tampa Electric, the development of a competitive market will be slowed and customers will lose the benefits they would otherwise see.
In addition to rejecting the proposals made by Tampa Electric in this proceeding, the Commission should initiate a generic docket to develop fair, workable and consistent national standards for generator imbalance services in the form of a new ancillary service.