FERC Filings
COMMENTS OF EPSA, RELIABILITY EFFORTS
Comments
On May 17, 2000, the Federal Energy Regulatory Commission (Commission or FERC) issued a Notice of Interim Procedures to Support Industry Reliability Efforts and Request For Comments (Notice). That Notice announced a number of specific actions, for implementation on an interim basis for the summer of 2000, designed to enhance our industry's efforts to maintain reliability. In the Notice, the Commission specifically seeks the views of industry participants on the actions identified in the Notice and on "what other short-term measures the Commission and others could take to alleviate reliability stresses during peak periods." Comments on short-term interim measures, which should be concise and focused on the actions implemented in the Notice or other "specific actions capable of being accomplished in the short term," are due by June 2, 2000. Comments on longer-term initiatives can be submitted by June 30, 2000.
The Electric Power Supply Association <sup>1</sup> (EPSA) welcomes this Notice
and offers the following comments on the measures proposed by the Commission and on additional measures that will improve reliability for the coming summer. We anticipate filing additional comments by the June 30th deadline, presenting long-term reliability measures for the Commission to consider.
The best guarantor of reliability is a robust competitive market. <sup>2</sup> The ability of suppliers to meet the demands of customers in a workably competitive market is the best protection against price volatility. For the safeguards to work, however, market participants must have confidence that they are being treated fairly and comparably under the Commission's rules and that transactions will be successfully completed. In addition, market participants must see the proper price signals and incentives to make longer-term infrastructure investments. Any action the Commission can take to improve competitive wholesale markets will limit price volatility and improve transmission operations, two vital aspects of reliability during the summer.
EPSA members are committed to improving the reliability of today's electricity system. EPSA members are actively building power plants to meet growing demand in virtually every region of the country, despite obstacles posed to interconnecting those generators to the grid. EPSA's research shows that over 6,600 new merchant megawatts are planned to be online by June of 2000, with almost 20,000 megawatts planned to be online by year-end 2000. This represents 45 new power plants in 20 states, all designed to improve generation adequacy immediately.<sup>3</sup> To promote investment, the most valuable immediate action the Commission can take is to reject calls for price caps and other ISO market interventions measures that distort market signals and increase risk.<sup>4</sup>
To improve the functioning of the transmission system, EPSA recommends that the Commission take four additional interim steps to improve competition and reliability this summer:
1. Eliminate the capacity benefit margin (CBM). This will vastly improve the quality and quantity of available transmission capacity this summer.
2. Require Level 3 available transmission capacity (ATC) calculations by an independent entity for all Transmission Providers. This will vastly improve the accuracy of ATC calculations immediately.
3. Require independent Security Coordinators. These will also improve ATC calculations and limit transmission loading relief (TLR).
4. Require all service for native load customers to use the pro forma tariff.
Taking these actions will dramatically improve reliability this summer and each can be implemented quickly. Also, EPSA proposes the following minimum first steps to address immediate concerns associated with reliability: (1) require Transmission Providers to give written notice to the Commission of its use of CBM, and post a notice on their OASIS within 24-hours; (2) require OASIS audits; and (3) require the retention of data confirming system conditions existing at the time of a TLR. These ideas are developed further below.
1. EPSA is the national trade association representing competitive power suppliers active in U.S. and global power markets. EPSA's members, which include power generators, power marketers and suppliers of goods and services to the electric power supply industry, share a commitment to bringing the benefits of competition to all electricity customers. Using a broad spectrum of fossil-fuel and renewable technologies, EPSA members generate reliable, competitively priced electricity, steam and other forms of useful energy from environmentally-responsible facilities. The comments contained in this filing represent the position of EPSA as an organization, but not necessarily the view of any particular member with respect to any issue.
2. Reliability encompasses both system security (often considered short-term or real-time considerations) and adequacy (which encompasses a longer-term planning horizon). Well functioning markets require, and can produce, a high degree of both security and adequacy. However, in a competitive market, the "cost" of reliability is not infinite. Transmission customers must be able to know and price the actual level of service supplied and energy suppliers and customers must be able to see and respond to price signals.
3. EPSA's latest Merchant Plant Matrix, which is attached, shows over 170,000 megawatts of announced merchant capacity planned for the next several years.
4. National policies to facilitate new generation interconnections remain a key concern for EPSA. However, we concede that an industry-wide dialogue designed to streamline interconnection procedures and develop more consistent interconnection standards, while it could be initiated immediately, is unlikely to be completed by this summer. Nonetheless, EPSA urges the Commission to adopt a more national approach to interconnection and we will address this issue in more detail in June 30th comments on longer-term reliability strategies.