FERC Filings

MOTION TO INTERVENE AND PROTEST OF ELECTRIC POWER SUPPLY ASSOCIATION-Desert STAR, Inc.-Docket No. RT01-44-000

F. Congestion Management

DSTAR proposes to adopt a model much like the flowgate model that is being adopted in other parts of the country (DSTAR refers to flowgates as firm transmission right (“FTR”) interfaces). EPSA is supportive of this model, but has significant concerns with one crucial aspect of DSTAR’s proposal. The initiation of any market-based congestion management system requires some method of allocating transmission rights. However, it is essential, if non-discriminatory access to the grid is to be possible, that those allocated transmission rights be made available to, and priced by, the market. DSTAR proposes to auction FTRs and allocate the rights to the revenues to existing transmission customers. EPSA does not object to this method of allocation of FTR revenues per se, but strongly objects to the provision in the DSTAR proposal that permits existing customers to be “price takers.” This provision would grant existing customers the ability to acquire FTRs without having to submit explicit price bids to DSTAR.

This provision is unacceptable. As “price takers,” existing customers would not have to go through the FTR valuation process, as would every other market participant. The “price taker” provision would result in the de facto removal of significant amounts of commercially valuable transmission capacity from the marketplace, effectively negating the central premise upon which the entire DSTAR commercial model relies: the existence of a liquid marketplace for FTR rights through which all market participants can acquire transmission access based on market economics. Requiring that every FTR be exposed to the market is the only way to develop a competitively efficient and robust market.6 6Note that existing customers can assure themselves of obtaining the FTRs that are required to serve loads because they would be allocated the rights to corresponding amounts of FTR auction revenues. Thus, these customers could assure themselves of obtaining the FTRs by simply outbidding all other bidders.