FERC Filings
MOTION TO INTERVENE AND PROTEST OF ELECTRIC POWER SUPPLY ASSOCIATION-Southern Company Services, Inc.-Docket No. RT00-77-000
A Southern Gridco Would Exert Undue Influence Over The Establishment Of Power Markets And The Development Of Market Policies and Rules.
EPSA questions whether a for-profit entity functioning as an RTO can ever achieve the neutrality aspect of independence as it pertains to the initial market design and the establishment of market policies and implementation of rules. Similarly, a transco board which has a fiduciary responsibility to maximize the value of its transmission assets for the benefit of its shareholders is likewise not neutral to market policy. An entity with such a duty should not have the authority to design the power market or set market rules.
EPSA recognizes the political, operational, and administrative impediments to establishing RTOs in regions not heretofore integrated. EPSA also recognizes the interrelated nature of market design to maintaining reliable transmission operations. EPSA nonetheless believes that it is possible to address the absence of transco neutrality on market rules, to avoid the seams problems and excessive ISO interference in market operations that have arisen in other regions due to the parochial interests of local market governance processes under existing ISO’s, and the natural tendency of ISO’s themselves to overlook their own shortcomings in system operation or market implementation. The Commission should require transcos/RTOs to unbundle market design and rule making functions and market monitoring from the transco/RTO. The Commission also should direct the establishment of a truly neutral market policy decision-making organization whose geographic scope is not artificially constrained by the geographic borders of the individual RTO transmission tariffs. Certainly the common market design should be significantly broader than, for example, the transco proposed by Southern. The transco should focus exclusively on transmission service and should have no role in administering power markets or establishing power trading rules.
With respect to the broader Southeast region, EPSA suggests that such an organization govern market policy across the proposed Southern Company, GridSouth, and GridFlorida regions. There already is a great deal of similarity between market design proposals in these regions. As these entities continue to develop their markets, EPSA is concerned that the transcos will exert too much control or influence over the design and implementing details. Specifically, there is concern that such outcomes will occur in a fashion to enhance the ‘for transmission profit’ motives of the transco and its Board which may be to the detriment of efficient market operation within and between proposed RTOs. Moreover, disparate market designs are likely to create seams problems throughout the Southeast region.
Finally, a transco’s involvement in market design would not inspire confidence in other market participants. Promises to eliminate seams problems through voluntary processes in the Northeast largely have been ineffectual. Structural change is needed and the most efficient way to accomplish such structural changes is to avoid balkanizing market designs at the outset of RTO development. The creation of a cross-RTO market structure not only will mitigate seams issues and facilitate interregional coordination, but also could be a first step towards transitioning to more geographically diverse RTOs and the possible consolidation of multiple RTO governance structures.
For these reasons, EPSA suggests that the Commission direct the proponents of the three southeastern transcos to establish a broad-based market design and policy organization to create market rules independent of their ‘for transmission profit’ motives. That entity should be a balanced organization reflective of all market participants. To ensure its successful establishment, EPSA welcomes the formal or informal involvement of the Commission’s ADR staff.