FERC Filings
MOTION FOR LEAVE TO INTERVENE AND COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION-Removing Obstacles To Increased Electric Generation And Natural Gas Supply In The Western United States- Docket No. EL01-47-000
Introduction
EPSA appreciates the Commission’s effort to examine and exercise the full extent of its authority to maximize supply from existing power sources. We applaud the heightened focus on economic incentives needed to foster infrastructure investment, particularly the Commission’s well-founded concern that entry costs be reduced by eliminating discriminatory or economically disadvantageous procedures relating to interconnection or system upgrades. Accordingly, EPSA welcomes this opportunity to comment on the measures required to improve the energy shortfall in the West.
I.Overview: RTOs Are A Major Component of the Ultimate Solution
EPSA appreciates the Commission’s effort and commitment to find innovative ways to help ease the West’s immediate energy problems. Taken together, the Commission’s proposed actions represent positive steps toward rational solutions to the difficult circumstances in the West. Most importantly, the Order highlights the importance of promoting infrastructure investment, including increased generation, transmission and natural gas pipeline facilities.
As explained below, the Commission’s immediate actions to obtain every available MW of electricity by removing certain procedural and administrative hurdles may help relieve the supply shortages in the near-term. However, the reliability of the electricity system in the West, and indeed throughout the country, largely depends upon robust, well-functioning competitive markets. It is vitally important for the Commission to ensure that all market participants are treated fairly and comparably, and to remove obstacles to the successful completion of transactions in wholesale power markets.
In its Order the Commission acknowledges that it has limited authority to address state and local siting issues associated with the construction of new generation and transmission facilities, an essential element of California’s energy problems. In addition to general support for the short-term measures the Commission proposes, EPSA is most encouraged that, while attempting to address the immediate circumstances, the Commission remains focused on and committed to the policy direction contained in Order No. 2000. In an effort to squeeze megawatts out of the existing system, no one should mistake the interim measures proposed here with the fundamental changes needed to achieve those policy objectives. There are no “silver bullets” for poorly designed markets, inadequate generation resources and deficient infrastructure; continuing to apply parochial limitations on those problems poses perhaps the greatest obstacle to the promise and potential of competitive markets and the enhanced reliability they provide.
Rather, the Commission correctly states that economic and reliability issues must be addressed on a regional basis:
<sup>Recent events have demonstrated the regional nature of the electricity markets in the West. Problems of inadequate generation supply and poor demand responsiveness are made worse by localized electric transmission and gas pipeline capacity bottlenecks and by fragmentation of Western market rules. A west wide RTO, or a seamless integration of Western RTOs, is the best vehicle for designing and implementing a long-term regional solution.</sup>
EPSA agrees. Single-state ISOs, and the balkanized markets they promote, have become relics of the past, clearly unsuited and ill-equipped to deal with the current challenge to provide reliable energy supplies over wide geographic areas. The interim measures contained in the Order may provide some immediate relief; certainly, every effort must be made to bring all available megawatts onto the system. However, correcting the myriad defects of the dysfunctional California energy market by developing and implementing regional solutions cannot be done overnight.
State agencies presently have primary authority over important elements of this situation relating to siting and demand response actions, which may limit the Commission’s immediate options in this particular Order. Nonetheless, EPSA urges the Commission to aggressively pursue the objectives set forth in Order No. 2000 by closely scrutinizing RTO proposals to ensure meaningful compliance with all eight functions, particularly those relating to geographic scope and interregional coordination.