FERC Filings
MOTION TO INTERVENE AND COMMENT OF THE ELECTRIC POWER SUPPLY ASSOCIATION-RTO West-Docket s No. RT01-35-000, RT01-15-000
II. PROTEST
The filing to create RTO West, i.e. the combination of RTO West and TransConnect, is by the Applicants’ own admission, a work in progress. The various filings and documents required for the Commission to determine that RTO West complies with the requirements set forth in Order No. 2000 are not included for Commission review. Indeed, with the exception of the specific items listed below, the documents contained in the RTO filing are submitted to the Commission for informational purposes only. The filing utilities intend to submit another filing, i.e., Stage 2, in spring 2001, containing all the remaining documents and information needed to complete their proposal for RTO West.
In Docket No. RT01-35-000, the member companies have filed a Stage 1 request, seeking a declaratory order from the Commission relating to various organizational documents. Specifically, in Stage 1, the filing utilities seek a declaratory order with respect to (1) the form of RTO West First Restated Articles of Incorporation and RTO West Bylaws; (2) the scope and configuration of the RTO West and; (3) the form of Agreement Limiting Liability Among RTO West Participants. In addition, the filing includes the current form of the Transmission Operating Agreement and the Agreement to Suspend Provisions of Pre-existing Agreements. However, only three of the filing utilities -- Bonneville Power Administration, Idaho Power and PacifiCorp -- request that the Commission find that the concepts in those two Agreements are acceptable to the Commission and consistent with the requirements of Order No. 2000. The remaining utilities need additional time to fully review the Transmission Operating Agreement and the Agreement to Suspend Provisions of Pre-Existing Transmission Agreements.
Likewise, the filing utilities in the TransConnect proceeding have not put forward a complete proposal required for Commission approval as an ITC within RTO West. For example, the crucial details concerning the functions that RTO West and the ITC will perform and how the two organizations will interact are not clearly spelled out. In TransConnect, the member companies seek only a declaratory order that (1) the TransConnect Corporate Manager, Inc. and TransConnect LLC will meet and exceed the minimum requirements for independence; and (2) the limited functions that TransConnect LLC will undertake – related to rate filings and transmission planning and expansion are acceptable. As discussed below, given the lack of a complete RTO West filing before the Commission, the Commission should not grant even this limited request.
Given that the RTO West filing now before the Commission is not sufficient for the Commission to grant RTO status, EPSA’s comments will only focus on those specific aspects of the two filings, such as the scope of authority by the RTO over critical transmission facilities, necessary for the Commission to provide meaningful guidance to RTO West in advance or in conjunction with its consideration of future filings by the members companies. Clearly, the Commission should not grant RTO status until further filings are reviewed in Stage 2. Rather, the Commission should merely grant sufficient authorization so that RTO West can form, and select its independent board and management. The Commission should then require that the newly formed board and management, not the incumbent transmission owning utilities, make the requisite tariff and other filings essential to the operation of RTO West. At the same time, the Commission should defer ruling on the independence of the TransConnect pending further development of the functions the ITC will perform vis a vis RTO West.
The approach proposed for RTO West ensures that the details left out of this filing, but essential to the independent operation of the transmission grid, (such as transmission planning protocols and generation interconnection procedures), have the imprimatur of the independent board and management of RTO West. This approach is much preferable to the alternative of the incumbent transmission owners, and their generation and marketing affiliates that will continue to use the grid after these two organizations are created, drafting these crucial documents.
Despite the fact that the filing utilities have not put forward, to date, a complete RTO filing, there is much to like in the two filings. In short, once fully developed, EPSA believes that RTO West will be an improvement over the status quo and will facilitate the development of a fully competitive market in the Northwest. Specifically, the proposed governance of RTO West appears to meet the independence requirements of Order No. 2000. Second, although RTO West encompasses a substantial area of the Northwest, the Commission should require RTO West to work with neighboring proposed RTO structures to develop a unified regional market for the Western Interconnection. Third, TransConnect’s filing indicates that this independent transmission company does not intend to have any role in providing or procuring ancillary services. EPSA believes that, unless absolutely necessary, an ITC should not have any role in commodity energy markets, e.g. real time ancillary services markets, and this filing is consistent with that view. Fourth, RTO West’s proposal for market monitoring calls for gathering market information and reporting of specific recommendations or perceived violations to the appropriate regulatory agency. EPSA supports giving a market monitor authority to gather information and make recommendations. In the end, however, it is the Commission’s responsibility to change the market rules affecting the wholesale market or to enforce the rules already in place. The Commission should exercise that authority by looking at markets on an inter-regional, rather than RTO by RTO basis, using the information gathered from the individual market monitors.
Finally, the RTO West filing shows that two contentious issues that have plagued the Commission’s restructuring effort and the transition to fully competitive bulk power markets, i.e. (1) the participation by public power entities and (2) ensuring that all transmission including transmission used to serve native load are taken under the same tariff, can be achieved if parties are sufficiently motivated to address the difficult issues involved. In this proceeding, Bonneville Power is an active player and the statutory and cost shifting issues associated with their participation in RTO West are being addressed.
In addition, all transmission, including transmission service to serve native load, will be taken under the RTO tariff, and all existing transmission agreements between Participating Transmission Owners will be suspended or phased out. EPSA strongly endorses RTO West’s proposal that existing transmission agreements will be replaced by service under the open access tariff. Moreover, the proposal to require native load to take transmission service under the same terms and conditions as other transmission users will significantly improve the competitive environment in the Northwest. Today 70% to 80% of the transmission system in the Northwest is used to serve native load. Such transmission presently is not subject to the same terms and conditions that apply to other transmission, i.e. the terms and conditions of the Order No. 888 open access tariff. This is discriminatory, discrimination remedied under the RTO West proposal. The Commission should closely review the steps RTO West took to bring native load under the open access tariff, since implementation of this proposal in other regions of the country will go a long way to eliminating one of the major impediments to the development of a competitive bulk power market, i.e. the exemption from native load from the terms and conditions of the Order No. 888 tariff.
The development of a seamless national transmission system wherein all transmission usage is accorded fully comparable treatment is vitally important to the growth of a competitive electric power industry. The establishment of RTO West, and the proposal to bring native load and existing contracts under the RTO tariff is an important step towards that end. With actual comparability, the transmission owners’ interests should be to operate the grid as a stand-alone business and to maximize throughput. With incentives aligned in this manner, the transmission operator is expected to facilitate those regional transactions that make the most business sense. Thus, comparability is critical if competitive power markets are to achieve their full potential.