FERC Filings
MOTION TO INTERVENE AND COMMENT OF THE ELECTRIC POWER SUPPLY ASSOCIATION-RTO West-Docket s No. RT01-35-000, RT01-15-000
The Commission Must Ensure a Liquid Market for Firm Transmission Rights that are Allocated through an Auction Process.
In RTO West, transmission congestion will be managed through a flow based physical rights model. Within this model, the right to use the system will primarily be allocated through firm transmission rights. EPSA supports this approach to congestion management. Moreover, this approach to congestion management is part of the proposal to place native load under the same terms and conditions as other users of the system.
Under the proposal, Firm Transmission Rights (“FTRs”) will be granted to each of the participating transmission owners: (1) to replace its firm rights under pre-existing long term transmission agreements; (2) to use its transmission facilities as needed to serve its load not covered by pre-existing agreements; and (3) to use its transmission facilities to serve its obligations under a bundled power sale, exchange, coordination or other obligations not covered by a pre-existing transmission agreement. In addition, through December 14, 2011, additional FTRs will be made available without charge to each participating transmission owner as needed to meet that participating owner's following year's reasonable load growth. Finally, continuing rollover rights would be provided for all transmission agreements required to provide (1) an adequate power supply to serve loads from the electric systems of the participating transmission owners, and (2) all other transmission owners holding pre-existing long-term transmission agreements, a one-time opportunity before the commencement of RTO West transmission service to extend the term of any pre-existing long-term transmission agreements, subject to available transmission capacity. If the rollover right is exercised before the commencement of RTO transmission service, the transmission customer will receive FTRs from RTO West for the roll-over period selected in return for a fixed payment during such period equal to the current firm service rate or the company rate for the transmission service to be provided.
The goal of the RTO West filing is for FTRs to be available through an auction process and tradable on the secondary market. EPSA supports that goal. However, with the initial allocation of FTRs for pre-existing customers, future load growth and the rollover rights described above, there will be no FTRs to auction.
There must be an annual auction of FTRs in which all FTRs would be allocated. In order to protect themselves, while at the same time facilitating a market price for FTRs, existing load serving entities could set a reserved price below which they would not sell their rights in the auction. The holders of those rights would receive any auction revenues received as part of the annual auction as set forth in the RTO West tariff.
Without an open and liquid auction process, these valuable FTRs will be left in the hands of the incumbent utility to serve existing load or to engage in other market transactions. This will extremely limit the ability of market participants to compete for existing load. Compounding the concern, the incumbent utilities will have no obligation to make these valuable rights available to the market at any time in the future. The limited availability of such rights in the day ahead market is not sufficient to allow new market participants to compete. In sum, a liquid and transparent market for FTRs is essential to developing robust electric power markets. The Commission should facilitate this process by requiring an annual auction of all FTRs, beginning with commencement of operations, in which a reserve process could be set.