FERC Filings
MOTION TO INTERVENE AND COMMENTS OF ELECTRIC POWER SUPPLY ASSOCIATION-The Midwest Independent Transmission-Docket No. RT01-87-000; Ameren Corporation, et al. (Alliance Companies)-Docket No. RT01-88-000; (Not Consolidated)
II. COMMENTS
In announcing the comprehensive settlement of various issues, the Chief Judge characterized the dual RTO concept of the settlement as accomplishing the “same result that a single RTO for the area would produce, while meeting the different business preferences of the participants.” EPSA is not as certain of this conclusion because the settlement, while meritorious in concept, lacks specificity on this point. What is certain, is that, absent the Inter-RTO Cooperation Agreement developed in the settlement, MISO, by its own acknowledgement, has insufficient scope and configuration to meet the Commission’s requirements in Order No. 2000, if Ameren, Illinois Power and Commonwealth Edison are permitted to withdraw, as the settlement would allow. Nor would the addition of new MISO participants necessarily rectify problems associated with a noncontiguous service territory. While EPSA is encouraged that there has been a settlement process in this case that at least purports to make the MISO and the Alliance into a seamless Midwest regional marketplace, the proof is in the details, the collective company commitments, the actual agreements, design and operation of a common, seamless market system and the corresponding market liquidity that develops. If the Commission determines that the dual-RTO concept outlined in the Settlement Term Sheet, and presumably described in greater detail in the settlement documents, does indeed comply with Order No. 2000, then the Commission should direct MISO and the Alliance Companies to commit themselves for the remainder of 2000 to developing a common market design that encompasses a single set of protocols for transmission planning, ATC and TTC calculation, security coordination, congestion management, a real-time balancing market, and generation interconnection procedures.
Because the settlement will not be filed with the Commission until March 19, 2001, it is not yet clear whether the settlement is the complete resolution it purports to be. What is clear is that a large part of the Settlement Term Sheet is focused on the withdrawal of the three participants from the MISO, the $60 Million withdrawal fee and their realignment with the Alliance Companies. In this regard, the primary purpose of the settlement effort was to assure that the other members of the MISO receive the proportionate share of start-up costs from withdrawing members, and perhaps to establish the framework for a financially viable MISO. While this effort benefits those members and the continuation of the MISO, the fact that the term sheet did not cover market design protocols and operation to any significant degree is not comforting to other market participants, including customers.
The critical issue in evaluating any RTO proposal is whether it will make the market more competitive than it is today. Furthermore, EPSA encourages the Commission to set a high threshold with respect to meet Order No. 2000 requirements and require such actions as are necessary to facilitate the establishment of lasting, robust markets. Moreover, the Commission should take such actions now while market structures are still in the formative stages. The proponents of the MISO and Alliance Order No. 2000 Compliance filings, as well as the Settlement Agreement itself must therefore bear the heavy burden of showing that their proposals not only meet Order No. 2000 requirements, but also are in the best interests of the markets.
Nothing in the above comments is intended to take away from the achievements announced by the Chief Judge or as a collateral attack on the settlement. Rather, the comments simply reflect the fact that many of the important details of each of the RTOs and their seamless coordination remain uncertain. What the Settlement Report does establish, however, is that the Commission plays a central role in the RTO process, not only in the Midwest but across the nation. As the Chief Judge’s report details, between 85 and 92 entities participated in the settlement procedures, negotiating over 11 days and generating more than 1200 pages of confidential notes. Despite what the Chief Judge described as night and day differences, the parties reached a tentative agreement. This efficient use of Commission resources is a model that should be followed elsewhere as there are many other RTO filings that raise substantial and far reaching issues that would benefit from the application of settlement procedures and the judicious use of Commission resources.
The Alliance RTO, in particular, would benefit from a collaborative process on future market design that includes all stakeholders, especially those market participants who have gained extensive experience in recent years in the daily operation of commodity energy markets. EPSA hopes that the recently announced technical conference will lead to a more extensive collaborative process. In any event, the Commission should require Alliance to adopt an open meeting policy and engage stakeholders in further discussions, particularly as to market design. Indeed, the Commission should order Alliance and MISO to develop a joint advisory committee.