FERC Filings
MOTION TO PROTEST OUT OF TIME OF THE ELECTRIC POWER SUPPLY ASSOCIATION
COMMENTS ON SUPPLEMENT REPORT
EPSA supports a Southeastern RTO of sufficient scope to encompass the natural markets within the region, and recognizes that inclusion of Entergy’s transmission facilities is a step in the right direction. Nevertheless, the Supplemental Report is as devoid of detail as any of Southern Company’s or SeTrans’ previous proposals and retains the flaws EPSA has noted in previous protests in these proceedings.
EPSA continues to believe that sharing of responsibility between an RTO and an Independent Transmission Company (“ITC”) is a sub-optimal and inefficient solution to transmission operation. If the Commission determines that an RTO/ITC structure is acceptable, the Commission must assure that the RTO retains adequate authority over tariff administration, transmission planning, congestion management and other operational issues, to ensure that transmission owners, under the guise of an ITC, cannot dominate transmission operations. The structure discussed in the Supplemental Report gives too much authority to the Entergy ITC, ensuring that a SeTrans RTO would not be adequately independent.
EPSA commends the SeTrans Participants for abandoning their previous support for a physical rights-based congestion management scheme in favor of the Locational Marginal Pricing (LMP)/financial rights structure supported by the majority of participants in the Southeast mediation. EPSA’s members have consistently favored a financial rights model. However, before EPSA can fully support the SeTrans congestion management proposal, the SeTrans Participants and interested stakeholders need to develop details for operation of the congestion management system.
A. The SeTrans Proposal Remains of Insufficient Scope and Configuration to Encompass All Regional Markets
As discussed above, EPSA supports a regional RTO that encompasses all natural markets in the Southeast, a goal the Commission has repeatedly endorsed. Including Entergy in any such RTO is a necessity, and the SeTrans Supplemental Report is a step in the right direction. Nevertheless, the newly-expanded SeTrans remains deficient, for two reasons. First, in the Southeast RTO mediation proceeding, the Collaborative Governance Model, not SeTrans, garnered the support of most market participants. Nothing in the Supplemental Report is likely to change this fact.
Second, EPSA is not convinced that Entergy will remain a long-term participant in the SeTrans effort. Entergy has flirted with a number of RTO proposals in the past, only to abandon such efforts upon realization that the RTO would not afford Entergy’s ITC sufficient control. Time will tell if Entergy has finally found an RTO home, but EPSA remains concerned that SeTrans’ scope may materially change in the future.
B. SeTrans Transmission Owners Retain Too Much Control Over RTO Operations
The SeTrans proposal remains centered around an “independent” System Administrator that would operate under its own Board of Directors and corporate management. The System Administrator would operate under contract with the SeTrans Transmission Owners (“TOs”), and would be controlled by the TOs, who retain the ability to hire and fire the System Administrator. If anything, the revised SeTrans proposal makes it easier for the TOs to fire the System Administrator if they do not like the way the RTO is being operated.
SeTrans TOs will also be able to control RTO operations through the terms of their individual contracts with the System Administrator, which will apparently be negotiated with little, if any, stakeholder input and outside any meaningful independent oversight. The SeTrans participants have long promised to develop some pro forma terms for these agreements, but such terms have not been adequately developed, and it remains unclear which terms will be modifiable at the discretion of individual TOs or ITCs.
Finally, it remains unclear what the division of responsibility and governance will be between the System Administrator’s Board of Directors and the RTO Board. Inasmuch as stakeholders will have no control over selection of the System Administrator Board, the division of responsibility is an important detail that has not, to date, been adequately addressed.
C. Dividing Responsibility Between the RTO and an ITC Will Allow Transmission Owners to Control the RTO
EPSA’s members generally supported the Collaborative Governance Model in the Southeast RTO mediation proceeding. This general level of support, however, was reduced when the GridSouth and GridFlorida proponents grafted the Entergy ITC concept onto the transco model previously proposed. Allowing a TO-controlled ITC, like that proposed by Entergy, to take over responsibility that would otherwise be exercised by an independent RTO permits the TO/ITC to favor local interests over regional, RTO-wide concerns, and allows the TO/ITC to dominate transmission decisionmaking, favoring its own affiliates over other market participants.
EPSA remains concerned that any RTO proposal that delegates authority to an ITC would not be independent. Nevertheless, it may be possible to design a bifurcated RTO/ITC structure with adequate safeguards to ensure that an independent RTO will prevent harm to regional markets by ITCs that are, by definition, less independent. In the SeTrans model, however, there are no details regarding the proposed sharing of responsibility. Without such details, EPSA cannot determine if market participants and the markets they participate in will be protected from the excesses inherent in an RTO/ITC structure.
D. The SeTrans Participants Have Still Not Implemented Meaningful Opportunity for Stakeholder Input
EPSA believes that, to be effective, an RTO must be developed through an open, collaborative process that provides all stakeholders with the opportunity for meaningful input. The SeTrans proposal, however, from its beginnings as a Southern-only organization, has been developed by transmission owners with no opportunity for stakeholder participation. When the SeTrans Participants have allowed stakeholder comment, such comments have been ignored. Allowing stakeholders to comment on proposals developed by the TOs is not sufficient – stakeholders must be involved from the beginning.
EPSA commends SeTrans for its proposal to form a Stakeholder Advisory Committee, but fears such efforts may be too little, too late. EPSA’s members will likely participate in the Committee formation meeting proposed for January, 2002, but EPSA remains concerned that the Committee will be no more than the stakeholder window dressing such efforts have been in the past. The Commission should require the SeTrans participants to develop all aspects of their RTO proposal and RTO structure with meaningful stakeholder input and decisionmaking, and the Commission should remain actively engaged in the process. Doing so would advance the progress made in the Southeastern RTO mediation, which would likely not have occurred but for the supervision of a Commission ALJ.
The SeTrans Participants can prove their commitment to meaningful stakeholder participation by including stakeholders in developing the SeTrans financial rights congestion management proposal. EPSA supports a financial rights model, but remains concerned that the details of such a model must support efficient and competitive markets. The Commission should require the SeTrans Participants to implement a stakeholder process to develop details for a congestion management scheme, which should begin with the financial rights model supported by most participants in the Southeast RTO mediation.