FERC Filings
EPSA LETTER TO FERC COMMISSIONERS RE: SETRANS RTO
LETTER
February 11, 2001
VIA HAND DELIVERY
The Honorable Pat Wood, III, Chairman
The Honorable William L. Massey, Commissioner
The Honorable Linda Key Breathitt, Commissioner
The Honorable Nora Mead Brownell, Commissioner
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
RE: SeTrans RTO, Docket No. RT01-100-000, RT01-77-000 and RT01-75-000
Dear Chairman Wood and FERC Commissioners:
In Order No. 2000, the Commission ordered transmission owner organizations, such as SeTrans, to conduct open and collaborative stakeholder processes to develop rules and standards as part of their approval as regional transmission organizations (RTOs). The SeTrans stakeholder process commenced on January 15, 2002, with a meeting regarding the selection of the Stakeholder Advisory Committee (SAC). Since then, the SeTrans SAC has held other meetings with the stated purpose of implementing the sponsor-designed process for selecting System Administrator (SA)candidates. The Electric Power Supply Association (EPSA) looked forward to this current SeTrans process as being one that could build on the progress established in the Southeast RTO Mediation. This optimistic anticipation was further encouraged by the Commission’s attendance at the January 15th meeting. However, the desire of the SeTrans sponsors to push stakeholders and the SAC process to select a group of SA candidates that would allow the sponsors to proceed with their own plans instead of establishing a fully collaborative process ensuring the goals of Order 2000 is disturbing to EPSA and its members.
EPSA, individual generators and marketers(collectively, the Parties) have been participating in the SeTrans stakeholder process to the degree permitted by the rules dictated by the SeTrans sponsors. However, many of the Parties have previously participated in other RTO efforts, most notably the Alliance Regional Transmission Organization (ARTO), and unfortunately see similarities in the way stakeholder input is regarded. Consequently, the Parties are troubled that SeTrans could potentially repeat the ARTO’s disregard for stakeholder input in the RTO development process. The Commission expressed dismay over the costs the ARTO expended while ignoring stakeholder input. The SeTrans process is proceeding down a similar path – sponsors are spening money to hold meetings, stakeholders are traveling to Atlanta to attend bi-weekly meetings where little is accomplished and the potential exists for polices and documents to be developed that will have to be ultimately “unwound” by the Commission. The Commission has previously expressed that it does not favor this approach and instead has said that it’s more efficient to have an effective collaborative process. As Williams Energy Marketing & Trading Company noted in its January 29th letter to the Commission:
The Commission, in short, has consistently emphasized the value and necessity of stakeholder participation in RTO formation and implementation process.
SeTrans need only look as far as PJM or ERCOT for examples of true open and collaborative stakeholder processes built on establishing consensus, rather than merely serving as a final stop before litigation to resolve these industry issues. Stakeholders in those RTO proceedings were given a fair opportunity to voice their concerns and they were meaningfully incorporated into their institutional, market design document, and contractual agreements. SeTrans, however, in its apparent reluctance to become accountable to anyone other than its member transmission owners, has started down a path far different than the ones that brought success in PJM and ERCOT.
The Parties are committed to an open and collaborative process to develop the SeTrans RTO and express a continued desire to discuss and resolve outstanding issues with the SeTrans sponsors. However, the SeTrans sponsors moved the process forward without gaining stakeholder input on important issues. These issues include: (1) governance, (2) structure of the SAC, and (3) the development of the organic documents.
The governance structure that SeTrans proposes is fundamentally the same structure that most stakeholders, as well as FERC Administrative Law Judge McCartney, found did not fully meet the independence criteria during the Southeast mediation. Rather than seeking stakeholder input subsequent to the mediation to modify the structure, SeTrans has instead sought to retain the troubled structure, content in its own internal agreement. In fact, sponsor representatives commented to the SAC that they are not bound by any results of the Southeast Mediation process. Consequently, the SeTrans Governance structure that does not have the buy-in of the non-sponsor stakeholders remains in place, and there is no plan to give stakeholders the opportunity to participate in the development and modification of this structure. While a SAC bylaw working group will be discussing some improvements, the concerns extend beyond the committee procedures. Moreover, it is unclear whether even the concerns raised in this working group will be resolved if the sponsor dominated SAC voting structure governs the decision to modify the sponsors’ original bylaws.
The SeTrans sponsors established the sectors that make up the SAC without any stakeholder input. The sponsors hold the majority of votes on the SAC with 10 of the total 18 votes. Without input into the number and type of sectors, stakeholders cannot help but feel that they are beginning in a minority voting position vis-à-vis the sponsors and appropriately fear a ministerial hand waving over every sponsor’s proposal. Currently there is nothing in the stakeholder bylaws that recognize how minority views can be expressed or recorded in the process.
The Parties are very concerned that the SeTrans stakeholder process is not intended to be a significant step in the SeTrans development of the organic documents. There is considerable ambiguity about the role of the SAC with regard to providing input and advisement on the development of the organic documents. The SAC bylaws, written by the sponsors and not yet approved by the SAC, provide for this role. However, inconsistent comments among sponsors and strong pressure to adhere to tight sponsor-specified time schedules limit SAC review, and discussion does not provide confidence to stakeholders. If stakeholders see the SAC’s input into the SeTrans process and the development of the organic documents ignored, it will seriously affect the development of an efficient regional market in the Southeast, and must be brought to the Commission’s attention.
The SeTrans sponsors have not provided a process to date that merits the Commission’s desire for a collaborative process that respects stakeholder participation. The Parties request that the Commission acknowledge this deficiency and direct the SeTrans sponsors to respect the input of informed parties prior to establishing the process and the guidelines associated with that process. The Parties concur with Williams’ suggestion that the Commission assert that no further action be taken on the SeTrans proposal, unless and until the sponsors have modified the process to hear and respond to meaningful stakeholder input prior to any filing being submitted to the Commission. The Parties are sure that if stakeholders are given the opportunity to participate in the initial discussions on RTO characteristics and functions and to contribute to the drafting of the “organic” documents, including the SA agreement consensus documents will develop. Consensus documents will improve the likelihood of a collaborative RTO that will bring the benefit of an efficient electricity market to all consumers in the Southeast.
Additionally, this process is occurring in the absence of both an independent system administrator and an independent RTO Board. If an independent board were in place to oversee activities of the SAC and the sponsors, many complaints could be avoided. The Parties request that FERC consider urging the SeTrans sponsors and the SAC to begin selection of the RTO board members.
The Parties do not intend that this request delay the SeTrans RTO process. Rather, the parties want to ensure that the ambitious nature of the SeTrans process does not move forward without meaningful consideration of stakeholder input. Indeed, we believe that the fast-track ministerial review of sponsor documents will lead to litigation that will slow the process down. If the process is forced to backtrack in the future, the associated costs will not be looked on favorably by state regulators, but will be seen as imprudent expenditures. We believe that proactive intervention by the Commission at this point in the process will avoid the necessity for corrective rulings in the future.
The Parties applaud the SeTrans sponsors’ promise to develop a robust competitive RTO market for the Southeast. The Parties welcome the opportunity to help the sponsors meet their goals and are ready to participate and work with the sponsors to develop the SeTrans RTO. To do this, the Parties want to become part of the stakeholder process by assisting in shaping the stakeholder process and developing the rules and standard for a Southeast RTO.
On the behalf of the Parties, I thank you for hearing our concerns regarding stakeholder input in the SeTrans RTO process.
Very truly yours,
ELECTRIC POWER SUPPLY ASSOCIATION
Lynne H. Church
President
Electric Power Supply Association
1401 New York Avenue, NW
11th Floor
Washington, DC 20005
(202) 628-8200
cc:
Daniel Larcamp, Office of Markets, Tariffs and Rates
Shelton Cannon, Office of Markets, Tariffs and Rates
Don Gelinas, Office of Markets, Tariffs and Rates
Michael McLaughlin, Office of Markets, Tariffs and Rates
Richard Miles, Office of Dispute Resolution Services
All parties of record in SeTrans RTO Docket et al., Docket Nos. RT01-100-000, RTO1-77-000 and RT01-75-000