FERC Filings
ADDITIONAL COMMENTS ON JANUARY 10 ISSUES OF THE ELECTRIC POWER SUPPLY ASSOCIATION, THE COLORADO INDEPENDENT ENERGY ASSOCIATION, THE ELECTRIC POWER GENERATION ASSOCIATION, INDEPENDENT ENERGY PRODUCERS OF CALIFORNIA, INDEPENDENT POWER PRODUCERS OF NEW YORK,
OVERVIEW
On November 15, 2002, the Electric Power Supply Association (EPSA), Colorado Independent Energy Association (CIEA), the Electric Power Generation Association (EPGA), Independent Energy Producers of California (IEP), Independent Power Producers of New York, Inc. (IPPNY), the Midwest Independent Power Suppliers Coordination Group (MWIPS) and the Western Power Trading Forum (WPTF) (herein, Competitive Suppliers) filed extensive comments in this proceeding. In light of the Commission’s October 2, 2002, Notice of Conferences and Revisions to Public Comment Schedule, Competitive Suppliers welcome this opportunity to file additional comments on issues identified in that Notice. Those issues include: (1) transmission planing and pricing, including participant funding issues; (2) Regional State Advisory Committees and state participation; (3) resource adequacy; (4) Congestion Revenue Rights (CRRs) and transition issues; and (5) liability limitations.
In the November 15 comments, the Competitive Suppliers largely endorsed the Commission’s Standard Market Design (SMD) initiative and urged the adoption of a Final Rule, with certain critical modifications, as soon as possible. However, the issues identified for this second round of comments are some of the more difficult and controversial in the development of the SMD. These are the areas where details matter, where consensus is difficult, and where the Commission must develop both transitional and “end state” rules that may vary from each other. Recognizing these difficulties, Competitive Suppliers strongly urge the Commission to stay the course on its SMD initiative and to make the critical decisions necessary to achieve the seamless regional wholesale markets needed to bring the benefits of competition to electricity consumers.
With respect to the issue of transmission planning, the primary focus for Competitive Suppliers is the Commission’s interconnection policies. While extensive and important progress was made in the rulemaking proceeding last year, Competitive Suppliers still await a Final Rule resolving critical outstanding issues. Needless to say, pricing issues, including the current debate about participant funding, remain at the core of the current controversy.
With respect to participant funding for transmission development, Competitive Suppliers have paid, and will continue to pay, millions of dollars to upgrade and expand the nation’s transmission grid. This investment has been made possible by the Commission’s current policy on crediting. While other forms of participant funding may be equally equitable and allow for similar investment, it is critical that an independent transmission operator be in place to make the key decisions about participant funding. An Independent Transmission Provider (ITP)/Regional Transmission Organization (RTO) must be in place to evaluate congestion patterns fairly and to ensure that the assignment of benefits and costs associated with infrastructure upgrades are assessed and allocated in an unbiased manner.
Regarding the issues of the role of states in this process, Competitive Suppliers applaud the Commission’s efforts to develop a meaningful role for state participation in achieving regional solutions to the problems facing today’s developing markets as the Commission restructures wholesale electric markets subject to its jurisdiction. However, it is important that the role of Regional State Advisory Committees (RSACs) be clearly defined, that governance and structure be fairly uniform and that RSACs not become new, bureaucratic entities, slowing rather than speeding the process of infrastructure development.
On resource adequacy, Competitive Suppliers filed extensive comments on November 15, 2002. Since that time, we have continued to develop and refine our thinking, and we now offer the Commission a set of principles against which to evaluate the various resource adequacy proposals that have been, or will be, made. As we noted in our earlier comments, it is vital in price capped markets to ensure that both supply and demand are able to make the investment needed for adequate and reliable infrastructure. It is critical, however, that the Commission remain focused on the goal of eliminating unnecessary and intrusive price mitigation, which only lends to other inefficient regulatory solutions and programs needed to solve the problems such mitigation creates.
On Congestion Revenue Rights (CRRs), Competitive Suppliers believe that a system based on uniform financial rights that allows parties to hedge congestion risk in a non-discriminatory manner is the key to the success of the SMD. Competitive Suppliers address two overriding concerns in these comments. First, the system of congestion rights should be purely financial, without an overlay of physical rights that perpetuates undue discrimination. Second, based on experiences to date, Competitive Suppliers endorse a prompt transition from arbitrary allocations of CRRs to auctions that reflect the needs of the market.
Finally, Competitive Suppliers address the issues raised at the Commission’s December 11 technical conference on liability limitations.
Specifically, Competitive Suppliers stress two key points. First, the Commission must extend to competitive generators whatever liability protections are extended to transmission providers, and second, the Commission must limit the liability protections enjoyed by transmission providers to activities related to transmission, not market, operations.