FERC Filings
Motion of EPSA for Leave to Intervene and Comment on the Midwest Independent System Operator's Open Access Transmission and Energy Markets Tariff Filing
Introduction
EPSA has vigorously supported the Commission’s effort to develop a seamless wholesale power marketplace through the establishment of Regional Transmission Organizations (RTOs) whose boundaries mirror prevailing operational and trading patterns. As the Commission has observed – both in person at various stakeholder meetings and in the numerous filings that have been made by stakeholders throughout the process leading to the most recent EMT filing – the MISO footprint encompasses stakeholders with numerous and vastly diverse interests.
In contrast to other RTOs that have arisen from historically tight power pools, MISO is an amalgam of some 37 separate control areas covering 11 states, one Canadian province, and three NERC regions. As such, the MISO footprint represents the universe of economic development, reliability standards, state regulatory schemes, retail unbundling, reserve requirements and transmission capabilities. It is therefore obvious that the development and imposition of a Day 2 energy market that accounts for these diverse interests is, has been and will continue to be a monumental undertaking.
The MISO officers and staff are to be commended in approaching this task with vigor and commitment while continually adhering to the hallmark of a true RTO: independence. Of course, balancing a multitude of competing concerns requires stakeholders to compromise, and it is MISO’s role in that process to provide the forum to vet issues and facilitate compromises when rational parties are willing to seek and find them. If compromises cannot be reached, it is the MISO’s responsibility to assemble a tariff and market design that weighs all of the competing concerns and, in its independent judgment, creates the best result for stakeholders and customers alike in terms of reliability, resource adequacy, price transparency, non-discriminatory treatment and value maximization.
MISO has done this in the current filing. While the market design filed by MISO requires all stakeholders to compromise on certain market design features, MISO has taken the lead role in offering a tariff that is workable for the footprint and will provide consumers with the market transparency and supply options that heretofore have been lacking in the Midwest region. EPSA urges the Commission to provide the approvals necessary for the EMT to become effective on December 1, 2004, as the MISO has requested.
In this connection, EPSA urges the Commission to consider carefully the necessity and impact of concessions that have been, or may be, granted to certain areas within the footprint in order to appease parochial interests, and not allow them to unduly burden other stakeholders or interfere with the December 1 effective date. Throughout the process leading up to the most recent EMT filing, there were several proposals and numerous conversations among stakeholders relating to certain states or areas within the MISO footprint. To advance their individual interests, these parties appear to make their continued participation in MISO contingent upon favorable treatment of their proposals. This has led, and may continue to lead, to special concessions being granted to these areas in order to “keep them in the fold” and ensure that MISO meets the December 1 effective date.
At this point, EPSA is satisfied that any concessions granted to these areas have been reached as part of the larger stakeholder process and are therefore have not threatened the integrity of the MISO footprint and the December 1 launch date. However, EPSA understands that MISO continues to entertain additional, geographically limited, concessions for the benefit of certain parties. In that regard, EPSA urges the Commission to carefully review any additional concessions, particularly those that may be orchestrated outside of the stakeholder process, to ensure that those concessions do not disrupt existing stakeholder accords and create inappropriate cost shifting and inequitable results across the rest of the MISO footprint.
While EPSA recognizes the need to compromise to reach a workable market solution, EPSA has identified certain aspects of the EMT that raise concerns and require certain modifications to maximize their effectiveness. In the following comments, EPSA explains how the Commission could help expedite and ensure the MISO’s success by providing strong guidance and direction on certain issues, and taking the following affirmative actions on several market design related features:
• Direct the adoption of a definitive plan for control area consolidation by a date certain to establish MISO’s authority over multiple control areas to assure short term reliability and security coordination;
• Correct deficiencies in the pricing of operating reserves and related LMP calculations by directing the MISO to provide that either: (1) energy offers are accepted for operating reserves with the results included in the real time LMP calculation; or (2) when operating reserves are deployed the LMP will automatically be set at the offer cap for that hour;
• Encourage the conversion of Grandfathered Agreements (GFA) to LMP-based contracts to eliminate related uplift problems;
• Eliminate the disadvantages for customers of point-to-point transmission service that would result from the proposed Financial Transmission Rights (FTR) allocation methodology by allowing for month-to-month service and implementing an auction paradigm as soon as possible;
• Set a sunset date on MISO’s interim resource adequacy provisions and encouraging the Organization of MISO States (OMS) and stakeholder community to meet the timeline in the proposed work plan for a capacity market by the January 2006;
• Scrutinize the bid submission time schedule and establishing a timeline for shifting to a bidding deadline of 1100 EST or later as soon as possible;
• Establish confidentiality procedures that protect market participants and market integrity by ensuring that only those with a legal right and legitimate need have access to commercially sensitive information;
• Ensure that uninstructed deviation penalties are not unnecessarily duplicative;
• Review the definition of “Load Serving Entity (LSE)”; and
• Prevent delays the December 1 market implementation date when resolving non-tariff issues.