FERC Filings
Comments of EPSA on FERC's Staff Report and Technical Conference Regarding Reactive Power and Voltage Control
Introduction
The Electric Power Supply Association (EPSA) appreciates the opportunity to comment on the Commission’s February 4, 2005 staff report, “Principles for Efficient and Reliable Reactive Power Supply and Consumption” (Report) in this docket and the issues raised during the technical conference conducted on March 8, 2005. As Chairman Wood explained in the cover letter of the Report, the Commission is reviewing its policy concerning reactive power and voltage support as one response to the U.S.-Canada Power System Outage Task Force’s Final Blackout Report and Recommendations, and is exploring both the technical and economic issues associated with reactive power as part of that review. EPSA vigorously supports the FERC staff’s key conclusions and recommendations addressing the lack of comparability in this area, and urges the Commission to take all actions necessary to eliminate discrimination in compensation for services essential for system reliability.
The Staff Report indicates that “an increased number of filings for reactive power compensation” have also contributed to the view that it is time to consider stronger, more transparent rules governing reactive supply and compensation. In conjunction with the widely recognized importance of reactive power and voltage support to system reliability, the Report contains a predominant theme: the existing paradigm deprives independent power producers (IPP) of comparable treatment and adequate compensation. Furthermore, FERC staff expressly rejected the view, expressed by incumbent utilities most interested in preserving the status quo, that IPPs should not be compensated for reactive power, at least within specified limits, “as a condition of interconnecting to the grid.”
FERC staff adopted an alternative view, concluding that “market participants should be compensated for the reactive power they provide, in order to ensure an adequate, reliable, and efficient supply of reactive power.” In summarizing the focus of the Report, FERC staff listed “several problems and concerns regarding the current procurement practices and pricing policies for reactive power,” including “discriminatory compensation.” Particularly, “[i]ndependent generation resources may not always be compensated for providing reactive power support to the grid in areas where other generators affiliated with vertically-integrated transmission owners receive cost-of-service payments for providing similar service, despite the Commission’s policy requiring comparability.”