FERC Filings
Comments of EPSA on FERC's Staff Report and Technical Conference Regarding Reactive Power and Voltage Control
Inapplicability Of A "Needs Tests"
EPSA opposes the imposition of a “needs test” precondition for receiving compensation for providing reactive power and voltage support services. Simply put, such a requirement is operationally problematic because its limited focus on actual MVAR production is inconsistent with the broader nature of voltage management and system operations as a whole. Indeed, there are differences between the calculations system operators perform for voltage support and those required for generating capacity. Actually, rather than requests for a specific amount of MVARs, system operators notify generators of particular voltage set points that must be maintained. Reactive power is then utilized to control voltage in accordance with the set point. However, perhaps the most compelling objection is that the needs test precondition is typically sought only for IPPs, and therefore would systemically result in discriminatory treatment.
Another shortcoming of the needs test argument is that fundamental reliability standards imposed by NERC and regional reliability councils require all generators, including IPPs, to have reactive/voltage support capability. Additionally, interconnection agreements themselves contractually obligate IPPs to provide resources for reactive power and voltage support services. The efforts of transmission provider representatives to justify a strict needs test precondition are incompatible with fair, comparable and nondiscriminatory treatment of all generators. Indeed, they appear to want it both ways. On the one hand, Ronald Snead, speaking on behalf of the Midwest ISO Vertically Integrated Transmission Owners (VITOs), stated that “a generator should not be automatically entitled to receive a reactive power fixed charge payment simply because it has the equipment necessary to produce reactive power.” Nonetheless, interconnection agreements, and reliability standards, obligate IPPs to possess voltage support capability, and the VITOs “believe there should be a penalty system to encourage generators to be operational and controlling voltage when needed.”
The assertion that the “value” of reactive power and voltage support resources depends exclusively on whether they are in actual use at any given time is misplaced. This simplistic notion obscures the financial reality that generation equipment must be designed and maintained to certain performance and capability specifications, and to provide such services at the direction of the transmission provider. Moreover, it would result in discriminatory bias. As Scott Helyer of Tenaska, Inc. explained, “[i]t has been suggested that generators be online in order to be paid. I point out that there are lots of capacitors, lots of reactors that are out there today on the transmission system that are in the rates, that are not always on line and cannot always be turned on line immediately…[b]ut they are in the rates of the transmission providers.”
In his testimony, John Lucas expressed Southern Companies’ view that FERC should allow for “flexibility provided for the different circumstances that are present in various regions, markets, and in areas where RTOs are formed, and in areas where they have not.” He also stated that “once you are interconnected and synchronized to the grid, all generation sources need to be able to maintain a voltage schedule in order to support the reliability of the system.” At the same time, however, Southern apparently wants FERC to adopt the view that a utility affiliate’s maintenance of a voltage schedule is more valuable than voltage support services provided by IPPs. This position is self-serving and misleading. With respect to system reliability, there is no valid operational distinction between voltage support from utility affiliates and equivalent services from IPPs.