FERC Filings
EPSA's Request to File Out of Time and Comments on Entergy's ICT Proposal
Comments
EPSA does not oppose transitional steps to achieve transmission service that is fully independent of market participants and that continues the march to well-functioning competitive wholesale markets. Much of Entergy’s May 27, 2005 ICT filing contains principles and concepts that represent positive transitional steps that can assist in the realization of the benefits of competitive wholesale markets for Southeastern electricity customers. However, the road to an effective competitive wholesale power market can only be successful if the ICT is founded on strong rules and protocols that ensure the ICT is independent of Entergy, has adequate responsibility and can act without relying solely on Entergy for basic information.
EPSA shares the Commission’s desire to establish competitive wholesale markets in the Southeast. However, the key to alleviating Entergy’s generation and vertical market power and concerns over discrimination in the Southeast is an ICT that is fully independent of Entergy. Entergy’s ICT proposal cannot achieve sufficient independence without significant modifications. Therefore, EPSA urges the Commission to approve the Entergy ICT, but with the modifications suggested below.
In addition, EPSA recommends that the Commission consider the WPP and the transmission pricing proposal separate and apart from the ICT. EPSA is aware of the Commission’s rationale in consolidating these matters. However, at this stage it seems that it may be more efficient – particularly given the opportunity to advance the ICT proposal in the most expeditious manner – to separate these issues. In fact, EPSA notes that Entergy has proposed that its WPP proposal would not be implemented until late in 2006. EPSA is hopeful that the Commission can direct implementation of the ICT program well before that time. Again, the key is independent transmission service. The task in this proceeding is to establish an ICT that is fully functional and independent. Without this independence, the consumer benefits that state and federal regulators expect from wholesale competition in the Southeast will not be realized.
Complicating the Entergy proposal are many associated issues that affect the ICT’s responsibilities and market operation. These complications increase the importance of ensuring that the mechanics of Entergy’s ICT work with the many different programs that have either been rolled into Entergy’s ICT proposal or are being considered in separate proceedings. The many interrelated Entergy proposals and proceedings that will impact the ICT’s operation may well confound state regulators’ desire for incremental wholesale market development. Further, the many interrelated Entergy proposals currently before the Commission complicate the ICT proposal as well.
EPSA endorses key aspects of the Generator Coalition’s August 5, 2005, filing on Entergy’s ICT. EPSA echoes statements made by the Coalition on critical transitional market issues. Of greatest importance, decisions on regional transmission system operations and transmission access must be independent of the financial incentives associated with Enteryg’s physical operation of its generation and bulk transmission. Therefore, EPSA, like the Coalition, supports the notion that the ICT has adequate authority and responsibility to successfully operate the grid. Additionally, transition markets need a consistent, transparent pricing policy for interconnection upgrades – the Coalition aptly calls for a pricing policy that is consistent, unchanging and equitable for all market participants. Finally, markets need best practices that evaluate supply in a non-discriminatory, efficient manner. At such time as the Commission continues to consider the WPP proposal, EPSA generally supports the Generator Coalition in its assertion that Entergy’s proposed WPP is not designed to select suppliers based on that criteria and, thus, does not result in the most economic supply choices.
EPSA has broad concerns about the possible policy implications of the ICT concepts on a national level. There are many aspects of Entergy’s proposal that EPSA would not want to serve as a model for other regions of the country. EPSA will highlight such concerns in other ICT-type proposals pending before the Commission. In the meantime, EPSA believes that the following modifications, also identified and discussed in greater detail in the Generator Coalition’s comments, are fundamental in order for the ICT to accomplish its stated purpose:
A. The ICT must have adequate authority and responsibility apart from Entergy.
1. The ICT needs more authority over data development, management rules and related models pertaining to access to, and the expansion of, Entergy’s transmission system.
2. There must be more stakeholder participation in the ICT’s development rules, protocols and plans. A more inclusive process will allow for management and process improvements.
3. The implementation of the ICT needs quality control programs to ensure its accountability.
B. The transmission pricing proposal included with the ICT proposal has significant problems that must be changed.
1. The transmission pricing policy proposes to retroactively reclassify transmission upgrades associated with interconnection. Retroactive reclassification of costs from prior agreements must be rejected.
2. The approach to compensation for customers funding Supplemental Upgrades needs to be reconsidered and requires extensive additional input from stakeholders.
C. The Weekly Procurement Process (WPP) must be changed to evaluate supply in a more effective and efficient way. Moreover, the WPP rules must be altered so that the transmission system is utilized more efficiently. Such modifications should be directed in a separate proceeding on the WPP. However, as the WPP is currently included in the ICT proposal before the Commission, the following changes must be considered.
1. The WPP needs to develop a joint procurement process so that suppliers can make multiple bids rather than one that only optimizes costs for a particular customer. Suppliers must be able to make multiple offers to different loads in order for the WPP to give customers the most economically efficient option.
2. The WPP needs a market clearing price mechanism to encourage marginal cost-based bids and, therefore, send the most efficient price signals.
3. The WPP should have the same scheduling and tagging rules for Entergy’s participating generation as it does for other generators participating in the WPP.
4. The WPP redispatch costs should be calculated on an hourly basis rather than on a weekly basis.