FERC Filings
Standards of Conduct for Transmission Providers
Reply Comments on Standards of Conduct Regulations for Transmission Providers (Docket No. RM07-1-000)
<center>UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION</center>
| ) | ||
| Standards of Conduct Regulations for | ) | Docket No. RM07-1-000 |
| Transmission Providers | ) |
<center>REPLY COMMENTS OF THE
ELECTRIC POWER SUPPLY ASSOCIATION</center>
The Electric Power Supply Association (EPSA) submits these reply comments in the Federal Energy Regulatory Commission's (FERC or Commission) proceeding, which proposes, among other things, to create two new categories of employees - Integrated Resource Planning Employees (IRP Employees) and Competitive Solicitation Employees (CS Employees) - who would be exempted from the Standards of Conduct prohibitions on the sharing of non-public transmission information (the Categories Proposal). EPSA's reply comments focus solely on this proposal.
EPSA's original comments pointed out that no reasoned case had been made as to why such information ought to be shared with utility affiliates and not all market participants, and why the simplest, fairest solution is not the one available to utilities under the existing Standards of Conduct: to make all transmission information necessary for state planning processes simultaneously available to all market participants.
The Categories Proposal is not only fundamentally at odds with the core principles of the existing Standards of Conduct, it also compromises the framework of Order No. 890, which is still in its nascent stages of implementation. As set forth below, the regional planning process in Order No. 890 and state IRP or competitive procurement processes are interrelated. The Categories Proposal should be rejected outright or, at the very least, tabled until the regional planning processes established under Order No. 890 have had a chance to develop. EPSA believes that the regional planning contemplated in Order No. 890 will render the Categories Proposal unnecessary.
I. NEXUS WITH THE REGIONAL PLANNING PROCESSES MANDATED BY ORDER NO. 890
There is an inherent nexus between the regional planning processes in Order No. 890 and the IRP and competitive bidding processes at issue in the Categories Proposal. In fact, the regional planning section of Order No. 890 specifically relies on the current Standards of Conduct to protect transmission customers against potential planning abuses when it states:
<italic>[A]pplication of the Standards of Conduct, as discussed above, will give assurance to customers that their cost and other information will not be used improperly. To that end, we direct transmission providers to clearly define the information sharing obligations placed on customers in the planning attachment to their pro forma OATT. </italic>
The Edison Electric Institute (EEI) notes in its comments, "in RTOs and ISOs certain planning functions are carried out at a regional level but bear many similarities to IRP." EPSA agrees. While the nature of these state processes varies widely, they all share the common objective of forecasting and planning for needed resources, just like the regional planning process contemplated in Order No. 890. Indeed, EEI's expert, Lauire J. Oppel, notes in an affidavit attached to EEI's comments:
<italic>
It is important to note that the development of a cost-effective IRP requires an iterative process of evaluating transmission upgrades necessary to support the individual and combined alternatives of future resources in the form of new generation, transmission tie lines, and demand side programs. </italic>
These are many of the same goals of the regional planning process. Logically, some of the same transmission information used in the regional planning process would also be used in the state IRP and competitive procurement processes. After all, transmission lines and electricity delivery do not stop at state lines. Thus, state IRP and competitive procurement processes of necessity involve iterative analysis of impacts on the same federally-regulated transmission facilities that are subject to the "coordinated, open and transparent" planning process rules of Order No. 890. Certainly, state resource planning is and should be an integral part of regional resource planning. Each process can and should inform the other, resulting in robust, synchronized planning at both the state and regional levels.
EEI's comments agree that planning at the state level should be coordinated with the larger regional process envisioned in Order No. 890. However, EEI asks the Commission to clarify that IRP Employees and CS Employees be allowed to participate in Order No. 890 mandated regional planning processes. Since Order No. 890 requires a "coordinated, open and transparent" planning process, giving IRP Employees and CS Employees access to nonpublic information would most certainly compromise the integrity of those processes. EPSA agrees with EEI that it is probably most efficient to have the same employees participate in both the state-mandated planning process and the FERC-mandated regional planning process, but disagrees that any such employees should be privy to information not available to all other stakeholders in any context. In her affidavit, Oppel states that, "Planning Employees involved in the ISO/RTO processes are performing essentially the same duties as they would otherwise within the individual utility as part of an IRP." Thus, because the duties to be performed by these employees and the information necessary to perform those duties are essentially the same, the Categories Proposal undermines the very openness and transparency upon which these regional planning processes depend and which the Commission has required in Order No. 890. Indeed, the Categories Proposal, by giving utility employees access to non-public transmission information that other market participants do not have, creates by regulation the very "motive and opportunity" for undue discrimination that Order No. 890 is designed to prevent. EPSA agrees with Order No. 890 when it states, "The simultaneous disclosure of transmission planning information can alleviate the Standards of Conduct concerns discussed above."
In fact, approval of the Categories Proposal could chill even the stakeholder processes articulated in Order No. 890 as the precursor to regional planning. Order No. 890 clearly mandated regional planning processes based on nine strong principles, with the details and structures of those processes to be developed through the stakeholder processes that are to begin in June of this year, and will allow for input from all stakeholders based on the needs and demands of their particular regions. This effort will be of great value, and certainly extremely resource intensive. In order for all market participants to devote the requisite time, resources and attention to these development processes, there must be confidence that the resulting planning processes will be fair. The Categories Proposal, which creates a new "black box" of information, undermines the very premise of the stakeholder process, chilling robust participation in the efforts to develop regional planning. The Categories Proposal compromises the Order No. 890 principles of coordination, openness, transparency and information exchange.
EPSA applauds Order No. 890's mandate for transparent regional planning and believes that transparency is a necessary tool for ending undue discrimination. In the nascent stages of developing these processes across the country, it would be irresponsible for the Commission to allow some participants to have information that will be hidden from others. EPSA represents independent power producers (IPPs) who depend on the ability to compete in the nation's wholesale electric markets. Where an IRP or competitive solicitation process is not transparent, or where there is the perception that the playing field is "tilted" in the direction of affiliated generation, it is axiomatic that competitive participation will be far less than where the procurement process is transparent and independently administered. The Categories Proposal would only worsen this perception by creating an additional "black box" with regard to transmission information. Additionally, EEI's proposal to allow shared transmission planning employees who have access to non-public information to participate in broader regional processes will hobble the regional planning processes envisioned in Order No. 890.
Finally, the Categories Proposal fails to specify what types of transmission information would be exempted from the existing Standards of Conduct prohibitions. It is accordingly difficult for EPSA to trust that the proposal would not result in new opportunities for undue discrimination. Because there is no record or definition of which types of transmission information need to be shared, the "black box" that this proposal will create has unlimited potential to create or allow new types of discrimination. The Categories Proposal is inherently flawed because, unlike Order No. 889 (which sought to strengthen Order No. 888), it seeks to weaken the transparency and nondiscriminatory progress made in Order No. 890.
II. LACK OF SPECIFICITY ABOUT INFORMATION THAT REQUIRES NON-PUBLIC SHARING
Given the opportunity for undue discrimination that arises from "in-house" sharing of transmission-related information, the Categories Proposal would have to be predicated on an extensive record demonstrating both that such amendments are necessary to benefit customers and to foster non-discriminatory, competitive electric markets, and that such amendments can be adopted without undermining the sound rationale for the Standards of Conduct and Order No. 890. No such record exists. Unlike the extensive fact-finding process that preceded the Order No. 888 NOPR, the "public record" for the extant proposal consists only of portions of the transcripts of three public technical conferences (held in Houston, Chicago, and Scottsdale, Arizona). While the Scottsdale conference did have a panel on information sharing, the discussion at this conference was preliminary in nature. There is, in fact, nothing approaching the type of record or even a specific basic statement of a problem that could justify the amendment to the Standards of Conduct being proposed here.
When the NOPR was first issued by the Commission at the January 18, 2007 FERC Sunshine Meeting, it was clear that it was meant to be a starting point, not a finalized proposal that simply needs polish. Commissioner Kelly noted upon voting for the NOPR that it suggests a "go-slow approach," and that the proposal "asks the right questions, and seeks the right answers." Commissioner Spitzer similarly emphasized this when he noted, "I view today’s NOPR as a strawman - a starting point on which I would encourage the public to focus comments." None of the Commission members showed strong confidence that the Categories Proposal clearly answered the stated question - whether IRP and competitive solicitation processes require a relaxation of the Standards of Conduct. Even after the voluminous comments filed in response to the NOPR on March 30, the basis, rationale and predicate for this proposal remain merely inferred. This proposal is a solution to problem that has yet to be fully defined. If there is, in fact, a problem (which EPSA believes is not the case), it first needs to be clearly defined before it can be successfully solved. As the Commissioners at the January 18 meeting stated, the Categories Proposal is but a starting point. Given the potential ramifications this proposal could have on Order No. 890's success, the Commission should act as Commissioner Kelly suggested and go slowly.
Even parties that do not agree fully with EPSA's position on the Categories Proposal have commented that there must be a more extensive record in order to comments fully on the Categories Proposal. EEI, the primary proponent of the instant proposal, requests a technical conference to vet the complexities of the proposals in this NOPR. If the Commission continues to believe that this proposal is worthy of further deliberation, EPSA would support the request for a technical conference before the Commission moves to a final rule.
If the Commission seeks a workable, enforceable solution to the alleged problem that necessary transmission information is not reaching the right parties in order for IRP and competitive solicitations to function well and yield efficient, robust results, the Categories Proposal is an inefficient, unnecessary and harmful way to do so. As EPSA noted in its original comments, the solution remains simple: simultaneous disclosure of non-public transmission-related information to affiliates and market participants. There is no record in this proceeding as to why information that would benefit all market participants in development of their resources and bids should be kept between affiliates under the utility's umbrella. Additionally, EPSA's solution is consistent with Order No. 890’s regional planning process principles, Order No. 890’s reliance on the functional unbundling of the electric industry (enforced and assured by the Standards of Conduct), and ultimately a nondiscriminatory marketplace.
EPSA believes the Categories Proposal is not necessary and would in fact be discriminatory. The Commission should reject the Categories Proposal or, at the very least, the Categories Proposal should be tabled until after the regional planning processes mandated by Order No. 890 have fully developed. To preempt or hijack the development of those processes is contrary to the efforts and the mission of the Commission in supporting competitive wholesale electricity markets.
III. CONCLUSION
The strides made toward transparency and openness in Order No. 890 must be given time to be developed and implemented in order to improve the operation, effectiveness and fairness of wholesale power markets. The role of the Standards of Conduct is to support transparent, non-discriminatory open access, as established by Order No. 889. Based on the developments in OATT reform and the urgent need to build extensive new infrastructure, the Standards of Conduct cannot be relaxed as proposed in the instant NOPR. Instead, should there be a need to improve or change the standards after implementation of and compliance with Order No. 890, such changes may be contemplated at that time based on an extensive and case specific record that allows for full consideration and comment by all affected parties.
Respectfully Submitted,
_______________________________________
Nancy Bagot, Vice President of Regulatory Policy
Tara Ormond, Coordinator of Regulatory Policy
Electric Power Supply Association
1401 New York Avenue, NW, 11th Floor
Washington, DC 2000
(202) 628-8200
April 30, 2007
SOCNOPRComments.pdf