RTO Week

Day 3 -- October 17, 2001

Standardizing RTO Tariffs

The morning panel focused on which transmission services should be standardized in RTO tariffs across an interconnection or the entire country.  There were many diverse views on the panel, and the Staff and commissioners were somewhat more engaged in this session.  

The panelists were:  Ricky Bittle, Arkansas Electric Coop; Jim Caldwell, American Wind; Peter Esposito, Dynegy; Rory McMinn, New Mexico PSC; Glenn Ross, Dominion Resources; Audrey Zibelman, XCEL Energy.

General Observations

This panel had a lot less agreement than the previous panels.  Dynegy opposes standardization of a transmission tariff and urges FERC to give strong guidance to stakeholders and then let the stakeholders work out the details of a new tariff.  Dominion advocates a more prescriptive approach by FERC, noting that stakeholders have been unable to reach agreement over the last five years.  EXCEL has it's own focus - they want to be an ITC and want to provide many of the RTO services without being an RTO.  The Wind group is mostly concerned about the ability to provide generation on an "as available" basis.   The commissioner from New Mexico does not want standardization, does not want FERC stepping on the state's jurisdictional toes, and does not want New Mexico ratepayers' rates to go up.  Arkansas Electric Coop insists that SPP transmission capacity is full, so if competitors want to move power through SPP, new transmission must first be built.

I am somewhat concerned that some of the Commissioners may believe that tariff standardization is not necessary.  While the Dynegy concept had merit at one time, it may be too late to rely on the stakeholder process to resolve issues, and it could take many months to go through the process, only to have FERC, in the end, decide the details anyway.  We may want to submit comments on this issue to FERC at the conclusion of RTO Week.

What Services Should be Standardized?

Overall, Dynegy opposes standardizing tariffs but believes certain aspects of reservations should be standardized -- timing, confirmation processing, maintenance issues, bus names, ramping protocols, assumptions for ATC calculations, posting times, bumping rules, and settlement time.  With regard to congestion management, it should not be standardized between RTOs.  

XCEL does not support a standardized tariff but urges FERC to standardize some issues such as CBM calculations, reserve obligations and load balancing and penalties.  American Wind says FERC must focus on having liquid spot markets in RTOs and not worry about tariff standardization.  Dominion cautions FERC about Dynegy's proposal to let the industry work out the details.  He says this is what happened with Order No. 2000 and the industry was unable to work it out.  

Should FERC Retain CBM?

Ricky (Arkansas Coop) believes that the bigger the RTO, the less important CBM is because the RTO will have enough resources internally to effectuate reserve sharing.  Dynegy thinks CBM should be eliminated.  Dominion thinks CBM should be retained but the rules need to be changed.  CBM should not be set for a year - it changes on a daily basis and this should be reflected.  Nor should CBM be standardized because needs vary region to region.  However, because CBM is used for load, the cost of CBM should be allocated to load.  All panelists agreed with the concept that if CBM is retained, load should be required to purchase it as a service provided under the tariff.

Network Versus Point to Point Service

Peter (Dynegy) discussed the need to develop a new type of transmission service that combines the best features from network and point to point, similar to transportation service offered in gas -- firm and interruptible.  Peter suggests starting with the CRT tariff proposed several years ago.  Glenn (Dominion) thinks the CRT is outdated and thinks we need a new type of service but agrees that it should combine the best elements of network and point to point.  

Should all Transmission Service Be Under the RTO's Tariff?

Most of the panelists said yes, all service should be under the tariff, but Ricky Bittle said there needs to be a transition period - minimum of 5 years, no more than 10 years.  Commissioner McMinn said no - he sees this as an infringement on the states' jurisdiction.

What Services Need to Be Changed Under a New RTO Tariff?

Jim (Wind) believes that the imbalance provisions must be revised so as not to penalize "as available" resources.  Ricky thinks transmission expansion is the most important issue to address in a new tariff.  XCEL urges FERC to recognize the distinction between RTOs and ITCs and allow ITCs to design and offer their own transmission tariffs.

Ray Alvarez will circulate a summary of the afternoon panel on Cost Allocation.

Please let me know if you have any questions.

Sarah