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Cc: dowens@eei.org, llogan@eei.org
Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: dowens@eei.org, llogan@eei.org X-From: "The Alliance of Energy Suppliers" <alliance@eei.org< X-To: Generation and Power Marketing Executives <ipp-news-contacts@listserver.eei.org< X-cc: David Owens <DOwens@eei.org<, Lawrence Logan <LLogan@eei.org< X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Inbox X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst [IMAGE] GENERATORS/POWER MARKETERS FERC Post-Meeting Memo for October 24, 2001=20 Highlights=20 At Wednesday's Commission meeting, generators scored a major victory with = the Commission's order setting a new interim generator interconnection pol= icy whereby transmission owners must pay interest to generators for interc= onnection costs for system upgrades needed to interconnect. Commissioner M= assey, although supporting the order only on an interim basis, said that "= if the generator is going to used as a bank, it should be paid interest." = Chairman Wood continues to be "uncomfortable with generators being the ban= k."=20 The remainder of the meeting focused on establishing processes for continu= ed development of RTOs. Within that framework, the Commissioners discussed= the status of the Southeast, Northeast and Midwest RTOs. Chairman Wood, a= lthough joking of the less than pleasant comments made by the Chairman of = the Maryland Public Service Commission, Catherine Riley, and many other st= ate commissioners at last week's RTO Conference, acknowledged that the FER= C took heed to the state commissions' concerns and will involve state comm= issions in the decision-making process and formation of the RTOs going for= ward. To back that up, Commissioner Brownell proposed the creation of a "r= egional panel" consisting of state commissions and FERC staff. This new pa= nel will offer a forum for all regulatory bodies to provide input in the R= TO process. Commissioner Brownell's proposal was supported by all three co= mmissioners, although Commissioner Massey expressed a little reservation.= =20 It seems that the Commissioner is taking steps in that direction by conven= ing the Western Infrastructure Adequacy Conference to be held during the W= estern Governor's Association Meeting in Seattle, WA on November 2. This c= onference, too, was aimed at strengthening relationships with the states a= nd involving them in the decision-making process.=20 In addition, the Commission extends bid caps for the ISO NE and NY ISO mar= kets, addresses the issue of costs responsibility for interconnections and= allows virtual bidding in the NY ISO real-time market.=20 These and other proceedings are reported below. If you would like copies o= f any orders, please contact us. =20 Commission Discussion =20 FERC Orders Transmission Providers to Pay Interest to Generators for Syste= m Upgrades=20 It is clear that the Commission is taking a serious look at the current in= terconnection policies and is not afraid to revisit earlier FERC policy to= make sure that they get it right. In a dramatic move, FERC changed policy= course and ordered on rehearing that Indiana Michigan Power Company pay D= PL Energy, Inc. interest on the transmission credits it will receive from = Indiana to repay it for interconnection costs associated with system upgra= des of facilities.=20 Chairman Wood believes that the transmission owner "should both construct = and take responsibility for getting transmission built". Wood went on to s= ay that "generators should do what they do best" ...and "not be the bank".= =20 Commissioner Massey tried to stress that his support of this order is only= on an interim basis: " My long-term view has not yet been formulated... I= have an open mind about how to price interconnection costs." However, Mas= sey supported this order because he believed that " if a generator is goin= g to be used as a bank, it should be paid interest."=20 Commissioner Breathitt, on the other hand, was the lone dissenter on this = order. Commissioner Breathitt called this item for discussion in conjuncti= on with six other interconnection-related proceedings being considered on = this agenda (E-7;E-10;E-12;E-17; and E-17). This policy shift is to be app= lied prospectively. In support of her dissent, Breathitt said that she "wa= s not convinced that this order adequately counters the July order which d= enied rehearing on this very issue. Commissioner Breathitt also stated that= she believed it premature to address interconnection issues and cost resp= onsibility in light of the Commission's earlier announcement that it will = issue an ANOPR on generator interconnection procedures and costs allocatio= n issues. =20 American Electric Power ER01-2163-001 =20 FERC To Establish Regional Panels to Facilitate RTO Formation=20 At the request of Commissioner Brownell, FERC will establish regional pane= ls to help facilitate information exchange and collaboration between FERC = and the state commissions. This decision is a direct result of the Commiss= ion responding to comments voiced by many state commissions at last week's= RTO "Boot Camp". It was clear that the state commissions have felt like t= hey have been left out of the RTO debate and process. So to remedy that go= ing forward, FERC has recommended the creation of this regional panel stru= cture. The goal of this regional panel is to strengthen relationships with = the states, help FERC with problem-solving, and bring more efficiency to t= his RTO process. The Commissioners have recommended that this newly create= d structure within FERC have a dedicated staff and serve as sort of a "one= -stop shop" for states to retrieve and exchange information with FERC. =20 Chairman Wood expressed his support for this initiative and thanked Commis= sioner Brownell for her vision. Wood also spelled out what he sees as the = duties of this regional panel: (1) setting up RTOs; (2) addressing transmis= sion cost and infrastructure issues; (3) devise demand-side response mecha= nisms; (4) help develop market monitoring and market mitigation programs; = and (5) consider best use of "distributed generation". Chairman Wood said = that he would like this panel to look at the use of "distributed generatio= n" on his behalf. Although conceding that distributed generation "looks mo= re like a retail issue", Chairman Wood went on to say that he and the Comm= issioners would do everything it could to help assist the states in that p= rocess.=20 Even though Commissioner Massey supported the order, he did, however, voic= e his frustration over the continuous use of conferences and other forums = aimed at developing regional transmission organizations that have yet to y= ield the desired result: "It is my belief that we have had a lot of proces= s.. if we need more we ought to structure it so to get to the 'end game'."= =20 ALJ's Discuss RTO Mediation Reports and Recommendations=20 Southeast RTO Mediation =20 The Commission heard presentations by staff and both the Administrative La= w Judge presiding over the Southeast and Northeast RTO meditations. FERC s= taff signaled the audience that "governance is where this discussion will = focus." Identifying the unique nature of this mediation process, Judge Bob= bi Mc Cartney viewed this as a "new approach to mediation" in which she no= w terms as a "market-based mediation" approach. In Judge McCartney's summar= y of her Southeast mediation report, she recommended that out of the two = governance models that rose from the Southeast RTO Meditations, the Collab= orative Governance Model "represented the most fully-developed model." Jud= ge McCartney went so far as to highlight several components of the GridFlo= rida RTO model: "It [GridFlorida] has a nicely prepared for-profit Transco= model."=20 Interestingly, FERC staff, in its presentation, stated that both models sa= tisfied compliance with Order 2000. However, upon questioning by Commissio= ner Massey, staff conceded that the alternate "Independent System Administ= rator (ISA)" model may NOT fully comply with Order 2000 and may need addit= ional work to bring it in compliance. Apparently wearing two hats, Judge M= cCartney's mediation advisor, Chairman Herb Tate, expressed his preference = for the ISA model. He stated that public power entities and states may be = more "comfortable" with this model because of its similarity to the Indepe= ndent System Operator (ISO) model currently in place in the Northeast.=20 Both Judge McCartney and Chairman Tate called on the Commission to take th= is report and build from it. Judge McCartney made it very clear that the f= indings were limited to the narrow scope she was asked to address. Judge M= cCartney only looked at the filings made in the Southeast RTO dockets and = made no comparisons to other region's RTO proposals. Because of that limit= ation, Judge McCartney and Chairman Tate asked the Commission to do what t= hey did not have an opportunity to.=20 Ultimately, the Commissioners were very impressed by the results of the So= utheast RTO meditations, but recognized that much more needs to be explore= d and resolved:(1) who does transmission planning; (2) how do you preserve= the low-cost energy while restructuring the wholesale market?; and (3) sh= ould sub-regional RTOs still be allowed to continue developing knowing that= they will be superseded by the creation of a supra regional RTO? (EX02-2= ; RT01-100 GridSouth; RT01-34 Southwest Power Pool; RT01-75 Entergy Servic= es; RT01-77 Southern Company Services) =20 Northeast RTO Mediation=20 Discussions on the Northeast RTO Meditations went very much like the South= east. Judge Peter Young summarized his findings from the Northeast mediati= on with assistance by his mediation advisor via telephone, Joe Garcia. The= Northeast mediation did not concentrate on substantive issues and structu= res, instead it concentrated on process and timelines. The meditations yie= lded three options stakeholders offered for consideration: Option I-M; Opti= on 2-M; and Option 3-M. Judge Young expressed his favor with Option I-M. H= owever, again, the advisors and Judges were split on the appropriate model= to use going forward. Joe Garcia recommended to the FERC the use of the 3= -M Option, since it garnered the most "broad based support" from industry = mediation participants. =20 Without committing to one model or the other, Chairman Wood did, however, = state that "Option 2 has some attractiveness" because of the of the shorte= ned time frame for implementation. (EX02-1-000; RT01-99 PJM; RT01-98 PJM-W= est; New York ISO RT01-95)=20 Midwest RTO Developments =20 The Midwest RTO discussions took a different approach beginning with a sta= ff presentation that highlighted the status of both the Alliance RTO and t= he Midwest RTOs. From the FERC staff presentation, it seemed as if the sta= ff portrayed the Midwest ISO as the more progressive of the two RTOs before= them. Of particular note, Commissioner Breathitt pointed out that Southwe= st Power Pool had announced its plan to merge with the Midwest ISO, which = could address Commission's concern that its scope was too small. Looking t= o gain more intelligence on the announced proposed merger of MISO and SPP,= the Commissioners asked Jim Torgenson of MISO to join the panel and answe= r staff questions. The Commissioners were very concerned with the possibil= ity of seams between the two areas,( i.e. Midwest ISO and SPP). Mr. Torgen= son quieted those concerns by telling the Commission that there will be "n= o seams"... "they will function as one." Under the new proposed structure,= Jim Torgeson will become CEO of the newly created and named structure and= Nick Brown will assume the position of COO for the new structure. In addi= tion, the Midwest ISO/SPP RTO will seat an entirely new independent 11 per= son board.=20 Representatives from the Alliance RTO were not given the same opportunity = to update the Commissioners on their RTO progress. The Commissioners only = had the staff presentation summarizing what the Alliance had filed in its = most recent status report afforded to them. In the presentation, staff not= ed that the Alliance RTO would not be operational by the December 15 RTO s= tart-up date, but that the Midwest ISO intended to be.=20 Much of the Midwest discussion centered around the viability of "stand-alo= ne" transcos and for-profit transcos within the RTO structure. Commissione= r Breathitt stated that she "hope(s) to see a stand-alone transmission com= pany." she went on to say that with regards to Transcos, "maybe it is a ti= me that has not yet come." With so much uncertainty surrounding the Midwes= t and other regions, Commissioner Brownell instructed the Commission no to = allow these "models to be exposed in the market while we [FERC] tincker." = Commissioner Massey made a statement along the same lines asking for the = Commission to consider "what functions do investors need to invest in RTOs"= that could make the investments more appealing. It is conceivable that th= is uncertainty in the market surrounding the creation of RTOs, both for-pr= ofit and not-for-profit could deter much needed investment in these models= . (EX02-3; RT01-87 Midwest ISO/Alliance; EL01-80 National Grid USA) - =20 The message the Commissioners got across at Wednesday's meeting is that it= will attempt to give people certainty by proceeding in a manner that will= involve the necessary parties to bring RTOs into fruition. (1) perform an= updated cost-benefit analysis of creating RTOs; (20 issue a NOPR on RTOs = that spell out what the Commission is looking for compliance; (3) issue an = interconnection ANOPR to resolve a huge outstanding issue that could impac= t functionality of RTOs; (4) create regional councils to facilitate collab= oration between states and FERC; and (5) issue a NOPR on Open Access Tarif= fs to guide the industry in fashioning tariffs.=20 Discussion of Western Infrastructure Adequacy Conference AD01-2=20 The staff started off the presentation by stating that it views this confe= rence as a "fact-finding mission". Staff proceeded to lay out three questi= ons the FERC will attempt to answer through this conference: (1) Is curren= t infrastructure adequate?; (2) What are the infrastructure needs in the W= est?; and (3) What factors are inhibiting adequate investment in infrastru= cture? In addition to those questions, staff is looking to address offsets= of those larger contextual questions: (a) what is the outlook for populat= ion and growth of demand in the West; (b) Why isn't needed infrastructure = being built? what are the barriers? © What can FERC and the states do to= increase investment in the West? Chairman Wood ended the discussion by st= ating that "what is good for the West is good for the rest of the country.= " So, we can probably expect FERC to move forward with a series of regiona= l discussions similar to this conference in the West. =20 Individual Contested Proceedings =20 Bid Caps/ Market Mitigation =20 New York ISO ER01-3001-000 - The Commission granted the NY ISO an extensio= n of its $1,000 bid cap until which time a Northeast RTO becomes operation= al. The Commission also directed the NY ISO to file semiannual reports on = the progress of its efforts to implement programs that could minimize occu= rrence of extreme prices, e.g. demand-side management programs. In additio= n, as condition for approval of an extension for the use of the NY ISO's T= emporary Extraordinary Procedures (TEP), the NY ISO must file within 30 da= ys a more defined set of procedures for triggering TEP in the market.=20 ISO New England ER01-3086-000 - The Commission granted the ISO-NE an exten= sion of its $1,000 bid cap until such time as a Northeast RTO becomes oper= ational. =20 Morgan Stanley Capital Group v. NY ISO EL00-90-000; ER01-3009;ER01-3153-0= 00 - The Commission accepted the proposal to allow virtual bidding, (i.e. = bidding of non-physical generation and load) in the NY ISO's real-time mar= ket. The Commission also accepted the NYISO's revised Market Mitigation Me= asures aimed at addressing potential gaming or market power that may resul= t from the introduction of virtual bidding. =20 Generator Interconnection=20 New York Independent System Operator, Inc. ER01-2967-000 The Commission= addressed the issue of cost responsibility for interconnection by ruling = that generators may only be assigned costs of System Upgrade Facilities to= the extent that these costs are not already in the "Baseline Assessment".= In addition, siding with generator arguments, the Commission also ordered= the NY ISO to delete from its tariff its "Material Impact Standards" with= out prejudice.=20 Market Complaints=20 E-19 San Diego Gas & Electric Co. v. Sellers of Energy EL00-95-034; EL0= 0-98-038 - Order on the CA ISO's compliance filing proposing a new generat= or outage and maintenance coordination plan. Dynegy and other protesters a= llege that the CA ISO is attempting to circumvent FERC and "seize control = of the outage monitoring" function that is currently FERC' s responsibilit= y and role. =20 Pacificorp Power Marketing ER01-2685-000 - The Commission accepts Pacifico= rp Power Marketing's request to withdraw its filing of a 10-year power Pur= chasing Agreement contract with the California Department of Water Resourc= es. Attempting to comply with a Commission order in the Southern Case resc= inding waiver and requiring that all long-tern power contacts be filed wit= h the Commission in place of submitting quarterly power marketing reports, = Pacificorp filed its long-term contract and later realized that the waiver= was still in effect at the time it made the power contract filing. =20 Mirant et al. v. ISO New England, Inc. EL01-93-001 - The Commission gra= nted NSTAR's clarification request and directed the ISO NE to file with th= e Commission all mitigation contracts negotiated under Market Rule 17, eff= ectively eliminating the discretion the ISO NE attempted to exercise. =20 E-30 Calpine Eastern Corp., Mirant et al. v. ISO New England EL01-124-= 000 - The Commission agreed with Calpine and granted its complaint orderin= g the ISO NE to include external energy contracts in its calculation of th= e energy clearing price and Real-time Marginal Price during non-OP4 condit= ions in the ISO's market.=20 =20 NOTE: FERC Issued ANOPR on Generator Interconnection Tonja Wicks=20 Manager, Energy Supply Policy=20 Alliance of Energy Suppliers=20 Edison Electric Institute =20 Phone: (202) 508-5098=20 Fax: (202) 508-5600=20 Fax: (202) 508-5445 =20 ______________________________________________=20 To subscribe to this list, send an e-mail to alliance@eei.org containing = the following information: name, company, title, address, phone, fax and e= -mail address. =20 To unsubscribe from this list, send an e-mail to alliance@eei.org containi= ng your name and e-mail address.=20 For more information, please contact the Alliance of Energy Suppliers at a= lliance@eei.org =20 P-(202) 508-5098 =20 F-(202) 508-5600=20 =20 Tonja Wicks Manager, Energy Supply Policy Alliance of Energy Suppliers Edison Electric Institute Phone: (202) 508-5098 Fax: (202) 508-5600 Fax: (202) 508-5445 - IMAGE.gif=20 - Tonja Wicks.vcf=20 ********** Several EEI meetings have been postponed or canceled. For more information= about a specific meeting, go to ( http://www.eei.org/resources/meetings/postponements.htm )
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