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Just been through the paper and have the following thoughts or concerns dep=
ending on your viewpoint: 1. The model is inconsistent with the approach taken by FERC. NG propose = that every transco. sets its own rates, runs its own OASIS and manages cong= estion....how can this ensure 'seamless practices' within each RTO footprin= t? I suggest the opposite will occur, that is balkanization. For example,= Transco's can join MISO under Appendix I, and a number are proposing to do= so. Based on NG's proposed split of functions each transco. could join MI= SO with its own tx rates, OASIS platform and congestion protocol regardless= of whether they are consistent. Under this scenario transmission rates an= d markets would remain balkanized and vary depending on transmission compan= y geographic reach (similar to today). 2. NG state that the benefit of a 'for profit' entity is that it can and w= ill manage risk commercially, i agree! However NG miss the point here....I= f an RTO/ISO is a non profit organisation, it will only provide services su= ch as tariff admin., OASIS and congestion management (such an RTO will not = own tx. assets...the tx. companies that it provides services on behalf of w= ill continue to do so!). In providing these services the RTO/ISO only mana= ges risk associated with non provision of service, not the underlying trans= mission delivery risk. The transmission companies, for whom the RTO provid= es services, will continue to be 'for profit entities' and will continue to= manage risks commercially (RTO benefits result primarily from aggregation = of services not from more appropriate commercial risk management...there is= nothing to stop tx. owners from managing risk more effectively regardless = of proposed RTO structure. For example NG as a transco., Translink or Cine= rgy transmission could propose liquidated damage clauses for overselling fi= rm transmission under the non profit RTO structure. Likewise NG as transco= and RTO could make the same proposal). Commercial form is a second order = issue! 3. NG should have concentrated on supporting FERC policy (4 RTO's) rather = than stating one parties view on separation of RTO functions between profit= /non profit entities. FERC policy suggests that the key structural issues = are; increasing market size (4 regional markets) and third party access ('l= evel playing field'). This was the basis for the CGM proposal that came ou= t of the SE mediation. Separating CM and OATT admin. from planning and sec= urity coord. improves third party access to real time information which in = turn will facilitate market based investment decision making (being investm= ent in transmission, generation or DSM). Suggesting that transmission inve= stment is necessary to resolve existing transmission constraints either sho= ws ignorance or more likely the conflict that NG has...i suggest that inves= tment in generation or DSM could resolve the problems just as adequately. 4. The model seems to be based on the assumption that transmission charges= will continue to be based on 'contract path' (congestion managed through r= edispatch). I assume that NG, and other transmission companies, prefer thi= s approach as it allows them to both maximise cash returns (above appropria= te regulated rates) and control information that facilitates new investment= (retain monopoly). I agree with Jim that this suggests a physical approac= h to congestion management. NG's concept that third parties can 'energy ma= rkets' is consistent with the ARTO approach (i.e. allowing an APX to provid= e day ahead market functions for example). I would propose that a transco.= should not care what tx. charging methodology was in place as long as it i= s perceived to be reasonable by customers and receives its aggregate regula= ted revenue requirement. Thus CM and OATT administration are not core tran= sco. functions at all... In summary, I suggest that NG actually propose the paper to reflect a 'for = profit' RTO but they do not state this anywhere (even if true, they do not = state anywhere that a transco. should have consistent OATT and CM protocols= if the assets they own are non contiguous or the transco. has a number of = owners). I agree with Luiz that in this form it is a hard sell and does not= resolve Enron's ongoing concerns... regards Mike =20 -----Original Message----- From: =09Maurer, Luiz =20 Sent:=09Tuesday, November 06, 2001 10:57 AM To:=09Steffes, James D. Subject:=09RE: Alliance Jim As per your request, I examined the attached doc (Response of National Grid= US to Questions posed by the Com << File: National Grid Transco White Pap= er.doc << m ission) My initial reaction is: 1) The simple answer to your question is: yes, I think the proposed governa= nce and organization structure can live with an LMP model. I am not familia= r with other MISO CM model, but at least in terms of LMP, my feeling is tha= t those are not mutually exclusive. It may be worth asking Ashley Brown 2) National Grid and other proponents of For-Profit-Transcos may have other= ideas on how to manage congestions (e.g. different reliability level produ= cts by customer segment). However, the attached paper makes no allusion to = avoid LMP and to introduce other congestion management models. The paper do= es not imply a physical model either. Your feeling may be right, but it doe= s not surface from the paper per se. 3) National Grid proposal is, in fact, an expanded version of the Southeast= Model proposed at the Mediation. It reinforces the role of the Transco Com= pany, preempting, to some extent, the role of the System Admininstrator. Th= is was a very controversial topic in the mediation: the System Adminstrator= was in charge of some functions to avoid potential bias. (particularly fr= om transmission companies who are not willing/able to transfer their T asse= ts) 4) National Grid will face a lot of resistance when selling this idea; Your= concerns on generation redispatch and long term transmission planning are = "surfaced" in the paper, by creating a concept of "core vs. additional" fun= ctions and a chinese wall, if necessary. But the perception of potential b= ias does exist. National Grid will probably face a lot of difficulty in " s= elling" this idea. Particularly when we get to the details LM -----Original Message----- From: =09Steffes, James D. =20 Sent:=09Monday, November 05, 2001 4:50 PM To:=09Maurer, Luiz; Stroup, Kerry; Roan, Michael; Nicolay, Christi L. Subject:=09FW: Alliance FYI. If we were to ask NG, could they live with the MISO CM/market model?? Thanks. -----Original Message----- From: =09Steffes, James D. =20 Sent:=09Monday, November 05, 2001 12:40 PM To:=09Nicolay, Christi L.; Roan, Michael; Novosel, Sarah Cc:=09Shapiro, Richard Subject:=09FW: Alliance NG proposal for "splitting" work between Transco and other parties. Don't = think they do a great job of managing the key fears - (1) generation redisp= atch and (2) long-term transmission plant over generation investments. =20 As I read this document, I get the strange feeling that NG is a physical-ri= ght player. Meaning, NG needs to build a model based on physical flows so = they can control (a) TTC/ATC and (b) use of non-firm transmission. =20 While the NG letter states that the "functions related to energy markets ca= n be performed by a disinterested third-party", NG specifically reserves as= a Core Function the "Ability to propose congestion pricing methodology". = Sure APX could go in and operate the balancing and CM system, but NG has th= e right to design subject to FERC procedures. Not sure what you guys think? =20 I will probably get back to Ashley Brown later this week. Jim -----Original Message----- From: =09"ASHLEY BROWN" <ACBROWN@LLGM.COM<@ENRON =20 Sent:=09Monday, November 05, 2001 9:18 AM To:=09dennis.flaherty@cinergy.com; david.a.svanda@cis.state.mi.us; gary.r.k= itts@cis.state.mi.us; greg.r.white@cis.state.mi.us; janet.c.hanneman@cis.st= ate.mi.us; laura.chappelle@cis.state.mi.us; michael.a.fielek@cis.state.mi.u= s; michel.l.hiser@cis.state.mi.us; robert.b.nelson@cis.state.mi.us; william= .j.celio@cis.state.mi.us; harvey.reed@constellation.com; Mfgildea@dukeenerg= y.com; rfahey@edisonmission.com; Steffes, James D.; airobbins@gkase-law.com= ; rrismill@icc.state.il.us; Snaumer@icc.state.il.us; tharvill@icc.state.il.= us; diane.munns@iub.state.ia.us; gforman@mail.state.ky.us; gwgillis@mail.st= ate.ky.us; rgraff@mail.state.ky.us; rsphillips@mail.state.ky.us; rkind01@ma= il.state.mo.us; wsmith@max.state.ia.us; skelly@mbolaw.com; Jim.mayhew@miran= t.com; mina.turner@mirant.com; susann.felton@mirant.com; Srandazzo@mwncmh.c= om; ervin@ncuc.net; richard.doying@neg.pge.com; clane@psc.state.wv.us; dell= is@psc.state.wv.us; don.howard@puc.state.oh.us; judy.jones@puc.state.oh.us;= Kim.wissman@puc.state.oh.us; nicci.crocker@puc.state.oh.us; eckenrod@puc.s= tate.pa.us; levin@puc.state.pa.us; jcrowley@pwrteam.com; jorr@reliant.com; = cwalker@scc.state.va.us; boyntonh@state.mi.us; bborum@urc.state.in.us; Bpau= ley@urc.state.in.us; dhadley@urc.state.in.us; dziegner@urc.state.in.us Cc:=09Paul Connolly; nick.winser@us.ngrid.com; paul.halas@us.ngrid.com Subject:=09Alliance Attached please find a copy of the paper entitled "Response of National Gri= d USA to Questions Posed by the Commission" for your review. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D This e-mail, including attachments, contains information that is confidenti= al and may be protected by the attorney/client or other privileges. This e= -mail, including attachments, constitutes non-public information intended t= o be conveyed only to the designated recipient(s). If you are not an inten= ded recipient, please delete this e-mail, including attachments, and notify= me. The unauthorized use, dissemination, distribution or reproduction of = this e-mail, including attachments, is prohibited and may be unlawful. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D - National Grid Transco White Paper.doc << File: National Grid Transco Whi= te Paper.doc <<
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