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Enron Mail |
I still think that Enron should be advocating some form of Negawatt program=
for non-retail access states. Using an RTP tariff that more closely track= s the wholesale prices from an RTO balancing energy market with locational = signals can be used without any retail access and can have the load respons= e needed to keep prices from skyrocketing - of course this would require a = DA market because the signals need to come in ahead of the usage. By the way, I disagree that we need a wholesale rate for capacity. We shou= ld make sure that we put this in our comments on RTO Week. Jim -----Original Message----- From: =09Novosel, Sarah =20 Sent:=09Wednesday, November 07, 2001 7:11 AM To:=09Walton, Steve; Roan, Michael; Maurer, Luiz; Hueter, Barbara A.; Landw= ehr, Susan M.; Hoatson, Tom; Nicolay, Christi L.; Steffes, James D.; Alvare= z, Ray; Shelk, John; Rodriquez, Andy Subject:=09Dave's Comments ICAP Please see Dave's comments below -- it's helpful for me for everyone to kno= w what everyone else is saying. Sarah -----Original Message----- From: =09Perrino, Dave =20 Sent:=09Tuesday, November 06, 2001 10:24 PM To:=09Novosel, Sarah Cc:=09Walton, Steve Subject:=09RE: RTO Week Comments -- ICAP I have added my 2 cents below in BOLD, I hope this helps....or at least fol= lows our general thoughts! -----Original Message----- From: =09Novosel, Sarah =20 Sent:=09Tuesday, November 06, 2001 2:59 PM To:=09Novosel, Sarah; Walton, Steve; Roan, Michael; Perrino, Dave; Maurer, = Luiz; Hueter, Barbara A.; Landwehr, Susan M.; Hoatson, Tom; Nicolay, Christ= i L.; Steffes, James D.; Alvarez, Ray; Shelk, John; Rodriquez, Andy Subject:=09RE: RTO Week Comments -- ICAP The FERC Staff report on RTO Week states that most panelists agree that so= me type of long term capacity obligation is needed, as long as demand is no= t very price responsive, in order to allow generation to recover its fixed = costs and support investment. =20 The report also notes that some panelists support: =20 =09-=09a recent staff proposal supporting an LSE holding foward call option= s on energy YES, and=20 =09-=09a capacity obligation being a transitional obligation until demand b= ecome price responsive. As I describe below I believe that placing the res= ponsibility on the LSE should be sufficient, I don't think you need a trans= istional period. I have cut and pasted our Executive Summary from the ICAP comments as our r= esponse (see below), but I have a couple of questions for this group: =091.=09We say in our comments that a real time energy market, through an R= TO, will give consumers the means to adjust their demand curve because they= will see real time prices. However, if a state has a rate freeze in effec= t and/or if retail access is not permitted in a state, how can retail load = respond to the RTO's real time spot market prices? The short answer would b= e, they won't. But we need to remember that some states still are moving f= orward with some type of retail access, mostly for the C&I customer market.= These are the folks who can make a difference and the ones with the most = potential to benefit. In the areas of no retail access it is still importa= nt to have a transparent market to send the correct signals for development= of transmission and generation, but even without retail access and a fixed= rate, depending upon new technologies and innovations some larger C&I cust= omers may opt to build their own in-house source of energy and sell off any= excess, without market signals this would not be possible. We need to inc= lude this response in our comments. =092.=09What do we think of a proposal where LSEs hold forward call options= on energy as a way to achieve a capacity requirement? This is the proposa= l I believe we should support because it places the procurement for suffici= ent resources where it belongs, on the LSE. The generators will still be a= ble to receive a "capacity" payment (the one they like so much now from the= ISOs in PJM and NY) Your thoughts are greatly appreciated. Also, any thoughts you have on othe= r parts of the Staff report would be greatly appreciated (thanks Dave Perin= o for sending you comments). Thanks Everyone Sarah EPMI opposes the continuation or implementation of installed capacity requi= rements. Four appropriately sized Regional Transmission Organizations ("RT= Os") that encompass robust, competitive spot markets for energy and operati= ng reserve products (including demand side management products) will provid= e an efficient and timely solution for the construction of adequate generat= ion, the siting of appropriate transmission and efficient use of demand sid= e management products to ensure that demand is met in real time. Spot mark= ets reveal the cost of procuring (or not using) electricity based on actua= l supply and demand conditions and, thus, signal the need for new generatio= n capacity. They also ensure that consumers 'see' the cost of procurement = decisions through transparent spot market processes and adjust demand based= on discovered prices. These markets will keep supply and demand in balanc= e in both the long and short run without the use of artificial planning cri= teria. Therefore, there is no need to continue separate installed capacity= requirements in an RTO environment. The use of the spot market to establish pricing for all energy products is = new to the electricity industry. Regulated consumers have historically pai= d utility tariffs that reflect regulatory decisions. These regulated tarif= fs provide little, if any, meaningful supply/demand price information to th= e consumer so the response has been to consume even during times when the u= nderlying "cost" of doing so has been high. As a result, demand curves hav= e been categorized as 'inelastic' or 'vertical' suggesting the need for 'ca= pacity' related products to meet any unexpected price insensitive demand. = The creation of RTOs and the resulting spot markets they include will, for = the first time, give consumers the means and incentive to change the shape = of their demand curve as a result of direct real time pricing information. = Changes in the shape of the demand curve will in turn eliminate the need f= or specific capacity related payments as supply/demand interaction, and cur= tailment, will be based on economic choices.
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