Message-ID: <30364864.1075846345930.JavaMail.evans@thyme> Date: Mon, 24 Apr 2000 01:30:00 -0700 (PDT) From: ginger.dernehl@enron.com To: government.americas@enron.com Subject: Reg. Information - Interconnecting Generation in the East Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Ginger Dernehl X-To: Government Affairs-The Americas X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Ferc X-Origin: KEAN-S X-FileName: skean.nsf Please see below. ---------------------- Forwarded by Ginger Dernehl/HOU/EES on 04/24/2000 08:29 AM --------------------------- Richard Shapiro 04/21/2000 07:56 AM To: Ginger Dernehl/HOU/EES@EES cc: Subject: Reg. Information - Interconnecting Generation in the East Please forward to entire group- This is an example of an outstanding memo that conveys critical information to our commercial counterparts- to the point and very relevant-- it is a model to emulate. ---------------------- Forwarded by Richard Shapiro/HOU/EES on 04/21/2000 07:53 AM --------------------------- To: Ben Jacoby/HOU/ECT@ECT, Mike J Miller/HOU/ECT@ECT, Rodney Malcolm/HOU/ECT@ECT, James A Ajello/HOU/ECT@ECT, Edward Ondarza/HOU/ECT@ECT, Kellie Metcalf/Corp/Enron@ENRON, Ozzie Pagan/HOU/ECT@ECT, David L Fairley/HOU/ECT@ECT, Debbie Chance/Corp/Enron@Enron, Oscar Dalton/HOU/ECT@ECT, Janet R Dietrich/HOU/ECT@ECT, John Moore/Corp/Enron@Enron, Stephen Plauche/Corp/Enron@Enron, Raimund Grube/Corp/Enron@ENRON, Ray Hoppe/Corp/Enron@ENRON, Jeffrey M Keenan/HOU/ECT@ECT, Steve Krimsky/Corp/Enron@Enron, George McCormick/HOU/ECT@ECT, Clay Spears/HOU/ECT@ECT, Webb Jennings/HOU/ECT@ECT, W David Duran/HOU/ECT@ECT, Fred Mitro/HOU/ECT@ECT, James L Noles/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Edward D Baughman/HOU/ECT@ECT, Art Bieser/Corp/Enron@ENRON, David Howe/Corp/Enron@ENRON, Cuthbert Roberts/Corp/Enron@Enron, Sheila Tweed/HOU/ECT@ECT, Chris Gaffney/HOU/ECT@ECT, Barton Clark/HOU/ECT@ECT, Bob Carter/HOU/ECT@ECT, Berney C Aucoin/HOU/ECT@ECT cc: Robert Frank/HOU/EES@EES, Harry Kingerski/HOU/EES@EES, Joe Hartsoe/Corp/Enron@Enron, Richard Shapiro/HOU/EES@EES, James D Steffes/HOU/EES@EES, Elizabeth Linnell/HOU/EES@EES, Elizabeth Sager/HOU/ECT@ECT, Kevin M Presto/HOU/ECT@ECT, Greg Woulfe/HOU/ECT@ECT, Patrick Hanse/HOU/ECT@ECT, Tom Dutta/HOU/ECT@ECT, Bill Rust/HOU/ECT@ECT, Lloyd Will/HOU/ECT@ECT Subject: Reg. Information - Interconnecting Generation in the East This is a brief primer to assist you with current policy regarding interconnecting generation plants in the East. Please forward this to your groups. Thanks. Christi Nicolay 37007 EB3108h. I am available for your federal/FERC regulatory questions and can point you to the correct state/regional regulatory people. When initially deciding where to site a plant, there are several federal regulatory issues to consider: First, you will need to obtain the utility's interconnection policy and a pro forma interconnection agreement from the utility. For most utilities, you will need to call them to obtain their policy and agreement. Some utilities have this available on their OASIS computer site or web page. The OASIS sites have areas that do not require a password, but if the information is not available in that area, you should contact the power trading desk transmission personnel to assist in locating the information. If a utility says it does not have a policy, you can let me know. The interconnection procedures typically require you to send in a request for the utility to study the interconnection (Typically, app. $10,000). When you return the money and the request (which is usually an agreement that must be initialled by ENA legal), the project will be placed in the "queue." The queue is usually available on the OASIS. If the utility does not post the queue, let me know. Many times the procedures require the project to meet "milestones" in order to remain in the queue. If the milestones look unreasonable, let me know. FERC (the Federal Energy Regulatory Commission) recently issued an order (Tennessee Power case) in which FERC stated that asking for "interconnection" is separate from a request for "transmission" under a utility's Open Access Transmission Tariff (OATT). Enron and others had lobbied FERC to issue an order dealing with interconnection. Many utilities will try to charge additional "network upgrade" costs, not simply the costs to interconnect. This is not allowed under the new FERC rule (Note: PJM and NEPOOL have different rules due to their pool structure). In addition, in the Tennessee Power case, FERC stated that utilities are required to abide by certain timelines during the interconnection study process. Generally, these timelines are in the attachment below. Most of the interconnection policies I have seen have timelines significantly longer than what FERC is now requiring. You should probably first call the utility to ask if they are planning to revise the deadlines to comply with FERC's new order. If that doesn't work, you can call me. There are several utilities that have filed their interconnection procedures at FERC: PJM, NEPOOL, Ameren, Entergy, ComEd. Enron is actively protesting Entergy's proposed procedures and interconnection agreement (a FERC order is expected 4/26/00). In addition, ComEd's procedures have been protested and a FERC order is expected soon. Other utilities may be filing their procedures shortly. Once you have gotten the procedures and interconnection agreements, I am happy to review them. An ENA attorney must sign off on the interconnection agreement. Generally, I review the interconnection agreement from a regulatory perspective. It is important to have someone in Genco review it if Enron will own or operate it after in-service or if EPMI plans to purchase power from the plant. The interconnection agreement usually contains operational provisions, including imbalance provisions, that are typically very one sided toward the utility, so it is important to have Enron technical input before the agreement is executed. Asking for interconnection and getting in a queue is not a request for transmission. You should consult the power trading desk transmission people in order to determine whether a request for firm or non-firm transmission needs to be made. The desk can make the request if necessary. While the desk may choose to use daily/hourly non-firm transmission for some of the Enron plants, the decision is made on a case-by-case basis. You do not want your plant to be "stranded" without the ability to wheel electricity away from the busbar, unless you are building a plant in order to sell power directly to the interconnected utility, and even then, you may want to wheel power around at times. If the utility does not have enough transmission capability to wheel power from the plant, the plant/Enron may have to pay "network upgrades." You want to make sure that you are reserving transmission on a firm (priority) basis if you pay for network upgrades. Some utilities simply provide "transmission credits" when requiring network upgrades. These are not as valuable to Enron because there may be no opportunity to ever wheel the power if Enron doesn't have a "reservation" for the transmission. The Eastern interconnection is prone to curtailments of transmission called "TLRs," especially in the summer. The Power Trading desk can assist in obtaining the transmission. In order to sell power to the grid, the plant must apply to FERC for "Exempt Wholesale Generator" (EWG) status and also obtain a FERC Power Marketer license with "Market Based Rates." These filings make the on-site generator a "utility" for FERC purposes and subjects the "power marketer" to periodic filings at FERC. These generally must be filed at least 60 days before the plant will start producing any power. The filings take several weeks to prepare. Do not assume that you can sell ancillary services from the plant. The plant may not be able to sell ancillary services into the market. EPMI has the FERC authorization to sell certain ancillary services in California and NEPOOL, but EPMI cannot, at this time, sell in other areas (absent a FERC filing and setting up an OASIS web page). Be aware that many utilities add language in their interconnection agreements that allow them to "take" the ancillary services from your plant, without compensation. If you are dealing with an industrial that has a plant on-site, additional issues are involved. You can check on the Enron home page under "Sites", "Intranet", "Government Affairs", "State Restructuring Reports" for information on the status of retail open access in that state. If you need additional assistance, contact Elizabeth Linnell 33896. Generally, the state must have retail open access in order for Enron to sell power to a plant. In order for an on-site plant to sell power to the grid, it must apply to FERC for "Exempt Wholesale Generator" (EWG) status and also obtain a FERC Power Marketer license with "Market Based Rates." These filings make the on-site generator a "utility" for FERC purposes and subject the "power marketer" to periodic filings at FERC. Because some industrials may not want to be FERC regulated, ENA may be able to use a "Special Purpose Vehicle" (SPV) so that ENA may own part of the generator. There are also options to establish a "Qualified Facility" (QF) that sells power to the interconnected utility. The interconnected utility may also have a program in which it purchases excess power from the on-site plant. Please contact Bob Frank 33180 for help on possible regulatory structures. There may also be issues if the plant is connecting to a lower voltage line, such as a 69kv or 138kv. Some utilties have filed to put these lines into their distribution systems, rather than in the wholesale transmission system, which may take them out of FERC jurisdiction for wheeling purposes. We have not fully examined this type of situation, but can if necessary. There are other regulatory issues, such as site permitting, political assistance, environmental permits, that must also be addressed. The regional regulatory people in Rick Shapiro's government affairs group can assist you.