Subject: My comments on Sierra Pacific's Draft interconnection agreement
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Thu, 15 Feb 2001 08:46:00 -0800 (PST)

The following are my comments on the draft interconnection agreement.

In the sixth "whereas" (page 1) (and Sections 3.4 and 5.1.6) the contract 
states that either the generating company or the generating company's 
customers are responsible for entering into a separate service for 
transmission service.  In any given transaction this may be incorrect and 
therefore must be changed.  Specifically, a third person may in fact be 
responsible for taking the transmission service and the generator may have no 
ability (or privity of contract) to require this entity to take transmission 
service from Sierra Pacific.  For example, the generator may sell the power 
to Dynegy, who may sell it to Sierra Pacific who might then be buying the 
transmission service.  

The eighth "Whereas" (page 1) (and Sections 2.18, 3.1, 31.7, E.4.1, E.4.2, 
E.8.2, E.8.3, E.8.4, E.8.6, E.8.7, E.11.10, E.11.11, and E.12.) state the 
generating company is willing to maintain the generating facilities in 
accordance with good utility practice and enter into a WSCC Reliability 
Management System (RMS) Agreement.  I would like to point out that some 
generators do not like to commit to the "good utility" practice standard or 
to be bound by the RMS agreement.  Enron has signed the RMS Agreement.  I 
doubt Sierra will be willing to sign this if we oppose the good utility 
practice standard.  This is especially true because BPA is insisting on this 
standard in the context of negotiating RTO West and, in order for RTO West to 
form, BPA must agree to join.  Enron is very interested in RTO West forming.  
If you want to oppose the Good Utility Practice standard, we had better 
develop a good rationale for being opposed to it and a justifiable 
alternative standard.

Section 1.1  Contrary to our requests, this section still states that the 
agreement will become effective on the date which FERC permits it to become 
effective.   This is not the way the OATT operates.  Rather, if Enron and 
Sierra cannot develop a consensual interconnection agreement, Enron asks 
Sierra to file an unexecuted interconnection agreement with FERC (as we have 
done) and service begins pursuant to the terms and conditions of Sierra's 
open access tariff.  Service here is governed by the transmission open access 
tariff because FERC has determined that interconnection is the receipt point 
portion of transmission service and that if a public utility does not have a 
separate tariff governing the procedure for requesting the interconnection 
portion of transmission service than the procedure established in the OATT 
applies.  The FERC has determined that filings under Section 212 (and 
therefor 211) of the Federal Power Act are no longer necessary because the 
customer simply requests service under the OATT.  Requiring the customer to 
wait until the FERC decides the agreement should become effective would 
completely  undermine the purpose of Order No. 888.

Section 1.2 After, "by both parties" add "however, if the parties cannot 
agree to execute this agreement, System Owner shall file this agreement 
unexecuted with FERC as provided by the terms of the OATT."

Section 1.6.2   Three years advance written notice is too long.  A reasonable 
notice period would be ____.

Section 2.6, 2.7 and 2.8 EPMI opposes the definitions of "Applicable Laws" 
"Applicable Permits" and "Applicable Reliability Criteria" because, when 
combined with their use throughout the contract (in Sections 2.6, 3.5, 3.10, 
3.11, 5.6.2, 5.6.3, 8.4.2, 11.8, E.2.8, E.3.3, E.4.1, E.4.3, E.4.4, and 
E.9.5) they subject EPMI to legal and regulatory risk by consenting to 
amendment of the contract by government action.  

Section 2.19 Section (i) of the definition of "Dispatch gives Sierra too much 
control over the generating unit by allowing it to redispatch for "the most 
reliable" supply.  Change "the most reliable" to "a reliable"

Section 2.31 Is inconsistent with Sierra's OATT.  It should be written using 
the same words as the OATT.

Section 2.52  The reference to Section 22.1 should be corrected to 21.1.

Section 2.56 Definition of "System Integrity" is too broad.  When combined 
with Section 3.13.2, it would require our generator to not "have an adverse 
impact on "maximiz[ing] the health, welfare, safety of personnel and the 
general public."  While Sierra can voluntarily do so with its own facilities, 
there is no reliability or governmental requirement that we do so and we 
should not.

Section 3.5 The proposed Use of "System Integrity" here is more fair assuming 
EPMI agrees to the "Good Utility Practice" standard.

Section 3.7 Shouldn't the word "unplanned" be added before the word Outages?

Section 3.8 EPMI opposes this provision to the extent that it would be 
directly assigned the cost of facilities that are being used by others.

Section 3.10 The second sentence exposes EPMI  to regulatory risk by allowing 
Sierra to add new facilities and charge them to EPMI.    This risk is 
increased by the last sentence which allows Sierra to determine the need for 
such facilities in its sole discretion.  Editorial note: the third to last 
sentence is missing a period.

Section 3.13.2 See comments under Section 2.56.

Section 4.1 EPMI opposes the first sentence because it gives Sierra an 
opportunity to have FERC order additional payments for the same level of 
service already provided by this contract.  Accordingly, the words "or 
ordered by FERC" should be deleted.  

EPMI opposes the second sentence because it would allow Sierra, with FERC's 
approval, to allocate to EPMI costs incurred for Sierra property and for 
operation of Sierra's facilities

Section 4.3 Should the words "generating company's applicable FERC-approved 
tariff" be changed to "Applicable Law?"

Section 5.1.1 EPMI opposes the last sentence because it would presumably 
require EPMI to pay more than cost for any project whose scope does not 
increase by more than 10 percent.  Under FERC's precedent, EPMI is only 
required to pay actual cost.

Section 5.1.3 Nine months seems like to long a time to wait to provide a 
final invoice.

The words "plus Interest" should be added after the words "difference" in the 
fourth sentence.

Section 5.6.2 This section says essentially the same thing as Section 3.10 
and EPMI opposes it for the same reasons.

Section 6.4.3 Add period at end of sentence.

Section 7.1 Delete period after the word "and" in last sentence.

Section 8.1.4 Add period after "Interconnection Facilities."

Section 8.4.2 EPMI opposes paying for all modifications to interconnection 
facilities to the extent that such modifications benefit Sierra or third 
parties.

Section 8.7.2 Delete the word "and" on the seventh line. 

Section 9.1.1 See comments under Sections 2.56.

Section 11.7 Delete "pen-nits" from last line on page and insert "permits."

Section 11.8  After "remediation or abatement activity" insert "pay all 
fines, penalties, or compensations as required by law."

Section 13.4 There should be a reciprocal provision for generators.

Section 16.2 EPMI opposes "regulatory" Force Majeure.  

Section 16.6 This provision is too broad in that it allows the System 
Operator to evaluate the alternatives available to the EPMI.

Section 17.9 Add the letter "y" after "and ma" on the second line.

Section 19.2.1 Third to last line change "ahs" to "has."

Section 19.3 Needs to be edited.

Section 19.6 This section subjects EPMI to the regulatory risk of amendment 
to the interconnection agreement to conform to an RTO's requirements.  

Section 22.5 By law, System Operator should be required to file with FERC 
prior to terminating the connection.

Section 31.8  This section exposes EPMI to regulatory risk because it allows 
Sierra to unilaterally file with FERC to change the terms and conditions of 
the interconnection contract.  This is standard in utility tariffs and 
agreements and in fact is in the FERC's pro forma OATT under Order No. 888.  

Section 31.9 of the contract retains EPMI's rights to protest any unilateral 
filing by Sierra under Section 31.8 and seems to balance the rights given to 
Sierra in Section 31.8 by allowing EPMI to file a complaint challenging any 
of the rates, terms, or conditions, etc., of the interconnection agreement.

Exhibit D D.1.1 EPMI should not be required to provide free station service 
to the extent it benefits Sierra Pacific or third parties.  A higher level of 
service should not simply be at the election of the System Owner but rather 
at the agreement of the Parties.   

D.1.2 The phrase "Except under Applicable Law," should be added before the 
first sentence.

D.2 EPMI opposes providing free VArs and opposing providing VArs at a level 
determined by Sierra's discretion.  Accordingly, EPMI opposes this entire 
provision.  If Sierra wishes to purchase VArs, EPMI would agree to provide 
______ level of VArs at ____ rate.  EPMI would also agree to provide VArs at 
Sierra's discretion, subject to this rate, in the case of an Emergency.  
Otherwise, EPMI would be foregoing the opportunity to provide real power 
(instead of VArs) to the market at a market-based rate, and it might be 
subject to having such transactions cut at Sierra's "discretion" without 
being assured the cost of cover.  Accordingly, the rate standard of cost or 
foregone revenues would not be compensatory.

D.3 EPMI opposes this provision to the extent that it could be read to 
require EPMI to provide free Black Start Service.

D.4 Since the generator is not taking the delivery portion of transmission 
service, it is not required to buy or self provide any ancillary service 
including regulation and frequency response service of real-time load 
-following service.  Accordingly, this provision should be deleted.

D.5 EPMI opposes the second sentence of this paragraph and it should be 
deleted.  Sierra should get ancillary services from the market.

E.2 Change "minimized" to "minimize."

E.2.4 Oppose requirement to notify Sierra of defects in generator "may affect 
System Integrity."

E.4.1.3 EPMI opposes giving the Control Area Operator authority to "approve" 
Planned Outage Schedules.

E.4.4 Once again EPMI would oppose the use of the term "System Integrity" 
here as too high as standard.

E.6.5 The second sentence gives the Control Area Operator too broad authority 
to preclude Planned Outages.

E.7.1 Add the word "the" on line 4 after "at."

E.8.1 EPMI opposes requiring the Generator to receive prior Control Area 
Operator authorization to undertake any action that is "reasonably likely to 
have an adverse impact of System Integrity," especially adjustment of the 
amount of real and reactive power it delivers to the Transmission system 
under E.8.1.1.

E.8.2.2 Because VArs could be sold as real power, System Control should not 
be allowed to "establish the range of voltages or voltage schedules."  
Rather, Sierra Pacific should negotiate with EPMI to buy the level of voltage 
support it requires.  See also E.8.9 establishing power factors.

E.8.4 EPMI does not have a problem with operating its AGC within WSCC limits 
but it will not be providing this Ancillary Service free to Sierra.  We need 
to negotiate compensation.

E.8.6 Giving Sierra "sole discretion" to determine "unacceptable 
deterioration of the quality of service over its Transmission System" is too 
broad.

E.9.2 "Repots" should be "reports"