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Date: Mon, 10 Apr 2000 07:35:00 -0700 (PDT)
From: christi.nicolay@enron.com
To: joe.hartsoe@enron.com, richard.shapiro@enron.com, steven.kean@enron.com
Subject: NOPR Comments
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FYI.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 04/10/2000
02:32 PM ---------------------------
From: Christi L Nicolay 04/10/2000 02:31 PM
To: Cynthia Sandherr/Corp/Enron@Enron
cc:
Subject: NOPR Comments
This is an excerpt from FERC's Notice of Proposed Rulemaking on RTOs
(eventually became Rule 2000). It references the 3/98 petition that Enron,
etal filed at FERC (which includes examples). I forwarded you the 3/98
petition last week for you to send to Miriam Erickson. I thought she may be
interested in this.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 04/10/2000
02:28 PM ---------------------------
Linda L Lawrence@EES
04/10/2000 02:26 PM
To: Christi L Nicolay/HOU/ECT@ECT
cc:
Subject: NOPR Comments
Docket No. RM99-2-000 - 72 -
In March 1998, a group referring to themselves as power
industry stakeholders 113/ filed a petition for rulemaking on
electric power industry structure. 114/ Although we are not
addressing here the specific relief they are requesting in that
Petition, the Petition does contain a number of fairly specific
allegations indicating problems in the market. For example, the
Petition asserts:
Concepts such as ATC and the OASIS have become vehicles
for obstructing and curtailing, rather than
accommodating, transactions. Incumbents are able to
deny new entrants access to critical, accurate
information across control areas. This can take the
form of out-of-date or incorrect postings of ATC or, in
some instances, intentional withholding of actual ATC.
Regardless of the cause, more transmission capability
111/ Open Access Same Time Information Technical Conference,
Docket No. RM95-9-003 (July 18, 1997), transcript at 23.
112/ Id. at 28.
113/ The group consists of a number of power marketers and users,
including, for example, Coalition for a Competitive Electric
Market, ELCON, Electric Clearinghouse, Inc., and Enron Power
Marketing, Inc.
114/ Petition for a Rulemaking on Electric Power Industry
Structure and Commercial Practices and Motion to Clarify or
Reconsider Certain Open-Access Commercial Practices, Docket
No. RM98-5-000.
Docket No. RM99-2-000 - 73 -
is physically available than is being released for
sale. [115/]
The Petition alleges the existence of "ATC exclusions,
inaccuracies and misuses that deny new entrants the ability to
evaluate market opportunities, and therefore, prevent reasonable
access to the grid." 116/ The Petition cited specific instances
of inconsistent ATC calculations for the same interconnection by
the systems on either side; an OASIS showing ATC that was not in
fact made available for scheduling; and an OASIS showing no ATC
but the utility then using that path for a sale. 117/
EPSA, the trade association representing certain power
suppliers, filed comments in support of the Petition and echoed
many of the same experiences:
EPSA agrees that this discriminatory conduct persists
principally because of the continuing incentives and
opportunity for transmission owning public utilities
covertly to discriminate against other transmission
customers, by, for example, minimizing reported
available transmission capability (ATC), delaying or
inaccurately posting ATC on the OASIS, or otherwise
manipulating market operations. 118/
EPSA further stated that, "The manipulation of ATC -- whether
with the intent to deceive or as the result of poor OASIS
115/ Petition at 7-8.
116/ Id. at 15.
117/ Id. at Appendix D.
118/ EPSA Comments, Docket No. RM98-5-000, at 2 (filed September
21, 1998).
Docket No. RM99-2-000 - 74 -
management -- is a serious entrance barrier for competitive power
suppliers." 119/
At our regional ISO conference in New Orleans, we were told
by a representative from the Public Service Commission of Yazoo
City, Mississippi, of a specific instance of what it considered
to be discriminatory treatment:
Yazoo City, as a participant, has experienced first
hand an individual [transmission] owner's continued
ability to use its ownership and control [of]
transmission to disadvantage competitors,
notwithstanding Order 888's mandate of
non-discriminatory transmission access.
The representative then went on to describe an instance where a
marketer could not complete a 10 MW power sale because of
transmission restrictions, but then the transmission provider
offered to supply the capacity itself. 120/ The representative
concluded that Orders Nos. 888 and 889 have not fully eliminated
undue discrimination and this will not be achieved "as long as
transmission owners are allowed to fence in
transmission-dependent utilities and others located on their
transmission system to enhance the value of their generation
assets at increased cost to competitors."
119/ Id. at 8.
120/ Comments of Robert D. Priest on behalf of the Public Service
Commission of Yazoo City, Regional ISO Conference (New
Orleans), Transcript at 201-03. After hearing this
assertion, Entergy Services, Inc. filed a letter in which it
stated that it was unable to identify any Entergy-imposed
restrictions that would have prevented the power purchase.
See Letter in Docket No. PL98-5-000 (filed July 2, 1998).
Docket No. RM99-2-000 - 75 -
One specific area where there have been allegations that
transmission owners are using ATC to favor their own merchant
operations concerns the calculation and use of Capacity Benefit
Margin (CBM). Although there is no single accepted definition,
CBM is generally used to mean an amount of transmission transfer
capability reserved by load serving entities to ensure access to
generation from interconnected systems to meet their generation
reliability requirements. 121/ Some utilities subtract CBM from
their total transmission capability to arrive at ATC. There is
no uniform method for calculating CBM. The ability to withhold
CBM to ensure reliability not only confers a reliability
advantage for the transmission provider, but may give the
transmission provider the opportunity to selectively withhold ATC
over paths and interconnections useful to its generation
competitors.
The use of CBM is an issue that is currently being
considered in several cases pending before the Commission. 122/
For example, with respect to the formation of the PJM ISO, the
Commission noted that it was not demonstrated that the PJM Pool's
historical practice of withholding firm transmission interface
capacity as a substitute for installed generating reserves is
121/ NERC, Available Transfer Capability Definitions and
Determinations (June 1996), at 14.
122/ The Commission recently noticed a technical conference, to
be held May 20 and 21, 1999, on the issue of CBM. See
Capacity Benefit Margin in Computing Available Transmission
Capacity, Notice of Technical Conference, Docket No. EL99-
46-000.
Docket No. RM99-2-000 - 76 -
consistent with our open access policies. The Commission
observed that the load serving entities that own generating
capacity within the PJM control area appeared to benefit from
this practice as suppliers in addition to benefitting as load
serving entities. 123/ The Commission set the issue for further
briefing and it remains pending. In another pending proceeding
concerning WPSC's CBM calculation, two of the parties assert that
CBM "removes firm transmission capacity from open access
offerings, thereby raising an unnecessary and unjustifiable
barrier to competition," and "fosters discrimination by giving
merchant functions gatekeeping control over CBM-related
transmission access and by giving individual interface
transmission owners broad discretion over where and how much CBM
is withdrawn from ATC." 124/ In the same proceeding, Electric
Clearinghouse, Inc. asserts that "the CBM set-aside embodies
undue discrimination in access to the monopoly owned transmission
wires because it ensures certain users a priority over the
reserved transmission interface capacity to the exclusion of
other firm transmission users." 125/
As we stated above, we fully recognize that these are
assertions made in pending cases in which we have not yet made
123/ PJM, 81 FERC at 62,277.
124/ Protest of Madison Gas & Electric Company and Wisconsin
Public Power Inc., Docket No. EL98-2-003, at 3 (filed August
21, 1998).
125/ Protest of Electric Clearinghouse, Inc., Docket No. EL98-2-
003, at 3 (filed August 21, 1998).
Docket No. RM99-2-000 - 77 -
findings. They are referenced here as illustrative of the
suspicions in the industry of continuing opportunities for
discriminatory treatment that may disadvantage certain
competitors where generation owners continue to operate
transmission.