fw : judge ' s final se rto mediation report + cn summary fyi
- - - - - original message - - - - -
from : nicolay , christi l .
sent : tuesday , september 18 , 2001 8 : 45 am
to : shapiro , richard
subject : fw : judge ' s final se rto mediation report + cn summary
- - - - - original message - - - - -
from : nicolay , christi l .
sent : monday , september 10 , 2001 7 : 09 pm
to : presto , kevin m . ; kitchen , louise ; lavorato , john ; carson , mike ; will , lloyd ; may , tom ; davis , mark dana ; sturm , fletcher j . ; herndon , rogers ; kean , steven j . ; shapiro , richard ; steffes , james d . ; robertson , linda ; guerrero , janel ; shortridge , pat ; shelk , john ; novosel , sarah ; fulton , donna ; roan , michael ; palmer , mark a . ( pr ) ; nord , sue ; lindberg , susan ; duran , w . david ; kroll , heather ; fairley , david ; connor , joe ; maurer , luiz ; jacoby , ben ; staines , dan ; montovano , steve ; robinson , marchris ; migden , janine ; stroup , kerry ; robertson , linda ; portz , david ; sager , elizabeth ; nettelton , marcus ; acevedo , rudy ; comeaux , keith ; forney , john m . ; garcia , miguel l . ; hernandez , juan ; lotz , gretchen ; marshall , howard ; rorschach , reagan ; rust , bill ; meyn , jim ; walton , steve ; perrino , dave ; comnes , alan ; jafry , rahil ; forster , david ; baughman , edward d .
subject : judge ' s final se rto mediation report + cn summary
the alj submits her report to ferc to obtain ferc review of the southeast power grid platform that resulted from the mediation .
* * judge ' s final recommendations : ferc should consider adoption of grid model ( the one enron likes best ) to fullest extent possible and that remaining unresolved issues be addressed through continued stakeholder process . however , since complete consensus was not reached , ferc should provide its determination of which of the two models best meets ferc ' s expectations as a platform for the se power grid rto . this should be done by ferc quickly . there should be no further delay . regardless of the model , ferc should encourage the collaborative process . she thinks that this should be done by the parties without ferc intervention except to the extent to respond to ferc orders . ( i think ferc staff should be involved or it will get bogged down ) . parties should reconvene within 15 days after ferc ' s order adopting a model and the ferc order should direct the participants ( like us ) to submit a joint proposal within 45 days thereafter . she recommends to ferc that parties be allowed to file comments to ferc within 20 days ( however , she recommends against permitting reply comments since they may prove counterproductive to the collaborative nature of the mediation process . ) the commission will then issue an order that can adopt her recommendations , may reject her recommendations , or change something . i would expect that the commission would adopt many of her recommendations , while allowing further mediated - type discussions on some issues ( hopefully , ferc will adopt many of our suggested changes ) . judge mccartney then basically describes both proposals of the grid group and the southern , etal . group , then provides the stakeholder participants ' comments ( almost verbatim from all submissions to her ) . while she states that the process should keep moving quickly , she does not adopt any timeframes ( we will comment that ferc should retain its dec 02 day 2 start date ( for lmp / financial rights congestion model to be implemented ) .
the attachments below are her report , the southern , etal proposal and the grid pricing , congestion management , operating , and planning protocols ( without any changes ) . clearly , our response ferc will include our proposed changes to the documents . highlights from her report below :
she recommends that spp pursue an rto coalition in the midwest
she encourages ferc to continue to encourage and utilize a collaborative process which accommodates stakeholders and state utility commission input , regardless of the rto platform ultimately adopted by ferc
her opinion is that the " grid ( entergy , gridsouth and gridflorida utility sponsored ) model " ( transco in rto , lmp / financial rights congestion management ) is better developed and more clearly in compliance with the requirements of order no . 2000 based on a " best practices " analysis of other rtos and commission precedent . this is good because enron generally favors the grid model . however , she does provide the commission information on southern , etal . ' s proposal ( independent system administrator - - like national grid - type ) in her report , even though she has concerns that the southern , etal model is not order no . 2000 compliant . the southern , etal . model has a hybrid physical congestion management with day ahead balanced schedule requirements and lmp in real time ( with penalties ) and significant control area responsibilities . the significant aspects of the grid model are discussed below :
grid governance : rto is a for profit transco with an independent board and an enhancement : the independent market administrator ( ima ) . the ima was added to facilitate public power participation ( worried that transmission owner on top , even if divested from generation , would favor its transmission solutions over generation or other transmission solution ) . the ima would administer the markets ; exercise operational authority over the transmission system ; administer one oasis ( with one process for interconnection and transmission requests ) ; and assume the security coordinator function . she strongly encourages this split .
good stakeholder advisory committee ( provides majority and minority views ) and an independent market monitor to monitor the rto and the markets
allows for independent transmission companies ( entergy wants to be one ) , with rto oversight
describes that control area operators will initially maintain their control areas for physical operation , such as switching transmission elements , pursuant to operating procedures approved by the rto / ima . recognizes that consolidation of control areas may occur as rto matures . ( protocols should be subject to further discussion )
rto / transco has primary responsibility for tariff administration , including rate changes and tariff filings
all load under the rates , terms and conditions of oatt ( gridsouth group has appealed this part of earlier commission orders , and , thus , retains their rights should they win on appeal )
4 transmission pricing zones initially : entergy , southern , gridsouth , and gridflorida . allows for participant funded , direct assigned , and merchant transmission . transmission rates to loads in rto will be zonal ( for existing facilities ) and regional charge ( for new facilities , other than those above ) . there will be one " through and out rate " , plus a grid management charge for rto operation .
encourages conversion of existing transmission agreements to oatt
financial rights / lmp ( includes " real time spot market " ) is clearly the preferred model and represents best practices model ( from pjm and spp ) - - many details need to be worked out in continued discussions . model allows parties to transact bilaterally and provides financial congestion hedges ( fch ) . stakeholder process needs to be continued for fch allocation , auction and non - discriminatory release . the grid model includes a " balancing resource " requirement that we will provide comments against
will allow establishment of markets for ancillary services once they can be supported - - control area operators required to provide before such market establishment
rto runs single oasis and independently calculates atc and ttc
rto / transco is responsible for planning through a participatory stakeholder process
numerous comments from marketers , ipps on reduction of control area functions ( all of our comments from last week ' s response are included )
judge mccartney had numerous meetings with state commissioners . ( 1 ) many are still concerned that ferc had not conducted a " cost - benefit " analysis and had concerns over the costs . she responds that extrapolation of costs to the entire se rto seems unwarranted because it ignores the " economies of scale " and initial reliance on existing control centers and infrastructure . in any event , ferc could explore the feasibility of a rate setting process that would involve the state commissions . ( 2 ) concerned about cost shifting : mediation team discussed phase in of rates that the commission has allowed . ( 3 ) concern that se rto would preempt state ability to approve asset transfers to rto and want state retail customers to receive full value for assets . ( 4 ) concern that se rto may prematurely put southern states into retail open access ( concerns with cal . ) judge encourages the commission to utilize a collaborative process that includes input from state commissioners .
i think our message for any press discussions tomorrow should focus on the extremely beneficial aspects of the mediation and the significant " jump start " it gave to the se rto process due to the significant role played by judge mccartney and her team on focusing the discussions . furthermore , the initial results after 45 days show the majority of participants favoring a " best practices " pjm / spp cornerstone type real time spot energy market with lmp pricing and financial congestion hedges and an rto with an independent board structure that accommodates a for - profit rto entity with a significant stakeholder advisory process . the commission should consider utilize the fundamentals resulting from this mediation for other regions , or , at a minimum , consider similar mediated " jump starts . "
- - - - - original message - - - - -
from : bobbie mccartney [ mailto : bobbie . mccartney @ ferc . fed . us ]
sent : monday , september 10 , 2001 4 : 05 pm
to : mddesselle @ aep . com ; john . a . cohen @ bakernet . com ; mcrosswh @ balch . com ; dex @ bbrslaw . com ; fhr @ bbrslaw . com ; fochsenhirt @ bbrslaw . com ; mrossi @ bdrnet . com ; jlphillips @ calpine . com ; jregnery @ calpine . com ; tkaslow @ calpine . com ; oharac @ dsmo . com ; mary . doyle @ dynegy . com ; jhughes @ elcon . org ; nicolay , christi l . ; jcashin @ epsa . org ; charles _ askey @ fpl . com ; steved @ gdsassoc . com ; ghobday @ hhlaw . com ; jschneid @ huberlaw . com ; richard . spring @ kcpl . com ; jpalermo @ kemaconsulting . com ; rlamkin @ llgm . com ; relliott @ mbolaw . com ; beth . bradley @ mirant . com ; ndaggs @ mwe . com ; paul . savage @ nrgenergy . com ; ron _ lanclos @ oxy . com ; billdegrandis @ paulhastings . com ; marycochran @ psc . state . ar . us ; pauline . foley @ pseg . com ; linxwilerj @ safferassoc . com ; twoodbury @ seminole - electric . com ; bobg @ sepa . doe . gov ; leer @ sepa . doe . gov ; msmith @ sf - firm . com ; glbernst @ skadden . com ; gary . newell @ spiegelmcd . com ; nbrown @ spp . org ; dacrabtree @ tecoenergy . com ; jrdalrymple @ tva . gov ; jpwest @ westlawpc . com ; jane . mudgett @ williams . com ; small @ wrightlaw . com
cc : herbert tate ; jonathan siems ; laura sheppeard
subject : re : final se rto mediation report
pursuant to the agreement of the parties , service of the attached document is hereby effected on this restricted service list , which has been previously approved in this docket , via this email .
please note that there are a total of six attachments , only five of which can be sent via email . the 6 th attachment is a two page copy of the tva mou which can be accessed on rims , or will be provided via fax upon request .
i want to take this opportunity to thank the parties once again for their hard work and dedication throughout this arduous and sometimes difficult mediation process . it was a pleasure to work with you !
judge mccartney
fw : judge ' s final se rto mediation report + cn summary
fyi
- - - - - original message - - - - -
from : nicolay , christi l .
sent : tuesday , september 18 , 2001 8 : 45 am
to : shapiro , richard
subject : fw : judge ' s final se rto mediation report + cn summary
- - - - - original message - - - - -
from : nicolay , christi l .
sent : monday , september 10 , 2001 7 : 09 pm
to : presto , kevin m . ; kitchen , louise ; lavorato , john ; carson , mike ; will , lloyd ; may , tom ; davis , mark dana ; sturm , fletcher j . ; herndon , rogers ; kean , steven j . ; shapiro , richard ; steffes , james d . ; robertson , linda ; guerrero , janel ; shortridge , pat ; shelk , john ; novosel , sarah ; fulton , donna ; roan , michael ; palmer , mark a . ( pr ) ; nord , sue ; lindberg , susan ; duran , w . david ; kroll , heather ; fairley , david ; connor , joe ; maurer , luiz ; jacoby , ben ; staines , dan ; montovano , steve ; robinson , marchris ; migden , janine ; stroup , kerry ; robertson , linda ; portz , david ; sager , elizabeth ; nettelton , marcus ; acevedo , rudy ; comeaux , keith ; forney , john m . ; garcia , miguel l . ; hernandez , juan ; lotz , gretchen ; marshall , howard ; rorschach , reagan ; rust , bill ; meyn , jim ; walton , steve ; perrino , dave ; comnes , alan ; jafry , rahil ; forster , david ; baughman , edward d .
subject : judge ' s final se rto mediation report + cn summary
the alj submits her report to ferc to obtain ferc review of the southeast power grid platform that resulted from the mediation .
* * judge ' s final recommendations : ferc should consider adoption of grid model ( the one enron likes best ) to fullest extent possible and that remaining unresolved issues be addressed through continued stakeholder process . however , since complete consensus was not reached , ferc should provide its determination of which of the two models best meets ferc ' s expectations as a platform for the se power grid rto . this should be done by ferc quickly . there should be no further delay . regardless of the model , ferc should encourage the collaborative process . she thinks that this should be done by the parties without ferc intervention except to the extent to respond to ferc orders . ( i think ferc staff should be involved or it will get bogged down ) . parties should reconvene within 15 days after ferc ' s order adopting a model and the ferc order should direct the participants ( like us ) to submit a joint proposal within 45 days thereafter . she recommends to ferc that parties be allowed to file comments to ferc within 20 days ( however , she recommends against permitting reply comments since they may prove counterproductive to the collaborative nature of the mediation process . ) the commission will then issue an order that can adopt her recommendations , may reject her recommendations , or change something . i would expect that the commission would adopt many of her recommendations , while allowing further mediated - type discussions on some issues ( hopefully , ferc will adopt many of our suggested changes ) . judge mccartney then basically describes both proposals of the grid group and the southern , etal . group , then provides the stakeholder participants ' comments ( almost verbatim from all submissions to her ) . while she states that the process should keep moving quickly , she does not adopt any timeframes ( we will comment that ferc should retain its dec 02 day 2 start date ( for lmp / financial rights congestion model to be implemented ) .
the attachments below are her report , the southern , etal proposal and the grid pricing , congestion management , operating , and planning protocols ( without any changes ) . clearly , our response ferc will include our proposed changes to the documents . highlights from her report below :
she recommends that spp pursue an rto coalition in the midwest
she encourages ferc to continue to encourage and utilize a collaborative process which accommodates stakeholders and state utility commission input , regardless of the rto platform ultimately adopted by ferc
her opinion is that the " grid ( entergy , gridsouth and gridflorida utility sponsored ) model " ( transco in rto , lmp / financial rights congestion management ) is better developed and more clearly in compliance with the requirements of order no . 2000 based on a " best practices " analysis of other rtos and commission precedent . this is good because enron generally favors the grid model . however , she does provide the commission information on southern , etal . ' s proposal ( independent system administrator - - like national grid - type ) in her report , even though she has concerns that the southern , etal model is not order no . 2000 compliant . the southern , etal . model has a hybrid physical congestion management with day ahead balanced schedule requirements and lmp in real time ( with penalties ) and significant control area responsibilities . the significant aspects of the grid model are discussed below :
grid governance : rto is a for profit transco with an independent board and an enhancement : the independent market administrator ( ima ) . the ima was added to facilitate public power participation ( worried that transmission owner on top , even if divested from generation , would favor its transmission solutions over generation or other transmission solution ) . the ima would administer the markets ; exercise operational authority over the transmission system ; administer one oasis ( with one process for interconnection and transmission requests ) ; and assume the security coordinator function . she strongly encourages this split .
good stakeholder advisory committee ( provides majority and minority views ) and an independent market monitor to monitor the rto and the markets
allows for independent transmission companies ( entergy wants to be one ) , with rto oversight
describes that control area operators will initially maintain their control areas for physical operation , such as switching transmission elements , pursuant to operating procedures approved by the rto / ima . recognizes that consolidation of control areas may occur as rto matures . ( protocols should be subject to further discussion )
rto / transco has primary responsibility for tariff administration , including rate changes and tariff filings
all load under the rates , terms and conditions of oatt ( gridsouth group has appealed this part of earlier commission orders , and , thus , retains their rights should they win on appeal )
4 transmission pricing zones initially : entergy , southern , gridsouth , and gridflorida . allows for participant funded , direct assigned , and merchant transmission . transmission rates to loads in rto will be zonal ( for existing facilities ) and regional charge ( for new facilities , other than those above ) . there will be one " through and out rate " , plus a grid management charge for rto operation .
encourages conversion of existing transmission agreements to oatt
financial rights / lmp ( includes " real time spot market " ) is clearly the preferred model and represents best practices model ( from pjm and spp ) - - many details need to be worked out in continued discussions . model allows parties to transact bilaterally and provides financial congestion hedges ( fch ) . stakeholder process needs to be continued for fch allocation , auction and non - discriminatory release . the grid model includes a " balancing resource " requirement that we will provide comments against
will allow establishment of markets for ancillary services once they can be supported - - control area operators required to provide before such market establishment
rto runs single oasis and independently calculates atc and ttc
rto / transco is responsible for planning through a participatory stakeholder process
numerous comments from marketers , ipps on reduction of control area functions ( all of our comments from last week ' s response are included )
judge mccartney had numerous meetings with state commissioners . ( 1 ) many are still concerned that ferc had not conducted a " cost - benefit " analysis and had concerns over the costs . she responds that extrapolation of costs to the entire se rto seems unwarranted because it ignores the " economies of scale " and initial reliance on existing control centers and infrastructure . in any event , ferc could explore the feasibility of a rate setting process that would involve the state commissions . ( 2 ) concerned about cost shifting : mediation team discussed phase in of rates that the commission has allowed . ( 3 ) concern that se rto would preempt state ability to approve asset transfers to rto and want state retail customers to receive full value for assets . ( 4 ) concern that se rto may prematurely put southern states into retail open access ( concerns with cal . ) judge encourages the commission to utilize a collaborative process that includes input from state commissioners .
i think our message for any press discussions tomorrow should focus on the extremely beneficial aspects of the mediation and the significant " jump start " it gave to the se rto process due to the significant role played by judge mccartney and her team on focusing the discussions . furthermore , the initial results after 45 days show the majority of participants favoring a " best practices " pjm / spp cornerstone type real time spot energy market with lmp pricing and financial congestion hedges and an rto with an independent board structure that accommodates a for - profit rto entity with a significant stakeholder advisory process . the commission should consider utilize the fundamentals resulting from this mediation for other regions , or , at a minimum , consider similar mediated " jump starts . "
- - - - - original message - - - - -
from : bobbie mccartney [ mailto : bobbie . mccartney @ ferc . fed . us ]
sent : monday , september 10 , 2001 4 : 05 pm
to : mddesselle @ aep . com ; john . a . cohen @ bakernet . com ; mcrosswh @ balch . com ; dex @ bbrslaw . com ; fhr @ bbrslaw . com ; fochsenhirt @ bbrslaw . com ; mrossi @ bdrnet . com ; jlphillips @ calpine . com ; jregnery @ calpine . com ; tkaslow @ calpine . com ; oharac @ dsmo . com ; mary . doyle @ dynegy . com ; jhughes @ elcon . org ; nicolay , christi l . ; jcashin @ epsa . org ; charles _ askey @ fpl . com ; steved @ gdsassoc . com ; ghobday @ hhlaw . com ; jschneid @ huberlaw . com ; richard . spring @ kcpl . com ; jpalermo @ kemaconsulting . com ; rlamkin @ llgm . com ; relliott @ mbolaw . com ; beth . bradley @ mirant . com ; ndaggs @ mwe . com ; paul . savage @ nrgenergy . com ; ron _ lanclos @ oxy . com ; billdegrandis @ paulhastings . com ; marycochran @ psc . state . ar . us ; pauline . foley @ pseg . com ; linxwilerj @ safferassoc . com ; twoodbury @ seminole - electric . com ; bobg @ sepa . doe . gov ; leer @ sepa . doe . gov ; msmith @ sf - firm . com ; glbernst @ skadden . com ; gary . newell @ spiegelmcd . com ; nbrown @ spp . org ; dacrabtree @ tecoenergy . com ; jrdalrymple @ tva . gov ; jpwest @ westlawpc . com ; jane . mudgett @ williams . com ; small @ wrightlaw . com
cc : herbert tate ; jonathan siems ; laura sheppeard
subject : re : final se rto mediation report
pursuant to the agreement of the parties , service of the attached document is hereby effected on this restricted service list , which has been previously approved in this docket , via this email .
please note that there are a total of six attachments , only five of which can be sent via email . the 6 th attachment is a two page copy of the tva mou which can be accessed on rims , or will be provided via fax upon request .
i want to take this opportunity to thank the parties once again for their hard work and dedication throughout this arduous and sometimes difficult mediation process . it was a pleasure to work with you !
judge mccartney