fw : summary rto week day 2 - - planning & expansion fyi .
tj and claudette - - please forward to your groups . thanks .
- - - - - original message - - - - -
from : walton , steve
sent : wednesday , october 17 , 2001 10 : 17 pm
rto week
day 2 - - october 16 , 2001
transmission planning & expansion
the afternoon panel discussed transmission planning and expansion . the panelists were : jose degado - - ceo american transmission company , michael dworkin - - chair vermont psc , mark maher - - vp transmission business line , bonneville power administration , lara manz - - pse & g , masheed rosenqvist - - national grid , steve walton - - enron .
general observations
the commissioners were all present although the did leave and return from time to time . commissioner ' s breathitt and massey were the most active in questioning . the ferc staff were active in asking questions after the initial presentations , moving along the discussion by asking questions . there was some reference to the morning discussion of congestion management , however , there was no discussion of the merits of the various types of transmission rights . there was a good deal of consensus around the concept of the rto planning process being first a provider of information to the market ( where are problems , how might they be solved , etc . ) and that the where possible that expansion be funded by market participants who would benefit . there was a good deal of discussion of " least cost planning " and the identification of options which are not transmission related . all agreed there had to be backstop authority to build transmission , however then the challenge is who pays for it , which raises the need for dispute resolution .
opening statements
jose delgado : atc is a transmission only company with miso as the system operator . they view everyone as a customer whose needs are to be met . they were formed by divestiture by ious , coops and munis and with a $ 500 million asset base initially . their current ten year plan will add $ 1 billion of investment . their top priorities are connecting generation and load .
michael dworkin : because transmission is a common good , construction affects all parties not just one party . the environmental and permitting of lines requires a balance of benefits with costs and a long range view . the idea of joint boards should be considered for dealing with multi - state projects , although ferc has show little interest in joint boards they have been used by fcc . state input needed because of the local needs and impacts which must be considered .
mark maher : ferc must consider the unique characteristics of the west when considering congestion management . lmp is not a good fit to hydro systems with their multiple use obligations . rto west is developing a planning process which will give the rto the freedom to develop options as we learn in the future . the rto needs a strong centralized planning process .
laura manz : the various aspects of planning are connected . pricing ( lmp ) is the key to getting the right signals for expansion of transmission and resources . no competitor should have an advantage over another . the rto needs a central planning process but it shouldn ' t push solutions . the market should decide on solutions .
masheed rosenqvist : the morning discussion of congestion management talked about hedging against risk . the planning discussion is not about what we have now , but about how to avoid future congestion . the commission has taken conflicting positions in different cases . the issues that need to be answered are : how can merchant transmission be compensated ? should transmission projects be open to rfps ? is ferc open to market based pricing for expansions ?
steve walton : the most important thing for ferc to do for expansion is to settle the matter of industry structure do away with the uncertainty that has frozen transmission investment . the rto debate has been going on for 5 years or more and needs to be settled . for expansion to go forward , there needs to be a clear property right which accrues to the expanding party . you are always going to have muddy issues in planning . for instance if a 138 kv line is all that is needed to day , but future considerations of scare right - of - way say a 345 kv line should be built , who pays for the extra cost . in order to resolve such matters the planning process must include a dispute resolution process , appeal able to ferc , to decide such matters .
discussion
kevin kelly asked about he fact that some parties benefit form current congestion so how does a stakeholder process get things built when some oppose . most agreed that if a party wants to fund construction it should be built with the beneficiaries funding . michael dworkin expressed concerns about use of eminent domain to build which means a benefit test must exist to say this is the best solution , i . e . least cost planning . this lead to discussion of the need for the rto to be provider of information to all parties so they can make intelligent decisions .
commissioner massey asked about whether the system was ( a ) under built and needed lots of expansion so don ' t worry about overbuilding or ( b ) transmission planning should consider all options before construction of new facilities . the panel agreed that pricing needs to be a prime determinant in the process . michaela dworkin worried that overbuilding distorts decisions . laura manz felt that the term " under built " is a secondary effect of not having proper pricing of locational prices to guide parties .
dick o ' neil asked if lmp will work in the west . mark maher said it wouldn ' t . laura manz said it applies everywhere because of physics , they manage hydro facilities in pjm . michael dworkin said lmp means an explicit measure of cost of congestion and the value of generation at locations and ought not to be rejected just intelligently designed . bpa is looking pricing model but lmp won ' t work . steve walton said lmp needed for real time dispatch , but given the nature of the northwest hydro system it must have some " tweaks " like bilaterals and allow operator self - schedule output levels to permit river coordination . hydro system optimizes over weeks and months to maximize firm energy production not on an hour to hour basis . pjm has hydro , but not 70 % as in the northwest . implementation will be different because such thing as unit commitment are different when you have primarily hydro and base load coal .
in the summation at the end of the panel , four principles were listed : ( 1 ) rto must provide information , ( 2 ) rto should identify solutions , ( 3 ) rto should be unbiased and ( 4 ) the rto should be accountable . the disagreement was over the last two points , michael dworkin felt that # 3 ( unbiased ) was critical and that # 4 ( accountability ) was accomplished by having regulators involved in governance . jose delgado said and transco can ' t be unbiased since it provides services , although the iso above it can be , but accountability is based on loosing your investment if you make an mistake . this last point really comes down to a preference for iso over transco forms and the tension which exist because unbiased and accountability issues .
steve
fw : summary rto week day 2 - - planning & expansion
fyi .
tj and claudette - - please forward to your groups . thanks .
- - - - - original message - - - - -
from : walton , steve
sent : wednesday , october 17 , 2001 10 : 17 pm
rto week
day 2 - - october 16 , 2001
transmission planning & expansion
the afternoon panel discussed transmission planning and expansion . the panelists were : jose degado - - ceo american transmission company , michael dworkin - - chair vermont psc , mark maher - - vp transmission business line , bonneville power administration , lara manz - - pse & g , masheed rosenqvist - - national grid , steve walton - - enron .
general observations
the commissioners were all present although the did leave and return from time to time . commissioner ' s breathitt and massey were the most active in questioning . the ferc staff were active in asking questions after the initial presentations , moving along the discussion by asking questions . there was some reference to the morning discussion of congestion management , however , there was no discussion of the merits of the various types of transmission rights . there was a good deal of consensus around the concept of the rto planning process being first a provider of information to the market ( where are problems , how might they be solved , etc . ) and that the where possible that expansion be funded by market participants who would benefit . there was a good deal of discussion of " least cost planning " and the identification of options which are not transmission related . all agreed there had to be backstop authority to build transmission , however then the challenge is who pays for it , which raises the need for dispute resolution .
opening statements
jose delgado : atc is a transmission only company with miso as the system operator . they view everyone as a customer whose needs are to be met . they were formed by divestiture by ious , coops and munis and with a $ 500 million asset base initially . their current ten year plan will add $ 1 billion of investment . their top priorities are connecting generation and load .
michael dworkin : because transmission is a common good , construction affects all parties not just one party . the environmental and permitting of lines requires a balance of benefits with costs and a long range view . the idea of joint boards should be considered for dealing with multi - state projects , although ferc has show little interest in joint boards they have been used by fcc . state input needed because of the local needs and impacts which must be considered .
mark maher : ferc must consider the unique characteristics of the west when considering congestion management . lmp is not a good fit to hydro systems with their multiple use obligations . rto west is developing a planning process which will give the rto the freedom to develop options as we learn in the future . the rto needs a strong centralized planning process .
laura manz : the various aspects of planning are connected . pricing ( lmp ) is the key to getting the right signals for expansion of transmission and resources . no competitor should have an advantage over another . the rto needs a central planning process but it shouldn ' t push solutions . the market should decide on solutions .
masheed rosenqvist : the morning discussion of congestion management talked about hedging against risk . the planning discussion is not about what we have now , but about how to avoid future congestion . the commission has taken conflicting positions in different cases . the issues that need to be answered are : how can merchant transmission be compensated ? should transmission projects be open to rfps ? is ferc open to market based pricing for expansions ?
steve walton : the most important thing for ferc to do for expansion is to settle the matter of industry structure do away with the uncertainty that has frozen transmission investment . the rto debate has been going on for 5 years or more and needs to be settled . for expansion to go forward , there needs to be a clear property right which accrues to the expanding party . you are always going to have muddy issues in planning . for instance if a 138 kv line is all that is needed to day , but future considerations of scare right - of - way say a 345 kv line should be built , who pays for the extra cost . in order to resolve such matters the planning process must include a dispute resolution process , appeal able to ferc , to decide such matters .
discussion
kevin kelly asked about he fact that some parties benefit form current congestion so how does a stakeholder process get things built when some oppose . most agreed that if a party wants to fund construction it should be built with the beneficiaries funding . michael dworkin expressed concerns about use of eminent domain to build which means a benefit test must exist to say this is the best solution , i . e . least cost planning . this lead to discussion of the need for the rto to be provider of information to all parties so they can make intelligent decisions .
commissioner massey asked about whether the system was ( a ) under built and needed lots of expansion so don ' t worry about overbuilding or ( b ) transmission planning should consider all options before construction of new facilities . the panel agreed that pricing needs to be a prime determinant in the process . michaela dworkin worried that overbuilding distorts decisions . laura manz felt that the term " under built " is a secondary effect of not having proper pricing of locational prices to guide parties .
dick o ' neil asked if lmp will work in the west . mark maher said it wouldn ' t . laura manz said it applies everywhere because of physics , they manage hydro facilities in pjm . michael dworkin said lmp means an explicit measure of cost of congestion and the value of generation at locations and ought not to be rejected just intelligently designed . bpa is looking pricing model but lmp won ' t work . steve walton said lmp needed for real time dispatch , but given the nature of the northwest hydro system it must have some " tweaks " like bilaterals and allow operator self - schedule output levels to permit river coordination . hydro system optimizes over weeks and months to maximize firm energy production not on an hour to hour basis . pjm has hydro , but not 70 % as in the northwest . implementation will be different because such thing as unit commitment are different when you have primarily hydro and base load coal .
in the summation at the end of the panel , four principles were listed : ( 1 ) rto must provide information , ( 2 ) rto should identify solutions , ( 3 ) rto should be unbiased and ( 4 ) the rto should be accountable . the disagreement was over the last two points , michael dworkin felt that # 3 ( unbiased ) was critical and that # 4 ( accountability ) was accomplished by having regulators involved in governance . jose delgado said and transco can ' t be unbiased since it provides services , although the iso above it can be , but accountability is based on loosing your investment if you make an mistake . this last point really comes down to a preference for iso over transco forms and the tension which exist because unbiased and accountability issues .
steve