ferc potpourri roundtable discussion 2005 appa legal seminar san antonio, tx

FERC PotpourriFERC Potpourri

Roundtable DiscussionRoundtable Discussion

2005 APPA Legal Seminar2005 APPA Legal Seminar

San Antonio, TXSan Antonio, TX

Major FERC Issues for Public Major FERC Issues for Public PowerPower

Generation resource Generation resource adequacy/LICAP/capacity marketsadequacy/LICAP/capacity markets

LICAP in New England: no capacity LICAP in New England: no capacity mechanism in CAISO tariff; but soon may mechanism in CAISO tariff; but soon may have one; how to assess legal position?have one; how to assess legal position?

CAN an ISO impose resource adequacy CAN an ISO impose resource adequacy on munis given recent case law?on munis given recent case law?

RPM in PJM : has some possible RPM in PJM : has some possible application; munis must bid into marketapplication; munis must bid into market

More Major IssuesMore Major Issues

LICAP: It is an attempt to put a market model LICAP: It is an attempt to put a market model in place in NE with a demand curve; an in place in NE with a demand curve; an alternative is being proposed; the entire alternative is being proposed; the entire Congressional delegation and all Governors to Congressional delegation and all Governors to object to LICAP: now being postponedobject to LICAP: now being postponed

FERC on LICAP: Why doesn’t it work? It works FERC on LICAP: Why doesn’t it work? It works in NY; got generation built in NYC (but it was in NY; got generation built in NYC (but it was built by NYPA—not in response to market built by NYPA—not in response to market signals) Case is now in settlement signals) Case is now in settlement negotiations in Boston; they are hoping for negotiations in Boston; they are hoping for consensus resultconsensus result

More Major IssuesMore Major Issues Must bid requirement—if you must bid in to meet Must bid requirement—if you must bid in to meet

capacity obligation are you subject to new FERC capacity obligation are you subject to new FERC refund authority??? Can you be forced to bid in refund authority??? Can you be forced to bid in and thus subject yourself to FERC jurisdiction and thus subject yourself to FERC jurisdiction under new FPA section?under new FPA section?

MISO: MISO Whitepaper has no capacity MISO: MISO Whitepaper has no capacity construct--energy only market with relaxed price construct--energy only market with relaxed price caps; State PUCS and regional reliability councils caps; State PUCS and regional reliability councils want to keep resource adequacy; MISO Staff want to keep resource adequacy; MISO Staff wants to let the energy price signal need for new wants to let the energy price signal need for new capacitycapacity

Retail choice states thinking shorter term; other Retail choice states thinking shorter term; other states want longer term planning. states want longer term planning.


IPPs want prices to spike to as high as the IPPs want prices to spike to as high as the market will set; they say otherwise no one market will set; they say otherwise no one will construct new capacity in absence of will construct new capacity in absence of capacity market.capacity market.

CA: PUC wants to do resource adequacy CA: PUC wants to do resource adequacy (instead of ISO); backstop procurement by (instead of ISO); backstop procurement by ISO on “peanut butter” rate basis can add ISO on “peanut butter” rate basis can add millions to ratesmillions to rates

What about the munis not in the ISO? Will What about the munis not in the ISO? Will the charge on exports draw them in?the charge on exports draw them in?

More Major IssuesMore Major Issues Some munis in MISO prefer the energy only Some munis in MISO prefer the energy only

market to the capacity construct; you can use market to the capacity construct; you can use bilaterals to protect yourself from most price bilaterals to protect yourself from most price volatility; you can deal with the price spikesvolatility; you can deal with the price spikes

CAL: Our price spikes were very prolonged and CAL: Our price spikes were very prolonged and it would be politically very difficult to lift capsit would be politically very difficult to lift caps

Role of Transmission constraints in CA, NE: can Role of Transmission constraints in CA, NE: can contract ahead if not in load pocket; if in load contract ahead if not in load pocket; if in load pocket, hard to contract due to few choices. pocket, hard to contract due to few choices. RMR units had to be kept in operation and paid RMR units had to be kept in operation and paid via PUSH, RMR contractsvia PUSH, RMR contracts


Higher of cost or market; role of Higher of cost or market; role of Transmission constraints and NIMBYs in Transmission constraints and NIMBYs in maintaining these problemsmaintaining these problems

Capacity poison or energy market poison? Capacity poison or energy market poison? Which is the better for us, or is there a Which is the better for us, or is there a third way?third way?

Mergers: Cross country mergers may be Mergers: Cross country mergers may be on the rise. How to get FERC to pay more on the rise. How to get FERC to pay more attention? Does membership in an RTO attention? Does membership in an RTO mean that generation/transmission market mean that generation/transmission market power is fully addressed? (Hardly)power is fully addressed? (Hardly)


Can you show flows of power coming Can you show flows of power coming from new merger partners’ transactions from new merger partners’ transactions will exacerbate market power even in will exacerbate market power even in an RTO region?an RTO region?

Gas-electric mergers; Dominion, Duke Gas-electric mergers; Dominion, Duke Market-based rate dockets: what Market-based rate dockets: what

happens after loss of market based happens after loss of market based rates?rates?

CLECO docket: negative 500 MW import CLECO docket: negative 500 MW import capacity!capacity!

What’s Eating Public Power What’s Eating Public Power Systems?Systems?

AMEA: Southern OATT customer; big issue AMEA: Southern OATT customer; big issue is the comparability of the rates they pay; is the comparability of the rates they pay; Southern uses postage stamp and Southern uses postage stamp and Alabama Power’s rate is lower. Creates Alabama Power’s rate is lower. Creates competitive problems for AMEAcompetitive problems for AMEA

NCPA: All of the above. Rewrite of ISO NCPA: All of the above. Rewrite of ISO Tariff being done on the fly and outcome Tariff being done on the fly and outcome could be very problematic. could be very problematic.

NTUA: Keeping WAPA out of an RTO; NTUA: Keeping WAPA out of an RTO; Desert Star turned into Death StarDesert Star turned into Death Star

What’s Worrying Us?What’s Worrying Us?

WPPI: Best way to protect yourself is WPPI: Best way to protect yourself is to have own base load generation; to have own base load generation; need LTTRs to do this.need LTTRs to do this.

FMPA: RTOs now scare them; looking FMPA: RTOs now scare them; looking for mandatory joint planning; may for mandatory joint planning; may lead to joint ownership? Need lead to joint ownership? Need recognition of generation behind the recognition of generation behind the meter; why is it not part of the meter; why is it not part of the network? No one size fits all on network? No one size fits all on behind the meter generationbehind the meter generation

What is Worrying Us?What is Worrying Us?

Those in MISO--SECA: MAKE IT GO AWAY!Those in MISO--SECA: MAKE IT GO AWAY! McDiarmid: How to strengthen the TX McDiarmid: How to strengthen the TX

system? This is the key to other system? This is the key to other problems.problems.

SEPA: Our plants badly need SEPA: Our plants badly need maintenance. Weathered one year in maintenance. Weathered one year in PJM. Customers want to manage own PJM. Customers want to manage own allocations; rolling change, possible allocations; rolling change, possible impact on Transmission; review of impact on Transmission; review of Southern system agreementSouthern system agreement


Michigan: Capacity issues; developers Michigan: Capacity issues; developers come and go but won’t invest—no surety come and go but won’t invest—no surety they will get money back. How to finance they will get money back. How to finance capacity for growth?capacity for growth?

UAMPS: How to serve load growth? UAMPS: How to serve load growth? Generation and transmission planning with Generation and transmission planning with multiple states raises many issues; multiple states raises many issues; parochial state jurisdictions; network parochial state jurisdictions; network customers get forgotten? Coordinated customers get forgotten? Coordinated planning could get us far…planning could get us far…


FLA: looking at OATT; rollover rightsFLA: looking at OATT; rollover rights MAPP: Lack of competitive bids for power MAPP: Lack of competitive bids for power

supply; need adequate transmissionsupply; need adequate transmission Jennifer Tribulski: Need non-monetary Jennifer Tribulski: Need non-monetary

incentives to encourage us to invest in incentives to encourage us to invest in transmission; high rate of return does not transmission; high rate of return does not do it for us; congestion charges don’t get do it for us; congestion charges don’t get transmission built; offsets transmission transmission built; offsets transmission charge; no structural incentive to charge; no structural incentive to eliminate transmission constraintseliminate transmission constraints


Platte River: Cure to our problems may be Platte River: Cure to our problems may be worse than the disease. CO is a worse than the disease. CO is a “backwater” that was not on the bleeding “backwater” that was not on the bleeding edge. Relatively small G&T; how will edge. Relatively small G&T; how will FERC-lite be implemented and will we FERC-lite be implemented and will we have to functionally unbundle?have to functionally unbundle?

CA: Cost/benefit analysis—we were sold a CA: Cost/benefit analysis—we were sold a bill of goods. Lack of transmission bill of goods. Lack of transmission capacity and long term planning; why are capacity and long term planning; why are folks fleeing CAISO? High costs. folks fleeing CAISO? High costs.

What is Worrying Us?What is Worrying Us? Metropolitan Water District: Reliability and Metropolitan Water District: Reliability and

the ISO’s goldplating; 15% reserve morphing the ISO’s goldplating; 15% reserve morphing into operating reserve; what does the ISO into operating reserve; what does the ISO really need? And can some one else do it really need? And can some one else do it more cheaply?more cheaply?

Reemergence of market power; in CA the Reemergence of market power; in CA the IOUs are reacquiring generation; can they in IOUs are reacquiring generation; can they in an LMP environment exercise market an LMP environment exercise market power?power?

Cost allocation consistent with cost Cost allocation consistent with cost causation; demand response also a big issuecausation; demand response also a big issue


Vernon: Behind the meter Vernon: Behind the meter generation; how will it be treated by generation; how will it be treated by the ISO?the ISO?

NCPA: Long term bilateral contracts; NCPA: Long term bilateral contracts; need to make sure the terms are fair need to make sure the terms are fair and not subject to abuse; need to and not subject to abuse; need to avoid unfair termination provisions in avoid unfair termination provisions in power supply contractspower supply contracts

ferc potpourri roundtable discussion 2005 appa legal seminar san antonio, tx

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