نقش شرکت مستقل انتقال نیرو در بازار استاندارد شده عمده فروشی برق

ITCs could perform all the functions of an ITP provided an effective performance-based rate, such as a price cap, is in place to provide incentives that ensure the ITC does not unfairly discriminate against other transmission owners, generation, or demand management.

Having examined the functions and structures of the Independent Transmission Provider (ITP) in last month’s article entitled ITP Building Blocks: Functions and Institutions, we now turn to the evaluation of alternative ITP models and institutional relations. We look at the three principal institutional options for ITPs and analyze them from an economic and regulatory perspective, focusing principally on the role of Independent Transmission Companies (ITCs) operating within or as an ITP. As stated in our companion piece, the objective of the Federal Energy Regulatory Commission (FERC) in restructuring the wholesale electricity business has been to enable power markets to become competitive. Three implications for transmission follow from this goal: access must be made non-discriminatory; transmission capacity should be rationed by price; and transmission investment should be market-based. This triplet is a tall order to fill because of the grid’s singular role in electricity markets and the grid’s physical attributes that erode the effectiveness of market-based investment policy. Furthermore, transmission service will remain a monopoly for the foreseeable future, which means that transmission prices must be regulated. In theory, non-discrimination is achievable by placing responsibility for monopoly transmission functions in the hands of an agent with no interest in generation, distribution, and marketing, an Independent Transmission Provider (ITP).1 Given that the real-time spot market and real-time dispatch of demand and supply resources are one and the same, it also makes sense to place the administration of the spot market (real-time market for certain, and day-ahead markets most likely) in the hands of an ITP. Then the ITP can ration transmission capacity to those who value it most highly through prices for transmission use founded upon market-based locational marginal electricity prices. Market-based pricing of transmission use then becomes the foundation for market-driven investment in the grid when it is economical to do so. In the proposed Standard Market Design, the Commission aims to achieve these goals by requiring all jurisdictional transmission-owning utilities to turn over control of their assets to an ITP. The ITP would be responsible for running day-ahead and real-time energy markets according to a clear-cut template, for allocating (i.e., selling) rights to the use of scarce transmission capacity and for coordinating and directing the transmission planning and expansion process.2 The critical question for those companies keen on participating in the transmission business is posed in the SMD Notice of Proposed Rulemaking (NOPR): can a for-profit ITC3 be considered sufficiently independent of the market (i.e., market neutral) to qualify as an ITP? Three factors play prominently in whether ITCs would be allowed to assume full functionality as ITPs: the ITC’s scope and configuration, its independence of market participants, and the form of price regulation adopted. Significant consolidation of regional transmission assets under an ITC’s control may be necessary before one will be considered large enough to satisfy the Order 2000 scope criterion. However, ITCs could perform all the functions of an ITP if a well-designed performance-based regulation (PBR) plan is in place. Such a PBR must provide the correct incentives (to avoid unintended side effects) that ensure the ITC does not unfairly discriminate against other transmission owners, generation, or demand management. This is a tall order, and there is no such PBR experience in the United States for ITCs. The experience in the United Kingdom and elsewhere should point ITCs and regulators in the right direction. ITCs that seek ITP approval from FERC (e.g., those that adopt the original Transco model) must therefore develop and present a workable PBR that addresses the concerns of those who favor an ISO-centered ITP. The remainder of this article is organized as follows. Section II covers the pros and cons of greater roles for ITCs within an ITP and SMD framework. Section III discusses the prerequisites for ITCs to play expansive roles as ITPs in regional wholesale markets. Section IV outlines ITC functionalities as ITPs under the SMD and as players within an ITP footprint. Section V offers our conclusions.

The goal of wholesale electricity market design is efficiency: efficiency in short-term operations and reliability plus long-term investment. Competitive electricity markets have become the principal vehicle for achieving that efficiency. Full utilization of existing transmission infrastructure and new grid investment make geographically large competitive regional markets possible; they increase the number of buyers and sellers and thereby reduce market power and consequently drive the market-clearing electricity price toward the marginal opportunity cost of power. Separation of transmission from generation and distribution to ensure non-discriminatory access turns transmission into a standalone business. The ITC is born and with it comes the question of its functionality within the SMD: how large a role in these markets should an ITC be allowed to play? The answer depends predominantly on three factors: independence, scope and configuration, and regulation. Independence and regulation are interdependent. Further consolidation of regional transmission assets under the ITC’s control may be necessary before ITCs are large enough to satisfy the ITP scope characteristic. Thus, an ITC (e.g., TRANSLink) must encompass the transmission systems of several existing utilities and the regional footprint must be reasonably contiguous to qualify as an ITP. ITCs could perform all the functions provided an effective PBR, such as a price cap, is in place. Such a PBR must provide incentives that ensure the ITC (as ITP) does not unfairly discriminate against other transmission owners, generation, or demand management. This is a tall order, and there is no such PBR experience in the U.S. for ITCs, although the experience in the U.K. and elsewhere should guide ITCs and regulators in the right direction. Thus, those ITCs that want to be ITPs must develop and present a workable PBR that addresses the concerns of those who favor an ISO-centered ITP. The exact institutional makeup of an ITP may be less important today because the Commission’s proposed SMD, if implemented, removes considerable discretion from the entity that would operate the day-ahead and real-time markets, as well as the installed capacity and CRR markets. That is, the Commission has laid out many of the details on how these markets are to be designed and run, reducing the amount of anticompetitive discretion the market manager might otherwise have. Regions differ in the characteristics of their electrical system (number, type, and locations of power plants and load centers, and transmission topology) and, especially, in their regulatory and political histories. Therefore, different ITP solutions will likely make sense in different regions. An ISO-centered ITP or an ITC-centered ITP could be made to work well. Theoretical and empirical superiority of one model remains an open question. The Commission may have been hasty in dismissing the Transco option. Perhaps, through an expanded role for ITCs, the Commission will reconsider. 1 We use the acronym ITP broadly when referring to an entity that performs functions of a Regional Transmission Organization (RTO) as defined in FERC’s Order 2000. 2 The market design is defined in the most recent Notice of Proposed Rulemaking (NOPR) on standard market design. 3 We see no difference between an ITC and a Transco, so we use the term ITC broadly in this article. The key distinction at one time was that the Transco would operate spot markets and the ITC would not. 4 J. D. Chandley and W. W. Hogan, Independent Transmission Companies in a Regional Transmission Organization, LECG, LLC and Harvard University, Dec. 20, 2001, Revised Jan. 8, 2002. 5 TRANSLink Transmission Company, LLC, et al., 99 FERC & para; 61,106 (2002) (authorizing operation of ITC within the Midwest ISO), reh’g pending, Docket Nos. EC01-156-001 et al.; Alliance Companies, et al., 99 FERC & para; 61,105 (2002) (authorizing the operation of an ITC). 6 National Grid USA is a division of National Grid Group that owns and operates the transmission system in England and Wales. It also operates utilities in New England and New York. 7 The original nine utilities that pledged transmission assets to form the Alliance RTO comprised an area of 182,000 square miles, linked by 54,000 miles of transmission lines, serving a population of 36 million people in 11 states. The combined transmission system connected 101,000MW of load to over 105,000MW of generation capacity. This scope would have made the Alliance Transco the largest ITC in the nation and, up to that point, would have made it one of the largest RTOs in the country. 8 TRANSLink Transmission Company, supra note 5. 9 The TRANSLink order provides for the ITC to unilaterally file revenue requirements and incentive rate proposals with the Commission. 10 This includes expanding the transmission system that, in effect, shifts the supply curve to the right relative to demand and lowers the market-clearing price. This rightward shift can encompass an increase in the supply of generation to a load pocket for spot energy, bilateral contracts, and ancillary services. Consequently, some of the market price reduction can come about as a result of the mitigation of supplier market power. 11 In 1990, the U.K. adopted a form of incentive regulation known as a price cap for National Grid (an ITC), which provides an example of the potential for an ITC to become more efficient and provide transmission services at lower costs. Similar price-capping (i.e., revenue control) schemes could be developed in the U.S., but so far only one proposal has emerged in conjunction with Transconnect’s RTO proposal. While the price-cap incentive structure is a promising avenue for regulation of the ITC, the main trouble with a wholesale application of the U.K.’s price-cap program for National Grid for ITCs in the U.S. is that the market design in the U.K. is completely different than the SMD. The principal lesson learned from the experience in the U.K. is that a PBR program can be devised that will align the incentives of the ITC with the policy goals of the regulator. The PBR program design that will be effective for the U.S. experience under SMD will have to accommodate LMP-based spot market as building block for signaling market participants and the foundation for the incentives in a price cap constraint. 12 D. L. Weisman, Is There “Hope” For Price Cap Regulation? Information Econ. Policy, Sept. 2002, 14 (3), at 349–370, of ITC to make the statement relevant to the present discussion. 13 I. Vogelsang, Price Regulation for Independent Transmission Companies, Working paper, Boston University, June 1999. 14 It also standardizes the pro forma tariff under a single network access service. 15 The split of functions between MISO and the ITC established in the FERC’s TRANSLink order is discussed in the next section. 16 TRANSLink Transmission Company, LLC et al., 99 FERC & para; 61,106 Order Authorizing Disposition of Jurisdictional Facilities and Participation in the Midwest ISO Regional Transmission Organization, Docket No. EC01-156-000 and ER01-3154-000, April 25, 2002. 17 The TRANSLink system represents the consolidation of the transmission assets of six participating electric utilities—Alliant Energy (WEST), Corn Belt Power Cooperative, MidAmerican Energy, Nebraska Public Power District, Omaha Public Power District and Xcel Energy. TRANSLink as a for-profit company will own or lease the transmission grid facilities from these entities and operate and maintain the assets. TRANSLink will oversee approximately 30,000miles of transmission lines linking 35,000MW of generating capacity. The company will be the transmission network provider to entities with approximately 6.9 million customers in 14 states, making it one of the largest transmission companies in the nation. 18 Midwest ISO, FERC Electric Tariff, First Revised Rate Schedule No. 1, Agreement of the Transmission Facilities Owners to Organize the Midwest Independent Transmission System Operator, Inc., A Delaware Non-Stock Corporation, Issued Jan. 28, 2002. 19 The Commission expressed cautious optimism in statements it made about the future role of ITCs in its order on International Transmission Company’s participation in the MISO. The Commission stated: “Our actions should not be construed to prejudge other types of RTOs in other parts of the country, including a structure in which a for-profit transmission company could be an umbrella RTO,” International Transmission Company et al., “Order Accepting Agreements for Filing and Approving Transfer of Control Over Jurisdictional Facilities, Subject to Subsequent Filings,” FERC, Docket Nos. ER01-3000-000, ER01-3000-001, RT01-101-000, RT01-101-001, Issued Dec. 20, 2001 20 Also, if the ITP is not a contiguous system, (i.e., the region has islands or large holes in it), there could be strong arguments presented for ITCs running day-ahead or real-time spot markets and ancillary service markets until such time as the ITP becomes contiguous. The key is whether the energy and energy-related markets can be competitive. And, is it appropriate for an ITC to run markets in which, as the transmission owner, it might be a participant? 21 PJM Interconnection LLC, Comments of PJM Interconnection, LLC on Allocation of RTO Characteristics and Functions Between Organizations Within An RTO, Docket Nos. RM-01-12-000 et al., submitted to the U.S. Federal Energy Regulatory Commission, Norristown, PA, March 12, 2002. 22 PJM Interconnection et al., Memorandum of Understanding Among and Between PJM Interconnection LLC, National Grid, USA, and Participants in the Independent Transmission Company, Norristown, PA, June 25, 2002. 23 PJM Interconnection LLC, FERC Electric Tariff, Attachment O: Independent Transmission Companies, Draft, Norristown, PA, Aug. 21, 2002, and PJM Interconnection LLC 2002d, FERC Electric Tariff, Attachment P: Form of ITC Agreement, Draft, Norristown, PA, Aug. 21, 2002. 24 ISO New England Inc. and New York Independent System Operator, Inc., Joint Petition for Declaratory Order Regarding the Creation of a Northeastern Regional Transmission Organizations, Docket No. RT02, submitted to the U.S. Federal Energy Regulatory Commission, Holyoke, MA, and Schenectady, NY, Aug. 23, 2002. 25 PJM Interconnection LLC, supra note 21, at 3. Mary Ellen Paravalos (Manager of ITC Development for National Grid) points out to us: “The related issue of guaranteeing CRRs is taken up in the current SMD debate. Incentives associated with maximizing throughput are a step in the right direction. However, in order for such a proposal to be meaningful and practicable, the ITC must possess sufficient functional control over its facilities in order to manage the financial risk associated with taking responsibility for system throughput.” Personal communication, Sept. 19, 2002.