It remains to be
seen whether the Department of Energy will again draw corridors
where the federal government can expedite the building of new
power lines where congestion is a problem. But the DOE is now
doing studies to assess the state of congestion in the
It shouldn't be
surprising. Power industry structures are different across the
"There is simply no comprehensive,
consistent information on usage or transmission investment," DOE
official David Meyer said in a webinar briefing the other day.
Meyer is working on the congestion studies
ordered by Congress in the Energy Policy Act of 2005. The idea
of the work was to establish whether and where transmission
inadequacy was causing problems that create inefficient or
unreliable markets. Once DOE identified such areas, it could
select corridors--national interest electric transmission
corridors--in which proposed transmission projects could get
special treatment.
If states did not approve the projects
within a certain amount of time, the Federal Energy Regulatory
Commission could step in and do it for them, the law said. But
(maybe for political reasons) it didn't say it very well, and
FERC's implementing rules brought successful court challenges.
DOE also lost in court with respect to its
part of the process, as a court sided with critics in declaring
that the congestion studies had not been done correctly. So now,
DOE is being very careful. Not only is it incorporating more
consultation with industry and state-regulator
interests--witness the three webinar briefings it is conducting
this month--but it also is using only publicly available data.
In the West and
Southeast, our colleague
Relying on publicly available data
essentially means relying on information made available by
operators of regional power markets, FERC and the North American
Electric Reliability Corp. Since there is no organized market in
the Southeast, data there is "too thin to support meaningful
conclusions," Meyer said. In the West, only the California
Independent System Operator can provide congestion-cost data.
But even where there are organized
markets, he said, "the data are frequently not comparable." As
some have observed before, independent system operators not only
set up immensely complex structures, but then they like to call
similar things by different names, and structure them slightly
or significantly differently. This is all In the interest of
"regional autonomy."
Without authority to dictate how the power
industry should structure itself, FERC walks delicately between
letting voluntary mechanisms develop and trying to instill
certain principles across the board. It's still a patchwork.
Thus, some organized markets choose to
have capacity markets, so that power suppliers are guaranteed at
least a certain amount for being available to serve. Others do
not have capacity markets. In one place the capacity market is
called the Reliability Pricing Model, in another the Forward
Capacity Market, and another the Installed Capacity market. Each
covers different time periods and has different rules.
Some markets have financial transmission rights. Some have transmission congestion contracts, or transmission congestion rights.
As David Meyer noted in the webinar, each
organized market "has its own definitions, its own practices,
formats for calculating data related to grid congestion."
He also said DOE has observed another
thing about market differences: "The one thing that kind of
jumped out at us ... was the extent to which inconsistent market
designs and practices between [markets] are now a significant
impediment to economically beneficial trade."
"When a party would like to engage in a transaction, particularly across seams, and is not able to do so, then they have to turn to some alternative, and that alternative is more costly ... so in effect, it is a form of congestion."
To subscribe or visit go to: http://www.platts.com