6.6. ERMUSR 01-11-2005 - Laserfiche WebLink

Home Browse Search

An FTR provides under certain circumstances a revenue stream to the holder, which can be used to offset the congestion charges a holder incurs as a transm~ss~on customer. These rights, however, are limited in number, transmission path and direction because they are tied to the physical capability of the transmission system under specil`ied conditions. Thus, in mane cases there are insufficient FTRs available even to hedge existing firm transmission service arrangements. As a result, mane APPA members have P"hR portfolios that are insufficient to hedge fully their ctn-rent power supple and transmission arrangements, due to the "proration" of FTIls. This Iias happened despite the assurances FERC provided in its April 2003 White Paper, where it said it would "ensure that existing customers retain their existing transmission rights and retain rights for future load growth."~ In I~~.tct, FERC has failed to protect fully the existing transmission rights of utilities with an obligation t.o serve in its ne~re KTO markets. Major generation investments and power purchases have been made for the heneTit of consumers in reliance on transmission o~~~~ned or contracted for on a long-term basis. It is essential that the existing transmission rights of load-serving utilities arising out of ownership of transmission, existing contracts (including "grandfathered" contracts) or service agreements entered into under an individual FERC-regulaud transmission provider's GATT, he preserved under any market design approved by FERC. The holders of such rights should be granted the right to elect to continue to tzse their physical transmission rights to meet their service obligations at the prices specified in those contracts or agreements, or if they wish, to convert to equivalent tradable rights or FTRs that will hold them harmless under any new wholesale market design. The use of FTRs also creates additional levels of complexity and uncertainty, as ~a~ell as opportunities for gaming. These problems threaten the economics of public po~,~er systems' cw-rent power supply arrangements, man}' oCwhich are eery long term in nauzre. :~'Iorco~°er, because FTRs are generally shorter term in duration, they do not address public power entities' long-term needs, including load growth. APPA members are deep]}' concerned about their inability to hedge full}' their transmission congestion costs, and thus to assure their Pederal Lnergy Regt.ilatory Commission, "\tihite Paper-~ti'holesale 1\[arket Platform," issued April 28, 2003, in Docket No. ILti101-12-000, rrtiyr~eo. at Vii. 8 Restructuring at the Crossroads: FERC Electric Policy Reconsidered