6.6. ERMUSR 01-11-2005 - Laserfiche WebLink

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RTOs themselves do not have the ability to construct transmission facilities, so they must rely on their member transmission owners ("TOs"). These TUs have in some cases challenged their RT'O's ability to require thorn to build. Thee have manv reasons of their o~~~n to be unenthusiastic about constructing the transmission facilities needed ro alleviate congestion, including pricing structures that impact the cost. of serving their own loads, and, in some instances, protecting their own generation from wholesale competition.8 Sorne RTO transmission-planning regimes separately identify Rather than pigeon-holing _ those transmission facilities needed for "reliabilit}'" purposes and newtrallsmissionrtaeilities those needed for "economic" purposes. "Reliability" is defined 8S needed forelther _ such that so long as sufficient generation (no matter how high reliability Or economic the price) is a.°ailable to keep the lights on, new transmission purposes, the foCUS facilities are not deemed w be needed. This means that all Should be On hoW t11UCh additional transmission facilities are deemed t~,~ be "economic" in nature. Labeling specific transmission facilities upgrades as transmission is required both to keep the lights "economic" can in turn lead to controversies as to who should pay for their construction. on and. to keep rates to COnSUmerS at just and Rather than pigeon-holing new transmission facilities as needed reaSOnable IeYeIS. for either reliability or economic purposes, the focus should be ou how much transmission is required both to keep the lights on and to keep rates to consumers at just and reasonable levels. Instead of leaving most transmission construction to the vagaries of the "market,"~ (~ootnote corati~2zeed from previous ~iage) sufficient generation and transmission are built in California, what seems to be lacking is a formal mechanism to plough back `congestion revenues' earned under the nodal pricing scheme back into the system as new generation or transmission. In its absence, itwould require a regtilatory fiat to build assets at the right location. Many stakeholders argue that if a regulatory fiat is to be used, there may be no need for nodal pricing and CRI2s in the first place."). 8 To be sure, the process for siting and constructing transmission facilities can be both daunting and uncertain. The necessary approvals must be obtained from state or local authorities, and landowners and residents located near a proposed line corridor oaten vigorously oppose such approvals or demand expensive alterations (including undergrounding). Siting of interstate facilities continues to be a contentious issue in some regions. `~ :~PP.~ notes that PJb'I, as instructed by FERC in its orders in Docket Nos. RTO1-2-00(l, et seg., has modified its transmission planning regime to add a new procedure to enable the construction of new transmission facilities Restructuring at the Crossroads: FERC Electric Policy Reconsidered 11