6.6. ERMUSR 01-11-2005 - Laserfiche WebLink

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an RTO must develop a rigorous regional transmission planning and constructiot~i process that ensures the region has a robust (but. not gold- plated) transmission s~~stem.10 Each affected RTO region sltouk3 hay°e the flexibility to develop through a collaborative process an associated transmission facilities cost-allocation method that works bust for its stakeholders and for electric consumers. Transmission construction has also been relegated to second-place status iii a number of RTOs, because "economic" transmission facilities must "compete" with generation projects and demand-side The value that a more rnanagcment mecl~,anisms in RTO planning processes. But robust transmission adding individual generation units in load pockets or at weak InfrastrUCtUre Wlll bring points on the transmission system, in lieu of constnzcting needed transmission facilities. often only creates a ne~~~ to electric consumers- generator with local market poorer, lower fuel elliciency, and access to additional only minimal benefits to consumers. Few merchant generators sources of generation, (entities without an obligation to serve) would build such new support for generation units (at ]east without along-term commitment for the power) if fuel diversity, and r~ley thought they could not charge prices to electric consumers strongerreliablllty- that reflect the value their location confers. The value that a mUSt be reCOgnlZed In snore robust Lrausmission infrastructure will bring to elecU~ic the RTO planning and consume°rs-access to additional sources of generation, support COnstrllCtlOn proCeSS. for generation fuel diversity, and stronger rcliabilit~~-must be recognized in the RTO planning and construction process. ,~1n important. ~~~av to address TOs' reluctance to construct needed new transmission facilities would be to encourage joint participation by other utilities serving load in regional transmission systems and in ne~,~ transmission construction projects. IOLT TOs in RTO regions still arc the primary (if not exclusive) owners and builders of transmission facilities in their respective service territories. IOUs have fold FEhC that they need substantial transmission rate incentives to construct. new transmission (foot~zole rnntinued fi~onz ~~r~ious ~~age) needed for "economic" purposes, if no market solution is forthcoming in a specified tune windo~ti~. 1o It is not economically or politically feasible to construct a transmission grid sufficient to support all potential commercial demands of all market participants, regardless of the associated transmission construction costs. Hence, the regional planning process must balance the competing interests of the various market participants, and support the construction of those transmission facilities found to benefit the region because thev are cost-effective. 12 Restructuring at the Crossroads: FERC Electric Policy Reconsidered