6.6. ERMUSR 01-11-2005 - Laserfiche WebLink

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ensure a sUOng regional transmission system must be made a top priority for all R"hOs. RTOs Must Be Accountable for Their Costs APP: men~ibers are also increasingly alarmed by the spiralin devcloprncnt APPA members and operational costs of RTOs.t~ It seems that persons. ~1, administrative, are increasingly hard care and software costs arc running out oI~ control, ~yitl~tout sufficient alarmed by appreciation of the impact of these costs on electric consumers. De~~elopment the Splraling of corrtplex °Day Two" L1~IP markets over large geographic regions spawns deYelOpment huge software budgcts.t~ and 0peratlODal ~1'oi-se yet, K'EO members, including .APP. members, must ramp up their o~y~n COStS Of RTOS. internal operations, adding staff, 1-~ardware and sofr~~~•are, simply to cope ~yith these new markets, protocols and requirement_s.~' Public po~yer systcins have i3 Tt~e Public Po~~~er Council ("PPC") has estimated that since `?000, fora] U.S. RTO operating expenses have increased by 143 percent., and arc: growing at an annualized rate oI~ 2U percent per year, largely due to lack of cost control and increases in operational size and scope. In 2004, PPC estimates that b1.04 billion kill be. spent funding the operation of the. five FERC jm isdiuional ISOs and the ERGOT ISO. "C:ornparatiye :~~nalysis of RTO/ISO Operating Costs, ,august 1 i, 2004," Public Power Council, available at: htt ~: '~~~~~a.~cndx.org/(~omparativcrlnalvsisl~~O.FINAL.ndf. Sec also, Final Keport, "Study of Costs, Benefits and Alternatives to C:rid tl-cst," prepared for Snohomish County Public Utility District by I Ienwood Energy Services, dated October I~, 2004, at ES-l. ~~ On October 6, 2004, FERC released a report b~~ its Staff comparing the Day One costs c,f Iuur RTOs (excluding the California, ;~'ew Fork and New England ISOs and including the not-yet-operational SPP). According to Staff, initial establishment of a Day One RTO should, after taking into account "lessons learned," cost approximately S~0-i0 million-about half t}ie acuial cost of [he most expensive R'FO analyzed-with annual revenue requirements of between 570 and X70 million. But Day One R"CO costs arc oily the tip of the iceberg. FERC has made it quits clear that it expects all KTOs to develop full Dav "Itvo markets, ~~hich FERC's own Staff calculates to be a much more expensive proposition (in the neighborhood of y~100 to .`5250 million in initial investment costs, wish annual operating expenses in the range of ~12d million to °5240 million), °Staff Report on Cost Ranges Cor the llcvelopment and Operation of a Day One Regional Transmission Organization," DockeC No. PL04-1 fr000, prepared by the Staff of the Federal Energy Regulatory Commission, October 2004, and available at: http:'/~~~ww.fcrcgov/EycntCalendar/ Files! 20041006149 34-rto-cost-re~ort_~f. t' For example, FERC conditionally approved rre~.ttment as a "regulatory asset" the X29 million in internal cosGS that Dominion is spending to join PJ~I and an 14 Restructuring at the Crossroads: FERC Electric Policy Reconsidered