Potential New Wholesale Transmission Services; Assessing the State of Wind Energy in Wholesale Electricity Markets; Notice of Draft Agenda for Technical Workshop, 11232-11238 [E5-963]

Agencies

• DEPARTMENT OF ENERGY
• Federal Energy Regulatory Commission

[Federal Register Volume 70, Number 44 (Tuesday, March 8, 2005)]
[Notices]
[Pages 11232-11238]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-963]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. RM05-7-000, AD04-13-000]


Potential New Wholesale Transmission Services; Assessing the 
State of Wind Energy in Wholesale Electricity Markets; Notice of Draft 
Agenda for Technical Workshop

March 2, 2005.
    As announced in the Notice of Technical Workshop issued on February 
1, 2005, the staffs of Bonneville Power Administration (BPA) and the 
Western Electricity Coordinating Council (WECC) will participate with 
the staff of the Federal Energy Regulatory Commission (FERC) at a 
workshop on March 16-17, 2005. The workshop will be held at the 
Doubletree Hotel & Executive Meeting Center Portland-Lloyd Center, 1000 
NE. Multnomah, Portland, Oregon 97232. The workshop

[[Page 11233]]

is scheduled to begin at 9 a.m. and end at approximately 5 p.m. (PST) 
each day.
    The goal of the workshop is to work with market participants to 
develop clear definitions for additional wholesale electric 
transmission services, e.g., conditional firm transmission service, 
develop applicable pro forma tariff language that could be included in 
public utilities' open access transmission tariffs and address 
attendant issues.
    Attachment A of this Notice contains the draft agenda for the 
workshop. Attachment B contains a table prepared by Commission staff 
that identifies and briefly describes the new transmission services 
proposed by other entities. Attachment C contains a proposal for a BPA 
``Conditional-Firm Product.'' Panelists are strongly encouraged to 
coordinate among themselves prior to the workshop to minimize overlap 
in the information presented at the workshop by using the information 
attached to this Notice.
    The Commission will solicit comments related to the workshop to be 
filed in the captioned docket by April 13, 2005. The comments will be 
available for review in the Commission's e-Library. The public will 
have the opportunity to file reply comments in response to these 
comments by April 29, 2005.
    The conference workshop is open for the public to attend, and 
preregistration is not required; on-site attendees may simply register 
on the day of the event.
    Capitol Connection offers the opportunity for remote listening of 
the conference via the Internet or a Phone Bridge Connection for a fee. 
Interested persons should make arrangements as soon as possible by 
visiting the Capitol Connection Web site at https://
www.capitolconnection.gmu.edu and clicking on ``FERC.'' If you have any 
questions contact David Reininger or Julia Morelli at the Capitol 
Connection (703-993-3100).
    For more information about the conference, please contact Jignasa 
Gadani at 202-502-8608, jignasa.gadani@ferc.gov.

Linda Mitry,
Deputy Secretary.

Attachment A

Technical Workshop on Additional Wholesale Electric Transmission 
Services Under the Order No. 888 Open Access Pro Forma Tariff

Day One

9 a.m.-9:30 a.m.: Opening Session.

     Stephen J. Wright, Administrator, Bonneville Power 
Administration.
     Senior Staff Member, Federal Energy Regulatory 
Commission.

    Note: While the agenda often references the conditional 
transmission services contained in Attachment B, this is not meant 
to preclude discussion of the other similar transmission services.

9:30 a.m.-10:30 a.m.: Identifying and Addressing Customer Needs.

    Panelists will discuss the need for transmission service options 
that are different from those available in the Order 888 pro forma 
open access transmission tariff (OATT). Questions intended to be 
addressed include:
     Are there provisions of the current pro forma OATT that 
are inadequate in terms of service and rate flexibility? If so, 
elaborate.
     Do current tariff provisions limit the potential (or 
practicality) of certain business models?
     How can new tariff services balance the needs and 
rights of existing and new customers, without introducing cross 
subsidies?
     How can conditional firm transmission service 
facilitate the financing of new generation?
     What are the elements of a new transmission service 
option that would be critical to facilitating reasonable debt or 
project financing?

10:30 a.m.-12 p.m.: Preview of the New Services.

    Using Attachment B of this Notice, Table of Existing/Proposed 
Transmission Services and Attachment C as a reference, panelists 
will describe the transmission services they propose to offer as 
part of a pro forma OATT and any other services they have developed 
to meet customer needs. Panelists should address the conceptual 
aspects of the services. Questions to be addressed include:
     Explain the elements of the proposed transmission 
services.
     Can the different proposals be reconciled to create one 
standard service?
     How do these services address customer needs as stated 
in the first panel? Are additional services needed?
     What other characteristics should be included in the 
services?

12 p.m.-1 p.m.: Lunch.
1 p.m.-2:30 p.m.: Arranging for Service.

    Panelists will describe and discuss the process in which a 
customer will arrange for service. Questions intended to be 
addressed include:
     Should Conditional Firm service be offered to all 
customers on a non-discriminatory basis?
     What is the minimum term of the services: is it one 
hour with no maximum term, similar to point-to-point?
     Will customers designate receipt and delivery points 
and ``reserve'' capacity over specified periods?
     Should Conditional Firm service be required to be 
offered as a standard service under the OATT, or should Conditional 
Firm offerings be at the discretion of the Transmission Owner?
     Should Conditional Firm service only be offered when a 
customer's request for long-term firm point-to-point service cannot 
be met?
     How would the transmission queue be affected with the 
addition of the new service?
     Should deposits be identical to those for firm point-
to-point service?
     Should a potential Conditional Firm Customer fund 
incremental studies to determine what Conditional Firm capacity may 
be available?
     How would a transmission customer arrange and schedule 
for this service through OASIS?

2:30 p.m.-2:45 p.m.: Break.
2:45 p.m.-4:30 p.m.: Service Availability.

    Panelists will describe and discuss how a transmission provider 
will determine the amount of capacity available for Conditional Firm 
service in an open and transparent manner. Questions to be addressed 
include:
     What system studies must be performed to determine the 
availability of Conditional Firm service?
     How is the level of expected curtailment determined?
     Should the level of expected curtailment be fixed or 
should it grow, for example, with demand growth?
     Should there be a limit on the availability of 
Conditional Firm service when expected curtailment reaches some 
threshold (e.g., 5 percent, 10 percent, 50 percent?).
     Should Conditional Firm service be offered in tranches 
(e.g. 98 percent firm, 95 percent firm, etc.) or should all 
Conditional Firm service be subject to the same curtailment 
exposure?
     How will transmission planners alter the modeling of 
their systems, if at all, to account for Conditional Firm service?
4:30 p.m.-5 p.m.: Re-cap Consensus Items and Highlight Action Items 
for Day 2 of Workshop.

Day Two

9 a.m.-9:30 a.m.: Recap of Workshop Day 1.
9:30 a.m.-11 a.m.: Curtailment Priority.

    Panelists will describe and discuss the specific details that 
characterize the new services. Questions intended to be addressed 
include:
     Presently, under the OATT, all firm service is 
curtailed on a pro rata basis. Should Conditional Firm service be 
curtailed after non-firm point-to-point and short-term firm, but 
before long-term firm point-to-point?
     Does this service require distinct rules for 
curtailment that can only be addressed through individual contracts? 
If so, why?
     How will curtailment beyond the level specified in the 
contract be addressed?
     How are curtailments implemented over multiple paths 
where the hours of availability are different for each path?
     Do all Conditional Firm service customers have the same 
curtailment priority? If not, explain the need for differing 
priorities.
     What is the effect of Conditional Firm service on the 
availability of short-term firm service? Would the Commission need 
to revise the provisions for short-term firm service to accommodate 
Conditional Firm?
     Should Conditional Firm service be required to be 
offered as a standard service

[[Page 11234]]

under the OATT, or should Conditional Firm offerings be at the 
discretion of the Transmission Owner?
     Should there be a requirement that a Conditional Firm 
customer must take firm service if it becomes available after it has 
arranged for Conditional Firm service?
     If transmission upgrades are installed as part of new 
firm service requests, would Conditional Firm customers be required 
to step up to firm and participate in funding those upgrades?
     In the case of transmission upgrades, would a 
Conditional Firm customer be subject to the same ``higher of'' 
standard of the FERC's transmission pricing policy?
     How will system growth affect the integrity of the 
Conditional Firm service?

11 a.m.-12:30 p.m.: Impact on Existing Customers and Reliability.
    Panelists will describe and discuss the potential impact that 
implementation of Conditional Firm service will have on existing 
customers. Panelists will also address potential reliability impacts 
associated with the implementation of Conditional Firm service. 
Questions intended to be addressed include:
     What should a transmission provider do to ensure that 
current firm customers retain the same level of service?
     Will a Conditional Firm service customer ever be 
curtailed on a pro rata basis with long-term firm customers?
     What is the curtailment priority of the new service 
with respect to secondary network service and short-term firm 
service?
     Are there any potential reliability impacts due to this 
new service?

12:30 p.m.-1:30 p.m.: Lunch.
1:30 p.m.-2:30 p.m.: What Should a Customer Pay?

    Panelists will discuss how the rates for Conditional Firm 
service should be determined. Questions intended to be addressed 
include:
     Should the rates for Conditional Firm service be lower 
than that of firm service to reflect the lower quality of service?
     Will the implementation of Conditional Firm impact how 
the rates are presently calculated? Will they result in deriving new 
billing determinants? Should the revenue from Conditional Firm 
service be credited against the transmission revenue requirement?
     What are the potential revenue effects of these new 
services?
     How do we design the rates for Conditional Firm service 
that would prevent subsidization by traditional transmission 
customers?
     What are the cost obligations of Conditional Firm 
customers if the transmission provider builds new facilities to 
alleviate congestion across a path?
     What should be the rules for allocating costs to the 
Conditional Firm service category?

2:30 p.m.-4 p.m.: How it All Fits Together, Including What Other 
Parts of the Tariff Must be Revised.

    Panelists will discuss how the Conditional Firm service will 
function in relation to the existing terms and conditions of the 
OATT. In addition, panelists will discuss potential modifications to 
existing tariff provisions that must be made to implement 
Conditional Firm service. Questions to be addressed include:
     What other sections of the OATT must be modified to 
accommodate Conditional Firm service?
     Do transmission providers consider Conditional Firm 
transmission service a new tariff provision or a variant of point-
to-point service?
     Where will the proposed service fit into the existing 
tariff, i.e., will a new service section be needed?
     Should Conditional Firm service be regional, 
transmission operator specific, or generally applicable under FERC's 
pro forma tariff?

4 p.m.-5 p.m.: Recap Consensus Items/Tasks Accomplished and Listing 
Outstanding Issues/Questions.

    During this part of the workshop participants and moderators 
will:
     Recap solutions/tasks accomplished.
     Develop lists of questions and issues requiring further 
work.
     Agree on roles and responsibilities to develop possible 
solutions on questions and issues that requiring further work at the 
end of the Workshop as well as the filing of these in the proceeding 
for the Workshop.

Attachment B

[[Page 11235]]



                                                  Table of Existing/Proposed Transmission Services \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       BPA--conditional firm      PacifiCorp--partial firm       RMATS--conditional firm      RMATS--priority non-firm
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nature of Service.................  Conditional Firm--The       Partial Interim Service--The  Conditional Firm--Offered     Non-Firm PTP--Right of First
                                     service is Firm for a       service is Firm but           Firm during defined period    Refusal to any service that
                                     number of years but         available only a portion of   of year and Conditional       may become available.
                                     limited during certain      a day, week, month, or        Firm for balance of year.
                                     months, weeks, days, and    year. Determined during       Determined during
                                     hours. Determined during    application procedures.       application process.
                                     application procedures.                                   Curtailment hours during
                                     Guarantee certain levels                                  month will be designated in
                                     of service.                                               an Appendix.
Eligible Customer.................  Available to customers      Available to customers when   Available to LTF PTP          Available to any party.
                                     when TP determines          TP determines insufficient    customers when TP
                                     insufficient ATC exists     ATC exists to meet            determines insufficient ATC
                                     to meet customer's full     customer's full request.      exists to meet full request
                                     request. Must be in                                       of traditional LTF PTP.
                                     existing queue.
Completed Application.............  Customer must first submit  Customer must submit an       Offered to customers who      Not Stated.
                                     an application for LTF.     application for Partial       submit a LTF application.
                                                                 Interim Service.
Type of Service...................  PTP only..................  PTP only....................  PTP only....................  PTP only.
Service Availability..............  Not a standard OATT         Not a standard OATT product.  Available when ATC is         Offered when there is
                                     product. Limited number     A customer cannot come in     insufficient for full         insufficient ATC in most
                                     of offers based on          and specifically request      amount of request of          hours of the year.
                                     historic usage data and     this service. Service is      traditional Firm PTP.
                                     studies of proposed         only available if a
                                     conditions.                 customer comes in
                                                                 requesting Firm PTP
                                                                 Transmission Service and
                                                                 the full amount is not
                                                                 available.
Determination of Available Periods  Not yet resolved, but will  Not Stated..................  Not Stated..................  Not Stated.
                                     likely be based on a
                                     level of probability to
                                     be determined.
Curtailment.......................  Not stated................  Not Stated..................  Curtailed after all Non-Firm  Curtailed after redirects
                                                                                               but prior to traditional      from secondary points; hour/
                                                                                               Firm Service.                 daily/weekly/monthly, Firm,
                                                                                                                             but prior to network
                                                                                                                             service from secondary non-
                                                                                                                             network resources, and Firm
                                                                                                                             Service. Subject to
                                                                                                                             curtailment for reasons of
                                                                                                                             reliability or to relieve a
                                                                                                                             constraint.
Rates.............................  OATT rate or the OATT rate  Percentage of OATT rate.....  Priced relative to LTF to     Based on proportionate use
                                     reduced by the same                                       reflect higher potential      of system.
                                     percentage as the                                         for curtailment.
                                     reduction in capacity.
Term..............................  Same as LTF...............  Not Stated..................  Same as LTF.................  1-10 years.
Impact on existing LTF PTP          None......................  Not Stated..................  None........................  None.
 Customers.
Queue.............................  Customers will remain in    Not Stated..................  Customer would retain         Customers would retain
                                     queue for capacity to                                     original queue status.        original queue status.
                                     meet full capacity
                                     requests.
Impact of STF on CF...............  Sale of STF will not        ............................  Not Stated..................  None.
                                     degrade CF. CF upgraded
                                     to Firm prior to offering
                                     to STF.
Impact on ATC.....................  Same as LTF. Affects the    Not Explicitly Stated.......  Not Explicitly Stated.......  Not Explicitly Stated.
                                     amount of available ATC
                                     for LTF, STF and NF.
Reduction to Capacity.............  Can be made to pre-         Not Stated..................  Not Stated..................  Not Stated.
                                     schedule. In real time
                                     treated same as LTF PTP.
Rollover Rights...................  Yes, but if customer        Not Stated..................  Not stated..................  Not Stated.
                                     refuses extra capacity at
                                     a later date, removed
                                     from queue and will not
                                     have Rollover Rights.

[[Page 11236]]

 
Assignment/Deposits/Deferrals/      Same as long term           Not Stated..................  Not Stated..................  Not Stated.
 Redirect Rights.                    procedures set forth in
                                     OATT.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ CF--Conditional Firm.
 PTP--Point to Point.
 LTF--Long Term Firm.
 STF--Short Term Firm.
 NF--Non-Firm.


[[Page 11237]]

Attachment C

Proposal for a Conditional-Firm Product With Bonneville Power 
Administration's Transmission Business Line

Background

    BPA's transmission system inventory is nearing zero, 
particularly on some constrained flowgates. Posted ATC indicates 
that on many flowgates there is limited long-term firm Available 
Transfer Capability (ATC) remaining. However, data from planning and 
operations shows that congested flowgates are at peak capacity for 
only a limited number of hours each year. We propose that the TBL 
offer a new transmission product, referred to here as the 
``Conditional-Firm'' (CF) product, which could optimize use of the 
existing transmission system and the ability to obtain transmission 
service as well as provide customers more flexibility.

Rationale

    There is a need for additional ATC for generators and utilities 
to be able to engage in long-term contracts to serve growing 
Northwest loads. The CF product would offer transmission service 
that would have more certainty than non-firm service, but would not 
be required to be available for the full year assuming all lines in 
service. (Current long-term firm service does allow for some outages 
throughout the year.) Many generators and utilities feel they could 
work with a transmission product with limited risk to transmission 
capacity availability. Intermittent generators like wind, do not 
always need the full transmission capacity of their contracts and 
would be less impacted by small incremental risks to capacity 
availability and therefore more likely to purchase CF. Generators 
and utilities are not comfortable signing twenty-year contracts for 
non-firm transmission for new resources with the risks inherent in 
transmitting that power strictly via non-firm transmission service. 
It is also difficult to get funding for new generators without 
transmission certainty. Since additional transmission lines are 
unlikely to be built soon to serve generators in many locations, 
customers have requested that BPA offer innovative products like CF 
that make more efficient use of the transmission system over 
constrained paths and allow new generators to get their power to 
market.
    A significant number of utilities and generators need to be able 
to finalize their contracts in the near future. For renewable 
generators this is especially true since their costs depend on the 
Federal Production Tax Credit (PTC). The PTC has been extended 
through 2005. Further extensions beyond 2005 are anticipated, but 
still unclear. A CF product defined by the end of 2005 and 
implemented in 2006 could provide a bridge until such time as more 
ATC is available from BPA via new transmission line construction or 
expiring contracts.

Proposed Conditional-Firm Product

    TBL needs to develop a new type of long-term transmission 
service that provides for as many months of firm service as possible 
during the year, combined with a certain number of hours identified 
for potential unavailability of capacity over a set number of 
months, weeks, or days.
    The amount of capacity that would not be available and may 
require reductions to capacity availability is yet to be determined.
    The CF product would provide a year round, long-term 
transmission product that would guarantee a certain level of 
availability of capacity and therefore identified number of 
potential hours of reductions to capacity availability. It could be 
``less firm than firm'' but ``more firm than non-firm'' in months 
that firm ATC is not available.

Elements of the Conditional Firm Product

     This CF product would be available for PTP service 
using the existing long-term firm transmission service queue. 
Customers would have to ask for long-term firm service and be in the 
existing queue. If the requested long-term firm service is not 
available but there is some CF available over the flowgates 
requested, then an offer of CF will be made to the customer.
     This product would provide firm service for a number of 
identified years within which certain months, weeks, or days would 
be identified where capacity may not be available and could be cut 
or limited. Within each year, the months where capacity is available 
and no additional reductions to capacity availability are needed 
beyond those associated with standard long-term firm PTP service is 
needed, will be treated identically to any other PTP service 
agreement.
     A specific number of hours would be identified per year 
of service that may not have capacity available and could be 
curtailed. This identified limit would not be exceeded. The number 
of potential hours that could be potentially curtailed would be 
based on a particular level of probability (to be determined) and no 
greater than this identified occurrence. This may limit the numbers 
of offers for this product based on probability level selected and 
based on historic data and future modeling results. Example: If 5% 
of the year was the level identified, the number of hours of 
capacity not available and that could be curtailed could be as great 
as 438 hours per year. There's still the question of how to 
calculate the number of curtailable hours over several flow gates. 
We propose calculating the given probability level over each 
flowgate and adding them together. This will be a conservative 
estimate and lessen the risk of impacting other firm PTP contracts. 
(We are currently working to determine what this level will be for 
the CF Product.)
     If service is scheduled (in real time), the Customer 
will receive the CF product similar to any other firm service. 
Reductions to capacity availability can only be made in pre-
schedule. In real time, the CF Agreement will be treated identically 
to any other PTP Agreement; there will be no reductions prior to 
other firm contracts in real-time. If CF service is not available on 
pre-schedule and a CF customer is curtailed, but then firm service 
becomes available, the CF Customers service will be restored on a 
pro-rata basis after the existing long-term firm PTP customers have 
had their transmission rights restored.
     This firm product could be the same Tariff rate as the 
current long-term firm service product or a new proposed Tariff 
rate, to be determined. For example, if the long-term PTP rate is 
used, the Customer could be charged on a probability basis, i.e. 
would be charged for 98 or 95% of PTP for a 2% or 5% reduction to 
capacity availability right. There will be times that Customers may 
not be curtailed up to the limit put in the CF contract but 
Bonneville is securing the right.
     This Product will not degrade existing long-term firm 
Customer rights or service.
     The number of reductions to capacity availability would 
be identified as a limit to everyone receiving this service. This 
would be done when the Agreement offered is signed and would not 
change for the duration of the Agreement. Any reductions after the 
limit is reached would be done on a pro rata basis along with all 
other firm Agreements.
     Assignments, deposits, deferrals and Redirects would be 
the same as existing Tariff provisions allow, but would have to take 
into account the reduction to capacity availability associated with 
the CF contract.
     A Limited number of offers will be available for this 
product based on the reduction of capacity availability probability. 
The limit would be determined by TBL based on historic usage data 
and studies of projected future conditions.
    A CF product would be offered only to a customer who has 
submitted a request for long-term firm service that cannot be filled 
due to lack of ATC on one or more flowgates. Given this requirement, 
the CF product that is offered to customers should be as close to 
long-term firm as possible. And those offered a CF product should 
remain in the queue to be upgraded to year round firm service should 
it become available. If a CF contract holder is offered the firm 
service they requested at a later date and they refuse the offer, 
the CF customer will be removed from the queue. In this case, the CF 
contract holder will keep their CF contract for its term and they 
will not be given roll over rights for a future CF contract. This 
policy is the same as that offered to customers purchasing partial 
or Seasonal Partial firm service.
    Other ways this product should be treated as firm service are:
     Ability to do firm and non-firm redirects in the same 
way as firm service.
     Similar OATT Section 22 Reservation Priority rights as 
currently allowed.
     Available for the same length of service term allowed 
for long-term firm service.
     Same de minimus rule as defined in Bonneville's current 
ATC Methodology.
     Sale of this product affects amount of ATC available 
for LTF, STF, and NT service in the same way as firm. (The product 
should be modeled as firm even during months where there is no ATC 
available. In this case ATC would look negative on some paths and 
should limit availability of STF and non-firm for other parties.)
     Same long-term request procedures and deposits required 
as identified in the OATT.
     Same standards for managing the queue and granting 
requests.
     Same Extension of Commencement of Service Rights.
     And same Deferral of Service Rights.

[[Page 11238]]

Additional Conditions

    It is critical that new sales of STF transmission service not 
degrade the value of the conditional firm transmission product. All 
CF contract amounts will be treated as firm obligations when 
determining the amounts of STF and nonfirm transmission available 
for future periods. The renewable generators propose that CF 
customers be upgraded to firm service during conditional months when 
firm service is determined available on a monthly, weekly, daily or 
hourly basis. Once CF customers are upgraded to firm, additional STF 
could then be sold during the same time frame and without gaining 
the reduction in capacity availability priority over CF customers. 
If there is more than one conditional-firm customer impacting a 
constrained path, and the available STF on that path is less than 
the combination of CF customer requests, the available STF must be 
allocated among those customers in a fair and reasonable way.
    Customers offered new CF Agreements will be provided clear 
guidance on the risk of reductions in the capacity availability 
based on historic transmission usage data.

Price

    Renewable generators and other independent power producers who 
have expressed interest in this product believe that the price 
should reflect the fact that customers of conditional-firm are more 
likely to experience reductions in capacity availability than 
customers with firm transmission. Given this increased curtailment 
potential, there is an expectation on the renewable generator's part 
that the resulting cost would be less than a full year of firm 
transmission. In order to avoid the need for a rate case, the 
renewable generators propose a pricing structure that uses current 
TBL transmission rates. The proposal is that CF customers pay firm 
transmission rates for the percentage of the year that they are 
guaranteed to receive firm transmission. For example, if a customer 
is offered a CF product that will be firm 95% of the year, this 
customer will pay 95% of the cost of a year of PTP service. We 
invite other opinions and suggestion on this pricing issue.

[FR Doc. E5-963 Filed 3-7-05; 8:45 am]
BILLING CODE 6717-01-P