Grid West: Regional Proposal for an Independent Transmission Organization

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Grid WestRegional Proposal for an Independent
Transmission Organization

• Northwest Public Power Association
• March 8, 2005
• Bud Krogh
• Grid West Coordinating Team
• ekrogh_at_serv.net
• www.gridwest.org

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Presentation Overview

• Grid West History
• Grid West Stakeholders
• Regional Problems and Opportunities
• Options Considered
• Development Principles and Accomplishments
• Grid West Developmental and Operational Bylaws
• Grid West Timelines and Work Plan
• Grid West Development Principles

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Grid Wests HistoryRTO West

• FERC Order 2000 (December 1999)
• RTO West organized in Northwest to respond to
  FERC Order 2000
• July 2002 FERC initiates rulemaking on Standard
  Market Design (SMD)
• Summer 2003 Regional Representatives reconvened
  to identify regional problems and opportunities
• Active participation by state utility regulators
  is critical
• Fall 2003 3 organizational options developed to
  address problems and opportunities
• December 2003 Regional Platform Proposal
  developed to respond to regional problems and
  opportunities and to serve as foundation for
  further developmental work

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Grid West StakeholdersRegional Representatives
Group (RRG)

• Transmission providers
• Power producers
• End users, including state consumer advocates
• Public power (municipals, coops, PUDs)
• Environmental and other public interest
  organizations
• State and provincial regulators and siting
  agencies, and tribal officials

RRG meetings are open to all, and summaries and
development documents are posted to
www.gridwest.org
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Problems

• Rules and practices that prevent full utilization
  of transmission infrastructure
• Impediments to region-wide transactions
• Congestion management by curtailment
• Absence of organized market structures for
  certain grid operations services

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Opportunities

• Improvements possible in system planning and
  expansion procedures
• Identify strategies for addressing aging
  infrastructure
• Backstop mechanism for transmission construction
• Facilitate multi-party agreements
• Support for regional market monitoring
• Increased availability of operational data and
  analytical tools available to reliability
  coordinator/authorities

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Regional Options Considered
Option 1
Option 2
Option 3

• Transmission Coordination Contract (TCC)
  Approach
• Assign functions to existing entities
• Minimize formation of new entities

• Independent Administrator Approach
• IA acts as agent for transmission owners
• Flow-based approach to transmission services

• RTO West Reloaded
• Independent governing board
• Single regional control area and operating
  authority

• Regional Platform Proposal

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Regional Platform Proposal

• Basics
• Create a new independent entity with provisions
  for regional accountability and governance.
• Use a staged implementation, phasing in features
  over time
• Voluntary control area consolidation option.
  Operated by independent entity on behalf of
  consolidating parties.
• Transition Principles
• Each step is a clear improvement over current
  approaches to managing and using the regional
  transmission system,
• Each stage of evolution is fully workable as it
  stands, and
• The proposed transition does not foreclose the
  ability to evolve to the target state (adapted as
  needed to changing circumstances).
• Follow-on work by the Process Group to plan
  work streams and decision points.

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Development Principles

• Accountability to the Region
• Independent, Merit-based Decisions
• Preservation of Existing Transmission Rights
• Compatibility with Hydroelectric System
  Operations
• Improve Transmission Service and Reliability
• Facilitate Integrated Resource Planning, Provide
  Transmission Adequacy and Appropriate Congestion
  Backstop
• Effective, Regional Market Monitoring
• Avoiding Complex, Costly Structure

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Grid West Bylaws

• Developmental Bylaws
• Governs Grid West during the developmental stage
• Five member independent board elected after
  Decision Point 2
• Grid West offers no commercial services during
  developmental stage
• Operational Bylaws
• Attached to the Developmental Bylaws
• Members and Developmental Board must vote to
  adopt at Decision Point 4
• Governs Grid West in its operational stage
• Nine member independent board
• Grid West offers services pursuant to
  transmission service tariffs
• Cost control provisions written into bylaws (see
  Attachment C to Bylaws QA)
• Provisions common to both sets of bylaws
• Grid West Board of Trustees cannot make major
  decisions without first completing a robust
  consultation process.
• Developmental and Operational Boards must be
  independent of market participants,

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Accountability to the Region

• Grid West bylaws strike a balance between
  regional accountability and independence
• Supermajority of MRC to elect board trustees
• Authority of MRC to remove board trustees
• Required board consultation with members and
  Board Advisory Committee
• Five special issues identified for heightened
  consultation and voting procedures
• Open meeting requirements
• Supermajority votes of the Board and members to
  amend the Operational Bylaws
• Budget and other standing committees
• Authority of members to designate an auditor
• Other

MRC Member Representative Committee
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Five Special Issues

• The following issues require special voting
  procedures
• establishing backstop measures to address
  chronic, significant commercial transmission
  congestion problems
• adopting an alternative to the company rate
  approach for recovering fixed transmission
  service costs
• transition to financial transmission rights for
  stakeholders
• providing enforcement powers and direct
  intervention authority for the market monitor
• adopting a loss methodology that overrides
  individual company loss methodologies

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Accomplishments in 2004

• Name changed from RTO West to Grid West
• Drafted and adopted Developmental and Operational
  Bylaws
• Membership and fee structure established
• Transmission Service Liaison Group (TSLG)
  developed transmission services market design and
  plan for further development
• Risk/Reward Group formed to begin evaluation of
  benefits, costs, risks and mitigation strategies
• Grid West became a membership organization on
  December 15, 2004

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Stated Purposes of Grid West from Bylaws

• to serve as an independent transmission entity
  that endeavors to
• improve reliability of the regional transmission
  grid,
• improve efficiency in its use,
• provide nondiscriminatory access to transmission
  services and related markets,
• provide cost-effective regional transmission
  planning and expansion,
• to develop solutions to operational and
  commercial problems resulting from limited
  transmission capacity,
• support effective monitoring of wholesale power
  markets and transmission related services.

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Development Stages of Grid West
Decision Point 1
Decision Point 2
Decision Point 3
Decision Point 4
Should a 5-member Developmental Board be elected?
Should Grid West offer Transmission Agreements
(TA)?
Should Grid West become Operational?
Bylaws Adopted
Corporation Activation Membership Process
TA negotiations w/ independent board
TA Offer Evaluation Risk/Reward Study
Draft Articles and Bylaws
Establish funding commitments
Member vote
RRG consensus
December 2004
2006
2007
Fall 2005
BPA ROD process on TA
Open TA negotiations
TA signed
BPA process
BPA process Technical Development, Risk Reward
Analysis
Note Dates shown are the best current estimates
and subject to change .
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Product Flow for Decision Point 2
Legal
Pricing
Conceptual Design Papers
Business Protocols (bridge from conceptual
framework to detailed design)
CCA
TSLG
Data on Cost Benefits
Risk Reward
Work Groups
Ongoing Feedback
Decision Point 2 Assessment
RRG/Members
Decision Point 2 Implementation
Developmental Board Detailed Design Phase (TA
Tariff Development, etc.)
RRG Assessment Meeting
Public Review Period
GW Dev. Board Seated
Developmental Reports Feedback
Seminars
Grid West Election Process
RRG
RRG
RRG
RRG
RRG
RRG
RRG
Filing Utilities
Dev. Funding Decision
Development Funding Plan
Filing Utilities
Interim Board
Board Candidate List
Search Firm
Interim Board
Organizational Startup Preparations (staffing,
location, etc.)
Membership Enrollment
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Timelines for Developmental Board Seating
Information Production 170 days
Review Period 100 days
Bylaws Req. 50 - 75 days
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2005
Work Groups

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Questions and Answers