Grid West: Regional Proposal for an Independent Transmission Organization

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Grid WestRegional Proposal for an Independent
Transmission Organization

• Montana Public Service Commission
• February 4, 2005
• Bud Krogh
• Grid West Coordinating Team
• ekrogh_at_serv.net
• www.gridwest.org

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Presentation Overview

• Industry and Grid West History
• Grid West Regional Scope
• Grid West Stakeholders
• Regional Problems and Opportunities
• Recent Accomplishments
• Grid West Timelines and Work Plan
• Grid West Development Principles

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Historical BackgroundBuilding the Interconnection

• 1941 Northwest Power Pool (NWPP) formed to
  coordinate power system operations in support of
  wartime production
• 1961 to 1970 Todays interconnected network
  takes shape.
• Columbia River Treaty, Pacific Intertie,
  connections from NWPP (Utah) to Arizona/New
  Mexico
• 1970 to 1985 Remote energy delivered by wires
• Southwest Coal energy from NM, AZ to California
• Rockies Coal energy to coastal PNW, Front Range
  and California
• BPA network expanded for hydro production and
  nuclear, 3rd AC intertie added to California
• Result is a single system covering the Western
  States where all parties are interdependent.

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Historical BackgroundEnter Open Transmission
Access

• Energy Policy Act of 1992 amended the Federal
  Power Act
• Industry proposed implementations
• FERC Policy Statement on Regional Transmission
  Groups (RTGs)
• Western systems respond WRTA, NRTA SWRTA
• IndeGO (Aug 1995 Dec 1997)
• Northwest and Rocky Mountain utilities, led by
  PNUCC, developed concept of an independent grid
  operator (IndeGO)
• A number of participants remained skeptical about
  benefits
• No regulatory mandate to proceed after Order 888
  tariffs became effective and became standard
  practice
• Died as a result of perceived cost shifts
  caused by pricing scheme

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Historical BackgroundFERC Order 888/889

• FERC Order 888 and 889 (April 1996)
• Required utilities to offer an open-access
  transmission tariff and functionally separate
  transmission from wholesale merchant
• Introduced concept of Independent System Operator
  (ISO)
• FERCs vision for the future of electric
  transmission service
• Compliance tariffs implemented in 1997
• Implementation of Order 888 Open Access tariffs
• lessened the urgency of IndeGO development
• Uncertainties about IndeGO raised concerns by
  some parties
• IndeGO effort archived for future use

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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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Activities 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
• 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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Regional Scope

• Over 62,000 circuit miles of transmission lines
• Includes most transmission facilities shown in
  this region owned by the following companies
• Avista Corporation (AVA)
• Bonneville Power Administration (BPA)
• BC Hydro (BCH)
• Idaho Power Corporation (IPC)
• Nevada Power (NP)
• NorthWestern Energy (NWE)
• PacifiCorp (PAC)
• Portland General Electric (PGE)
• Puget Sound Energy (PSE)
• Sierra Pacific (SP)

Note The Grid West proposal is designed to
accommodate participation by Canadian
transmission owners and operators in British
Columbia and Alberta.
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Ownership of Regional Transmission Facilities
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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

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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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Stated Purposes of Grid West

• 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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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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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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Operational Stage
5-member Developmental Board continues as
caretaker board
Grid West preparations for offering service
Grid West offers transmission services
?
?
?

• Special Issues voting
• Expansion of backstop authority (chronic
  congestion)
• Change from Company Rate
• Authorization to issue financial transmission
  rights
• Granting authority to market monitor to
  penalize/intervene
• Authorization to change loss methodology

9-member independent Operational Board elected as
soon as practical
2007
Note Dates shown are the best current estimates
and subject to change .
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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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Member Classes

• Major Transmitting Utilities
• Transmission-Dependent Utilities
• Generators, Power Marketers, Large Generating
  End-Use Consumers, and Others
• End-Use Consumers
• State and Provincial Energy Authorities, Tribes,
  Certain Public Interest Groups
• In general, each member class has the same voting
  power

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System Integrity

• The integrity of a system can be measured by the
  extent to which it satisfies four basic
  conditions
• Wholeness
• Coherence
• Connectedness
• Adaptability
• When a system, an organization, an alliance, is
  internally connected, when one action bears a
  close and meaningful relationship to another, and
  where the system as a whole can respond vitally
  and creatively to any kind of stress or change,
  the system displays a high degree of integrity.
• Integrity is critical to a robust, resilient, and
  stable system
• Grid West can be evaluated in comparison with the
  status quo, by whether it better satisfies these
  four basic conditions.
• Elements of Integrity by Julian Glasser, 2003

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Questions and Answers