Transcript OATT Policy Overview - BC Hydro

OATT Policy Overview
3/11/11
Ren Orans
Agenda
History of the FERC pro forma Open Access
Transmission Tariff (OATT) and its use in British
Columbia
Evolving North American Industry Standards
Access to Transmission under the OATT
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HISTORY OF OATT and
Use in BC
Policy goals of FERC
A primary FERC policy objective is to encourage
broad, competitive generation markets
• The tools FERC can use to drive its policy goals arise from
its jurisdiction under section 201(b)(1) of the Federal Power
Act
• Transmission of electricity in interstate commerce; and
• Sale of electricity at wholesale in interstate commerce.
Since mid-1990s, FERC has driven much of its
policy agenda through a pro forma transmission
tariff, beginning with Order 888.
Subsequent orders have modified the pro forma
tariff, spoken to market structures (such as RTOs),
and defined flexibility both inside RTOs and in
regions without RTOs.
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FERC Order 888 (1996)
Purpose: To open wholesale electric market competition
Order 888 set out a detailed pro forma open access transmission
tariff (OATT)
Requires all public utilities to file an OATT that provides
competitors the same services, on the same terms and conditions,
as utilities provide to themselves and to their affiliates.
Allows third parties access to the transmission system without
requiring utilities to separate transmission, generation, and
marketing functions – no need for restructuring & divesting
Does not require direct retail access
Continues to provide certain advantages to domestic load service –
flexible network secondary rights, for example.
Contains reciprocity provisions
Both OATT and SOC were created as companion orders and have
evolved over time
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FERC Landmark Orders –
Beyond 888
Order
888/889
1996
Requires all
utilities to file an
open access
transmission
tariff (OATT) that
provides
competitors the
same
transmission
services it
provides itself.
SOC was
introduced here
too.
RESULT:
Opened
wholesale
electricity
market.
Order
2000
2000
Required public
utilities that own
transmission to join
pools and RTOs.
RESULT:
South/West U.S.
complain and
Congress sustains
that utilities are not
required to join
RTOs.
FERC is left with
some pools and the
rest using 888-type
OATTs.
Order
2003
2003
Sets standard procedure that
must be followed by all
interconnection customers and
transmission providers. Includes
cost and responsibility allocation,
rights, and dispute resolution
processes.
RESULT: All costs associated
with interconnection facilities
before the point of
interconnection assigned to the
interconnection customer.
Facilities beyond the point of
interconnection are considered
“network upgrades” and are paid
for by the customer and refunded
through transmission credits.
Order
2004
2003
Order 890
Order 717
20072008
Revised standards of
conduct for transmissionReforms a number of
providers and their
elements of Order 888 to
associated energy
further enforce
affiliates. It required
comparability and undue
transmission function
discrimination.
employees to work
independently of
RESULT: Creates tiered
sales/marketing
imbalance charges and a
employees
conditional firm service.
Also, FERC moves away
RESULT: Required
from corporate
corporate functional
separation approach
separation
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OATT has Tracked Evolution of
FERC Policy
FERC has continuously amended the OATT to follow
changing policy goals, to make the tariff more practical,
to track jurisdictional definition by the courts, and to
follow industry evolution
• Flexible approach to RTOs and non-RTO regions
• Modified OATT to address issues that arise with undue
discrimination (e.g. Order 890)
FERC has also relaxed its requirement for strict
adherence to the pro forma
• Allows for regional or circumstantial differences, e.g. allows matters
such as opportunity cost to be defined on a “case-by-case” basis if
needed
• Provides wide latitude for business practice flexibility
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Functional Unbundling Example
Vertically
Integrated
Generation
Transmission
Distribution
Retail Service
Heritage
Utility
Generation
Separation of Transmission System
Transmission
Distribution
Customer
Independent
Power
Producers
Wholesale Customer
FERC Standard 888 OATT
FERC Standard 888 OATT
Standards of Conduct
Standards of Conduct
Divestiture of generation
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Adoption of the OATT in BC
BC Hydro introduced a FERC Order 888 pro forma OATT
in the mid-1990s
• Primary motivation was to ensure access to US markets by
adhering to FERC’s reciprocity requirement (Powerex received its
PMA in 1997, and continues to hold it)
As was common at the time, BC Hydro originally followed
strict adherence to the pro forma, even though it was
non-jurisdictional to FERC
• BC Hydro OATT exclusively regulated by BCUC
BC Hydro adopted the original incarnation of FERC’s
Standards of Conduct (SoC)
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BC Electricity Policy has also
Evolved
2002 BC Energy Plan added new policy motivations for the OATT
•
Private sector opportunity joined preservation of market access
•
Generation divestiture and competitive generation markets were not pursued
BC separated transmission into a separate company, BCTC,
during time of BC market structure changes
•
Common government ownership kept tariff structure designed and suited to
vertically integrated utility
BC Hydro has recently modified its SOC, reflecting FERC’s Order
No. 717
Clean Energy Act continues to emphasize value of wholesale
electricity trade and private sector opportunity
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EVOLVING
TRANSMISSION
INDUSTRY STANDARDS
OATT as Industry Standard
The evolving pro-forma OATT remains the North
American industry standard
BC Hydro remained generally aligned with the
changes of OATT over time
Other non-jurisdictional entities to adopt OATT:
• The Bonneville Power Administration is not federally
regulated, but uses the FERC 888 pro forma OATT to remain
consistent with industry practice in the West
• Hydro Quebec TransEnergie also uses a FERC 888 pro forma
tariff for similar reasons
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Regions with Pools vs.
FERC 888 OATT
BCH
Transenergie
Hydro Quebec
SaskPower
Newfoundland &
Labrador Hydro
Puget
Avista Northwestern
BPA Idaho
Power
Portland
Sierra PacifiCorp
NV
PSCo/Xcel
Energy
APS PNM
TVA Duke
Entergy
Progress
Southern
FPL
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Standards of Conduct Comparison:
General Principles
Both BCH and BPA follow FERC’s SoC General Principles
BC Hydro
BPA
Treat all transmission customers,
affiliated and non-affiliated, on a nondiscriminatory basis
Transmission function employees
must function independently of
marketing function employees
Transmission function employees
must function independently of
marketing function employees
BPA employees and affiliates may not
disclose, or use a conduit to disclose,
non-public transmission function
information to BPA’s marketing
function employees
BCH employees and affiliates are
prohibited from disclosing or using a
conduit to disclose non-public
transmission information to BCH’s
marketing function employees
BCH must provide equal access to
non-public transmission function
information to all its transmission
customers, affiliates and nonaffiliates
BPA will comply with SoC in
transparent manner through
compliance with various posting
requirements and will provide equal
access to non-public transmission
function information to all its
transmission customers, affiliates and
non-affiliates
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OATT is Still Western Standard
There is no practical alternative for BC Hydro to
operate without an OATT:
• Trade objectives require following industry standards and
regional practices, and preserving Powerex’s PMA
• BC public policy has explicitly and repeatedly rejected
adopting a competitive energy market
This places BC Hydro in the mainstream of
transmission providers in the West
It places BC in the mainstream of energy market
structures in the West
Exceptions:
• Alberta
• California
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Comparable Access
UNDER OATT
Impacts of OATT Design
FERC aims to enhance transmission use in order to
enhance wholesale electricity markets
FERC also aims to preserve the rights of existing
customers and native load
OATT aims to eliminate undue discrimination so
that all eligible customers have a fair and nondiscriminatory opportunity to use the transmission
system
OATT is not designed to ensure that there is resultbased equality for all eligible customers
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Impacts of OATT Design
FERC has determined that it is not discriminatory
when scheduling practices have disparate impacts
on various types of users
FERC has not sought to use “set asides” or other
tools to balance outcomes
Neither the BCUC nor BC policy makers have
sought to modify FERC’s approach
• Seeking to provide equality of opportunity
• Not seeking to ensure equality of result
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Key Takeaways
Key to non-discrimination is that BC Hydro’s terms
and conditions of service are equal between BC
Hydro’s own use of the system and third parties’
use
OATT provides the standard for non-discriminatory
access in the West
OATT provides comparable access to transmission
services but does not ensure equality of results
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