Transcript Electric Industry Restructuring in Wisconsin 1990

MISO Wisconsin Relationship
Public Service Commission
Randel Pilo, Assistant Administrator
August 7, 2008
Potential Benefits from an ISO
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Production Cost Savings for Ratepayers By Dispatching
Generation Over Larger Footprint. {~3-4% Savings}
Increased Use of Transmission System in Terms of Flow without
Decreasing Reliability
Less Reliance on Physical Curtailments on Congested
Transmission Lines.
Prevent Utilities that Own Generation and Transmission From
Exercising Vertical Market Power, Whereby Grid Access is Denied
or Overpriced to Other Utilities.
Better Price Signals for Construction of New Generation or
Transmission.
Consolidation of Functional Areas like Contingency Reserves and
Regulation to Create Savings
Coordinated Inter-regional Transmission Planning & Analysis
Potential Downsides to RTOs
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Set Up Costs for Control Centers, Computers, and Operation.
Central Dispatch needs Effective Market Monitoring to Make Sure
No Strategic Pricing or Capacity Withholding Occurs.
Market Design Must Be Correct
Loss of Economies of Scope. Utilities Who Were Efficiently
Operating Their Combined Transmission and Generation Assets
May Experience Increased Costs Due to Disaggregation.
Settlements Process for Transactions Can Be Complex and
Subject to Dispute.
Seams Can Exist Creating Operational and Cost Disparities
Federal and State Jurisdiction Legal Issues Abound.
Present Issue Areas
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$420 million Arrowhead-Weston Line was Excluded from Regional
Cost Sharing; PSCW is Challenging this in Federal Court.
Transmission Planning—MISO, Xcel, ATC, and PSCW roles
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Transmission Cost Allocation—RECB1 and RECB2.
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Several Ongoing Transmission Studies with Results Due in 2009.
Presently, regional cost sharing is set at 20% of project cost.
Resource Adequacy—MISO has proposed an administrative fee
approach in conjunction with a voluntary excess capacity auction.
Prevention of Non-competitive Pricing by Market Generators.
Targeted Load Shedding in Real Time .
Should US DOE and FERC have Siting Autority over Projects in
Wisconsin?
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Congestion Conference in Chicago mid September 2008.
MISO Membership
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PSCW continues to monitor.
2007 Stakeholder study suggested staying in
MISO because there would have been a $51
million exit fee, and the other options did not
look much more appealing.
Need to constantly assess due to membership
changes, ongoing construction of new lines in
MISO footprint, and cost sharing implications.
Make sure MISO continues to bring value.
PSCW Watchdog Functions
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PSCW participates with Regional State
Committee, Organization of MISO states
containing 14 states, or OMS.
PSCW interacts directly with RTO Board,
Management, and MISO Staff. Dedicated
Commissioner with 6 technical staff as backup.
PSCW Intervenes in Appropriate FERC
Dockets
Costs Examined in Rate Proceedings
Appendix
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Congestion Fixes In Progress—ATC.
2007 Energy Prices in Key MISO Zones.
Market Monitor Synopsis on MISO pricing.
Potential Transmission Improvements in Upper
Midwest under study in MTEP.
2007 ATC Top Ten Congested Elements
& Approved PSCW Projects Addressing Congestion
#3 Hintz – Werner
#4 Ellington – Hintz
#8 N Appleton – Werner West
Weston Unit 4 (2008)
Gardner Park – Hwy 22
(2009)
#7,#8 & #9 Stiles – Pulliam
#6 Highway V - Preble
Morgan – Werner West (2009)
#5 Pleasant Valley – Arthur Road
Saukville – St Lawrence (2008)
#2 Arpin – Eau Claire
Arrowhead – Weston (2008)
#1 Paddock Transformer
Paddock-Rockdale (2010)
Key
BLACK –
Congested element rank and name
RED –
Projects that address congestion
LMP Differentials Into ATC
Annual - 2007
Minnesota Hub
higher than ATC
MN $56
ATC
$54
*
Illinois Hubs
lower than ATC
NI $48
IL $47
MISO $51
Executive Summary:
The Midwest ISO energy markets performed competitively in 2007.
Although certain suppliers in the Midwest ISO have local market power, there
was very little evidence of attempts to exercise market power in 2007.
Hence, mitigation measures were employed infrequently to address economic
withholding that would have increased energy prices or uplift costs.
The most frequent mitigation occurred in Minnesota
New Narrow Constrained Area (“NCA”) defined in January 2007.
Higher fuel prices, played a primary role in the 13 percent increase in average energy
prices in 2007 and other rising costs, including:
A 26 percent increase in uplift costs associated with revenue sufficiency
guarantee payments (“RSG”) that was due to higher fuel prices and increased
commitment of peaking resources to manage congestion.
A 28 percent increase in congestion costs that was due to the increased redispatch costs
caused by higher fuel prices and other factors discussed in the
report.
Wisconsin Projects Under Study Only