Transcript New England’s Response to FERC’s RTO Order No. 2000

New England’s Response
to FERC’s
RTO Order No. 2000
Presented By: Kevin A. Kirby
Vice President, Market Operations
Massachusetts Roundtable
January 29, 2001
NERTO Proposal
• Joint petition supported by ISO-NE, National Grid USA, Northeast
Utilities Service Company, Central Maine Power Company, Vermont
Electric Power Company, United Illuminating Company, Bangor HydroElectric Company
• Petitioners proposed an RTO that complies with Order No. 2000
consisting of:
– ISO-NE, a not-for-profit independent system operator.
– NEPOOL, governance relationship to ISO-NE
– NE ITC, an investor-owned independent transmission company
• Pursuant to an “RTO Agreement,” RTO responsibilities will be allocated
between NE ITC and ISO-NE based on which entity has the fundamental
attributes that render it best capable of carrying out the specific function.
ISO-NE’s Responsibilities
• In general, current ISO-NE responsibilities
continue, with appropriate coordination and
communications with NE ITC:
– system operations, including the dispatch of generation as necessary to
maintain short-term reliability and to address emergency conditions
– security coordinator
– administer and operate the day-ahead and real-time wholesale markets for
balancing energy and ancillary services
– perform the settlement functions required for the Markets it operates
– monitor the Markets for design flaws and the exercise of market power.
– perform interchange scheduling with neighboring control areas; and
arranging for emergency power exchanges when necessary.
– administer OASIS
– Approve coordinated generation and transmission maintenance schedules
– Regional transmission planning with ITC
Role of NEPOOL
• ISO-NE expects NEPOOL to have a continuing
role in the development and modification of the
rules for the New England Markets (the “Market
Rules”).
– If NEPOOL cannot reach consensus within a prescribed time
period, ISO-NE will have the authority to file Market Rule changes
under Section 205, as well as under the circumstances in which the
ISO currently has rule-filing authority under the Interim ISO
agreement.
NE ITC Structure
• Investor-owned, independent transmission company
operating under incentive rates focused on increasing value
to customers and shareholders
– Improving operating practices
– Applying new technology
– Investing capital
– Building new facilities
• Business model with efficient decision-making process
subject to FERC regulation
NE ITC’s Responsibilities
 NE ITC will be responsible for managing transmission throughout New
England, subject to appropriate coordination with ISO-NE’s
responsibility for the operation of the system.
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manage congestion by coordinating outages with generators, through new investments, and
efficient operation of the existing transmission system
arranging construction of new transmission facilities in the region
generator interconnections
Developing maintenance standards
 Assist in addressing “seams” issues
 NE ITC will have primary responsibility for the New England open
access transmission tariff (“OATT”)
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For access purposes, the distinction between PTF and other transmission assets would be
eliminated, thereby creating “one-stop shopping” for transmission access
Financial incentives built into regional transmission rates would encourage NE ITC to operate
the existing transmission grid efficiently
 Regional transmission planning in conjunction with ISO-NE
ISO/ITC Planning Process
 NE ITC will jointly develop the Outlook (transmission plan) with
ISO-NE.
 ISO-NE will lead the needs assessment phase of the process, with
input from NE ITC and stakeholders and publish a preliminary scope
document for comment.
 NE ITC will develop a Regional Transmission Outlook (plan) in
response to the needs assessment and considering market responses
and stakeholder input,
 ISO-NE will publish a draft report assessing whether the Outlook is
likely to meet the identified regional needs after considering
proposals by Market Participants. After considering comments and
consulting with NE ITC, ISO-NE will submit its final assessment and
recommendations for the regional Outlook to the ISO-NE Board for
approval.
Construction of New Facilities
• Decision to proceed with any given project will be
made by market for market-based projects and
NE-ITC for regulated transmission projects.
• NE ITC will be obligated to arrange for
construction of needed new transmission facilities.
NERTO Governance
• ISO proposes to work with NEPOOL under modified governance
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ISO proposes rule changes
NEPOOL must act within 90 days
Reduce required vote for NEPOOL to pass an action from 67% to 58%
Eliminate ability of a single participant to invoke automatic stay
Restructure voting sectors to reflect creation of ITC, lower voting
threshold and elimination of automatic stay by single participant
• improve balance of business interests, consumer and public policy interests
– ISO would have ability to call for vote on its proposal if NEPOOL fails to
act in prescribed period - lower threshold to pass to 53%
– ISO retains its current filing rights under the NEPOOL-ISO Agreement
• ITC would establish an advisory process to ensure consideration of
stakeholder interests
ISO-NE / NYISO Agreement on
Interregional Market Plan
• Establish and staff a joint task force to expedite activities
addressing seams issues and conforming market rules.
– The joint task force will develop and support initiatives that result
from the MOU process as well as expedite the high priority
projects identified for New York and New England, including:
• a) Development of uniform rules for a day-ahead market (“DAM”) for (at a minimum)
energy transactions;
• b) Development of compatible schedules for interpool energy transactions in real time;
• c) Development of Reserve Sharing protocols for ten-minute non-spinning reserves and
thirty-minute operating reserves;
• d) Development of Uniform Standards for Generation Interconnection. (Minimum
Interconnection Standard applicable to New England and New York.)
– Target dates established for identified priorities
ISO-NE / NYISO Agreement on
Joint Market Monitoring
• Establish a Joint Monitoring Committee
– Reports to boards of both ISOs
– Market Monitors Share information across ISOs
– Board of ISO-NE will hire Market Advisor firm to work with Market Advisor to NYISO
Board
– Complementary and in addition to the monitoring functions performed individually by
the ISOs
• JMC would:
– Review and assess product markets
– Review control area market rules and procedures and recommend opportunities for
improvement of efficiency and cost-effectiveness in those rules
– Review proposed rule changes to assess their competitive impacts
• The Independent boards of the ISOs will hire independent
auditors to undertake periodic performance audits of the ISOs
Comments and Issues
• RTO Structure
– NSTAR filing generally supports the concept of a TRANSCO, however,
• The absence of tariff terms renders consideration of NE-ITC proposal premature
• NSTAR proposes to shift responsibility for system operations and dispatch from the ISO to the
ITC in order to better manage and control congestion costs
– Public Power filing supports the continued central role of NEPOOL in the
New England markets
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Governance should be improved:
 The voting percentage needed to pass an action at the NPC should be reduced from 66.7 % to a lesser
percentage, except for “core” matters,
 the automatic stay should be eliminated; and
 a portion of NEPOOL’s Section 205 filing rights with respect to changes to the NEPOOL OATT
should be delegated subject to failure to act by NPC in specified
• A structure (or institution) should be in place that can facilitate on an expedited
basis the construction of transmission facilities across multiple service territories
and regulatory boundaries.
 More specifics are needed on the ITC and how it will provide incremental benefits.
Comments and Issues (Cont’d)
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Market Monitoring:
– NSTAR advocates to create a new independent market monitoring entity
• market monitor should be an independent unit that reports directly to the FERC, as well as
to the boards of ISO-NE and NE-ITC
• Monitoring of the NE-ITC should be included in the NERTO market monitoring function
 Public Power advocates that
 The market monitoring and mitigation process needs to be strengthened, pursued with
more vigor, and modified to permit private enforcement activity by individual
Participants.
 Market monitoring should be focused on:
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monitoring the behavior of market participants; and
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identifying design characteristics that adversely impact the markets.
 Disclosure of market data to the participants and consumers should be quicker and more
complete.
 In the NERTO collaborative process some advocated that the Market
Monitor not report to the ISO Boards but rather to a new board.
Next Steps
• Develop ITC Tariff
• Negotiate definitive agreements
• Define division of responsibilities between
NE ITC and transmission asset owners
• Implement interregional market plan
– establish task force
• Form Joint Monitoring Committee