Transmission customers protest Puget Sound Energy's entry into energy market

transmission line jan 16 elp 5

Puget Sound Energy intends to respond to comments filed at FERC by several parties about PSE’s plan to modify its transmission tariff to join the Western energy imbalance market (EIM), a PSE spokesperson told TransmissionHub March 7.

PSE appreciates stakeholder involvement during our own tariff development process as well as the one that’s currently in front of FERC,” the PSE spokesperson said.

FERC should require PSE to make some changes to its plan to join the EIM, including directing the utility to clarify how it will use neighboring transmission systems since its transmission system is not directly connected to the California ISO grid, Powerex Corp., said in recent comments.

Unlike current EIM participants, NV Energy and PacifiCorp, PSE’s grid alone is not sufficient to allow full participation in the EIM, and PSE’s lack of direct connection with other EIM participants requires PSE to use other transmission systems to transfer power to and from the PSE balancing authority area (BAA) for PSE to participate in the market, Powerex said.

The Bonneville Power Administration and the California ISO also filed comments at FERC on PSE’s proposal, while the Industrial Customers of Northwest Utilities (ICNU), filed a March 2 protest (Docket No. ER16-923).

When it filed at FERC and with the Washington Utilities and Transportation Commission in February to join the EIM on Oct. 1, PSE said it planned to use its existing transmission rights on the BPA system to facilitate power transfers with other EIM participant BAAs, along with 300 MW of real-time transfer capability on the BPA grid available through PSE’s participation in the EIM.

The EIM, which is administered by the California ISO, balances supply and demand in multiple BAAs in the West and enhances efficiency in the dispatch of generation to meet demand, including improved access to renewable resources in several states, the California ISO has said.

PSE in 2015 became the third utility to announce its intent to join the EIM, after PacifiCorp and NV Energy, and since then other utilities have stated their intentions to participate in the market. PSE has noted that BPA initially sought a memorandum of understanding (MOU) with PSE to enable PSE to utilize its existing BPA transmission rights in the EIM, but BPA has since determined that an MOU is not needed. BPA initiated a stakeholder process in January to work through operational issues associated with other potential entities joining the EIM, PSE explained in its FERC filing.

FERC should let that stakeholder process continue and not make any ruling on PSE’s tariff that would affect the discussions and negotiations of entities in the Northwest, Powerex said. It is premature for FERC to make any finding on PSE’s open access transmission tariff that could conflict with future tariff revisions of BPA, the California ISO or any other EIM entity, claimed Powerex, which noted that it is a power marketing subsidiary of the British Columbia Hydro and Power Authority and one of PSE’s largest wholesale transmission customers, as well as an active participant in the California ISO markets.

FERC should make clear that any findings on PSE’s Feb. 10 request would only apply to PSE transmission facilities and that any findings regarding use of third-party transmission facilities would wait until such time as those issues are directly before the commission, Powerex said.

Powerex also said that PSE’s proposal to allocate payments and charges for operating reserves from the California ISO is not just and reasonable and is not consistent with a prior FERC order rejecting an identical proposal by PacifiCorp.

The proposal stems from the need for the California ISO to adjust its operating reserves level based on power transfers into and out of the California ISO BAA, with the grid operator imposing charges for transfers out of the California ISO BAA – because they increase the amount of operating reserves needed – and providing payments for transfers into the California ISO BAA, since they lower the amount of operating reserves needed, Powerex said.

Powerex did not object to PSE’s proposal for the allocation of payments from the California ISO, but it did object to the allocation of charges, which PSE proposed to impose on all utility transmission customers on the basis of “measured demand,” meaning all metered load plus exports in the PSE BAA. Powerex said that the proposal would result in duplicative charges and is not just and reasonable.

BPA brought up the same issue in its comments, telling FERC that, unlike other EIM participants that allocate California ISO charges based on load imbalance, PSE’s plan to use “measured demand” would penalize transmission customers whose loads are in balance and are not responsible for the costs of increasing California ISO’s operating reserve needs.

BPA also challenged PSE’s proposal to charge transmission customers power-balance infeasibility penalties and flexi-ramp penalties in order to maintain a load and resource balance in the PSE BAA. Transmission customers pay PSE to hold sufficient resources by purchasing regulation and frequency response service under the PSE tariff, BPA said.

“If PSE is not fulfilling its obligation to provide the necessary resources under this service, PSE, not its transmission customers, should pay a penalty rate,” BPA told FERC.

In its protest, ICNU said some of its members are retail wheeling customers of PSE who purchase power from retail suppliers and take transmission service from PSE under a special tariff – Schedule 449 – that was developed for those customers. Under contracts with their retail suppliers, those customers pay for enough power to cover any transmission losses incurred during delivery, but PSE’s proposed tariff change would charge all customers for transmission losses, including the Schedule 449 customers, ICNU said.

The result would be those Schedule 449 customers would be paying their retail suppliers for transmission losses based on their power supply price and they would be paying PSE for losses based on the proposed tariff change for the EIM, ICNU said.

ICNU said FERC should require PSE to continue providing Schedule 449 customers with the option to pay for transmission losses as a component of their power supply contracts with retail marketers.

Not all of the comments filed at FERC were critical of PSE’s plan, as the California ISO supported PSE’s request and said it was the result of robust outreach to stakeholders over several months and reflected input from a wide variety of parties who participated in the stakeholder process.

“Understandably, some stakeholders may have different views or preferences” regarding the proposed tariff amendments, the California ISO said, asserting that PSE sufficiently addressed the concerns raised in the stakeholder process and that FERC has no reason to reject any of the amendments.

PSE’s proposed tariff provisions to participate in the EIM largely follow those that PacifiCorp and NV Energy made to join the EIM, which FERC accepted as just and reasonable, and are consistent with the California ISO tariff provisions governing the EIM, the California ISO said.

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