FERC Requires WECC Transmission Upgrade Formula

Some ?nonparticipating? transmission owners, such as wind producers, may receive greater revenue for their transmission upgrades under a draft rule issued by the Federal Energy Regulatory Commission. This week, FERC tentatively rejected the California Independent System Operator?s plan to scale back the amount of revenue FPL Energy will receive for its transmission upgrades. If the ruling is approved by the commission, payment to grid users that do not own transmission under CAISO will be determined by the Western Electricity Coordinating Council. WECC coordinates reliability for its volunteer members, which include 14 Western states and British Columbia, Canada. Federal regulators reasoned in a draft order released October 27 ( 404-004 ) that designating one forum created ?certainty of a known methodology for determining compensation in the ISO tariffs? that ?would encourage investment in transmission upgrades.? FERC and CAISO sparred over whether FPL Energy was entitled to be paid for 146 MW or for 96 MW of new capacity. According to CAISO, the 50 MW added by the WECC formula are not actual new megawatts but merely ?paper? capacity. The capacity added from the rerating, according to CAISO, should be distinguished from the physical upgrade, with the benefit of the WECC increase going to the transmission owner, not FPL. CAISO noted that the regional council rating process looks at defined paths, but some transmission upgrades are not necessarily limited to such paths. And in this instance, the 50 MW of new capacity WECC found resulted from the regional council?s change in the definition of Path 59 between two substations involving the line upgrade, according to the grid operator. FPL upgraded Southern California Edison?s Blythe?Eagle Mountain transmission line at the end of December 2002. The California grid operator argued that the WECC rating process, which subtracts the pre-upgrade rating of the lines from the post-upgrade rating, is not always clear and could create unjust and unreasonable outcomes. Edison also argued that FPL sought revenues for changes in the system that arose not from its work but from changes on CAISO?s system, which were independent of the high-voltage upgrade. In the proposed decision, FERC insisted that WECC call the shots on upgrade compensation. It added, ?To the extent that the ISO has such concerns about the WECC?s re-rating of Path 59 resulting from FPL Energy?s upgrade, the ISO should pursue the matter with the WECC.? The impact of this decision is not clear because line upgrades occurring simultaneously with WECC reratings are somewhat unusual. There are several transmission upgrades in the pipelines in California and the West, and ?it is hard to know what will spur the WECC to do a rerating,? said CAISO spokesperson Gregg Fishman. WECC may increase the rating on a specific line or facility when a new engineering study is conducted, or when a change on the grid in one section changes the capacity of a facility that may be many miles away.

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FERC Requires WECC Transmission Upgrade Formula

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