Calpine Claims Grid Balkanization Impedes Sutter Power

By Published On: September 30, 2005

The Western Area Power Administration’s withdrawal from the California Independent System Operator’s control area is “impeding” Calpine’s ability to transmit power to California markets from its Sutter Power Plant near Yuba City, the company claims. To redress its losses, Calpine sued Western. It asserts that the agency’s move to become a subcontrol area of the Sacramento Municipal Utility District constitutes a breach of its long-term transmission contract with the federal agency. Further proceedings in the suit filed in the U.S. District Court for the Northern District of California were put on hold September 12 to give the two parties time to negotiate a settlement. Western officials said they could not comment on the suit’s specifics. In a motion to dismiss, the agency argued that the legal doctrine of sovereign immunity invalidates Calpine’s suit. That doctrine protects federal agencies from being sued for damages unless the federal government “clearly and explicitly consents to be sued,” attorneys for Western wrote in their motion. That dismissal motion was not granted. “We’re optimistic” that the lawsuit can be settled, said Kent Robertson, Calpine spokesperson. He added that he could not comment further since the issue is in litigation. The dispute arose after Western left the grid operator?s system at the beginning of this year after its long-term transmission contracts with Pacific Gas & Electric expired at the end of 2004. “We had to do something else,” said Randy Wilkerson, Western spokesperson. Under that subcontrol arrangement, Western manages the lines on a daily basis, but SMUD ultimately is responsible for the balance at the interface with CAISO, said Kevin Smith, SMUD attorney. “We’re trying to get our market interfaces to work properly so they can sell the services they want to,” Smith said. “Calpine is trying to get the full value out of their plant.” Essentially, Western’s move has not stranded the Sutter plant, but it has limited Calpine’s market, Smith added. CAISO sees Western?s withdrawal as another example of the “balkanization” of the state?s electric grid, according to Gregg Fishman, grid operator spokesperson. CAISO and some regulators have taken note of the increasing segmentation of the grid as disgruntled munis take their transmission systems into their own hands. Some blame the splits from CAISO for exacerbating communications problems, which can lead to blackouts (Circuit, Sept. 16, 2005). Munis say they are handling their grids in an exemplary way and can do without the grid operator’s oversight and costs. Calpine said that under a long-term agreement calling for “firm point-to-point transmission,” it had relied on Western’s lines to move 500 MW of power from the Sutter plant to the 230 kV Tracy substation to sell into the CAISO and ancillary services markets. However, according to the suit, it was sometimes impossible for Calpine to send power to those markets because Western’s intertie to Tracy was “oversubscribed.” The 540 MW Sutter plant-with two combined-cycle turbines-opened in 2001. The company also has had to pay more to move power into the CAISO market, Fishman said. “They had direct access and paid our grid access charge,” according to Fishman. “Now they are paying two grid access charges. It’s pancaking rates, stacking one rate on top of another.” Since the move, Fishman said, CAISO has scheduled the plant as if it were an out-of-state facility requiring longer lead times for dispatches to the grid. By contrast, the ancillary services market calls for almost instantaneous dispatches in response to fluctuations in power demand. Calpine is seeking to recover damages and to obtain a court order to require Western to deliver power directly from Sutter to Tracy on a firm basis

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