FERC's Massey Prods RTOs Over Coordination Standards

Drawing parallels between the natural gas industry's efforts several years ago to create seamless gas markets, FERC Commissioner William Massey last Tuesday called on the electric power industry to develop regional transmission organization (RTO) interregional coordination standards by the end of this year. In the absence of industry action on this front, FERC will have to take matters into its own hands, Massey warned during a technical conference.

The conference at Federal Energy Regulatory Commission (FERC) headquarters examined RTO seams coordination issues, which run the gamut from coordination of reliability standards across regions, to standardized business and operating protocols.

During his opening remarks, Massey pointed out that FERC faced similar issues on the natural gas side several years ago. Gas pipelines had their own unique electronic bulletin boards, which created difficulties for national traders to navigate across several pipeline systems and do business, the commissioner noted. FERC subsequently directed the natural gas industry to work toward the creation of seamless natural gas markets, which occurred through the Gas Industry Standards Board.

"I think we're at a similar juncture with respect to the electric industry," Massey said. "National traders are saying to us 'good, you're moving forward with RTOs; hopefully you'll end up with just five or six of them nationwide, but you're going to have seams between the RTOs and you're going to have to deal with six to a dozen different communications protocols, standards for a variety of different practices.'" The commissioner noted that traders in one RTO want to be able to move power to another RTO seamlessly.

"It seems to me, we ought to seek a commitment to having the industry establish interregional coordination standards by the end of the year and present them to this agency," Massey said. "Otherwise, I think the agency will have to do it itself, but I think it would be better for the industry to take up this mantle."

Several panelists who appeared before the conference stressed the importance of standard market designs. "I think that everyone would agree with the goal of seamless and liquid markets and reliable, efficient and seamless transmission systems," said ISO New England's Gordon Van Welie. The ISO executive said that ISO New England believes that the path to this point starts with a set of standardized market rules and designs. "To achieve this universal market, we need standard transmission products and procedures -- this is one of the critical seams issues that faces us." Van Welie noted that ISO New England, the New York ISO and PJM have agreed to move forward towards common product offerings with standardized rules "and you've seen us take a significant step in this direction just in the last few months."

Van Welie noted that ISO New England has many stakeholders putting pressure on the ISO to move in one direction or another. "I think clear direction from the FERC would be helpful, in fact, in allowing us to move forward expeditiously on this issue." The ISO New England executive said that FERC's options range from mandating a standard market design to creating standards for specific areas like external transactions.

Phil Harris, chairman of PJM Interconnection, urged the Commission to take action related to forming a standard market design. The PJM official noted that the Energy Policy Act of 1992 articulated a need for generation to compete for the benefit of customers. "We have nine years of rhetoric; we have some empirical evidence from real-time operations about what works and what can create a misstep or huge, unintended consequences." Harris went on to argue that if "any generating plant in this large, Eastern interconnection is going to be able to deliver power across this market to benefit the customers, you ultimately have to have a standard market design."

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