FERC Commissioner Suedeen Kelly last Thursday said that the de-rating of the Pacific DC intertie on the West Coast for repairs and maintenance “is frightening” as California enters another summer of expected tight supplies. She said that the loss of the line is “going to lead to more congestion this year than last year — and that’s balanced against 4% load growth in California” as the state’s economy shows signs of rebounding.

Kelly made her comments in a Washington, DC, appearance at a forum sponsored by the Electric Power Research Institute (EPRI) and the Committee for Economic Development.

The FERC Commissioner said that California is “particularly constrained,” and in particular Southern California. She noted that the state’s Path 15 line “limits import flexibility.”

A national summer assessment issued this month by FERC’s Office of Market Oversight and Investigation (OMOI) concluded that one of the areas of greatest concern is the California power market, where supplies during the peak demand period are expected to be tight. “The economy is rebounding in California. Load growth is picking up, and the California ISO has forecast a reserve margin that does not have a lot of excess above the basic minimum of operating reserves,” staff noted (see NGI, June 21). The report forecasts about a 1,600 MW surplus relative to a demand forecast of 44,400 MW.

The California Independent System Operator in February said that the 3,100 MW Pacific Northwest-to-Southern California DC Intertie would be de-rated by 1,100 MW for five months — April to September — and the entire line would be scheduled to be out of use for three ensuing months — October through December 2004.

Meanwhile, Kelly said that readiness audits being conducted by the North American Electric Reliability Council (NERC) and FERC’s review of vegetation management practices of transmission-owning utilities “reveals a lack of standards and accepted good utility practice, with respect to this aspect of reliability. Indeed, we do suffer from a lack of clear and accepted standards for the tools and training that are necessary to run a reliable grid.”

Kelly noted that these and other “potentials for crises have been communicated more in the last six months, post the August [2003] blackout, than in the last six years. So, I think that we are building towards — hopefully, as we continue to talk about this — eliminating that sense of complacency that has been with us.”

At the same time, the FERC Commissioner said that there are also “major opportunities” that could be taken advantage of to hasten change in the electric power sector. “One is the existence of independent transmission companies,” she said.

“Recently, we have seen a 5 to 1 ratio of investment in transmission by stand-alone transmission companies, compared to transmission and generation companies,” Kelly noted. ITCs, she went on to say, represent “an opportunity that exists that could be taken advantage of to move more investment into our transmission infrastructure.”

Another opportunity lies with regional transmission organizations (RTOs) and independent system operators (ISOs). “Given the complex and integrated nature of the grid, regional planning for transmission infrastructure is essential to efficiently and effectively enhancing reliability and relieving congestion,” Kelly said. Reliability and congestion “must be approached from a regional basis.”

ISOs and RTOs “have a potential to be an avenue towards effecting the kind of change that we need to see in the transmission system of this country.”

Kelly noted that FERC recently created a reliability office at its headquarters, with a state outreach and liaison function. “In this arena, state decisions are key,” the FERC Commissioner noted. “They’re as important as federal decisions. They’re as important as industry decisions.”

Kelly said that uncertainty surrounding cost recovery, “which comes about because of the split in jurisdiction between the federal and state governments, is a deterrent for investment.” She said that FERC could, through outreach to the states, help to achieve a “more coherent” cost recovery policy around the U.S.

Interaction between the states and FERC could also help to achieve a “better approach” to the thorny issue of siting transmission lines, the FERC Commissioner went on to say.

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