FERC last Wednesday rejected assertions made by a collection of generators that Entergy Corp. has effectively hindered wholesale competition by preventing independent power producers (IPPs) from being able to self-supply their imbalance requirements in a fashion similar to what Entergy does for its own generation resources.

More broadly, FERC Commissioner William Massey piggybacked on the Commission’s Entergy decision to drive home the point, as he did with another case involving a complaint filed by the California Electricity Oversight Board, that the problems raised in the Entergy-generator dispute could potentially be solved by the agency’s ongoing standard market design (SMD) efforts.

“The principle of comparability in Order 888 requires that Entergy allow generators to self-supply generation imbalance service or to receive that service from third party suppliers,” Massey noted at FERC’s agenda meeting Wednesday. “So a generator must be able to secure point-to-point transmission service necessary to transmit the energy through Entergy’s system to the out of balance generator.”

But a coalition of generators earlier this year alleged that IPPs are not able to self-supply their imbalance requirements in the way that Entergy does.

The coalition asserted that Entergy was charging independent generating facility customers “unjust, unreasonable and unduly discriminatory rates” for energy imbalances resulting from under deliveries. According to the generators, the utility has been overstating its incremental cost for supplying such balancing energy in rates under its generator imbalance agreement (GIA) for GIA services.

At issue are Entergy’s so-called “source and sink” requirements included in its transmission tariff. Point-to-point transmission service on the Entergy system is governed by FERC-approved source and sink requirements.

Because sinks must be loads and not generators, the Commission based its approval of these source and sink requirements on the fact that Entergy does not designate its own generation units as legitimate points of delivery, according to the generators.

But for purposes of providing imbalance service, Entergy does not apply this source and sink limitation to itself and therefore the generators said that the utility must not be allowed to apply it to generators seeking to self-supply their imbalance needs. Entergy’s source and sink requirements effectively prohibit a customer from self-supplying generation imbalances, the generators told FERC.

But FERC last week issued an order rejecting the generators’ charges that Entergy’s tariff, with its source and sink requirements, is unlawful. Citing a case involving Wisconsin Power & Light (WP&L), the Commission determined that if it were to grant the generators’ complaint, it would be a collateral attack on the WP&L decision.

“As a legal matter that may be the right call,” Massey said. “I continue to have concerns about this issue, though, because I think it’s all wrapped in the rigidity of the Order 888 tariff requirements and a lot has changed since that tariff was adopted. And the Commission has to recognize that.”

For the second time in a day, Massey cited problems raised in a case pending before the Commission as possibly having a solution in FERC’s SMD efforts. The Commission issued an SMD working paper earlier this month.

“As I read our working paper on standard market design, the new network access service that we envision would give the transmission customers the right to transmit power between two points — a source and a sink,” he said. “The paper goes on to say that sources and sinks, and I think this is critical, that sources and sinks would be defined to include both individual nodes as well as aggregated points such as trading hubs.”

As Massey interprets the SMD working paper, a generating unit may qualify as a sink. “You can transmit power from one generating unit to another or from a trading hub to a generator or from a generator to a trading hub,” he added. “This new transmission service that we envision as part of the working paper on standard market design would be infinitely more flexible.

“Whether the paper says this as precisely as I want it to or not, I think this is the solution to come up with a kind of transmission service that solves this problem. I think we’re going to do that in the standard market design and that’s why I’m comfortable dismissing this complaint.”

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