Comments on Draft of NWRTO Transmission Control Agreement

[Carl Imparato for Power Marketer Group - July 8, 2000]

The following are some “overview” comments on the current draft of the document.  We have not attempted to propose solutions to most of the concerns raised below because in most cases, the solutions require that the other NWRTO working groups first come to agreement on basics of the NWRTO model.

General Comments

1.	We are generally in agreement with the substance of the comments that have already been provided by Enron and by the IPP Group.

2.	A very important issue is begged by the language in the TCA: how will the NWRTO meet its obligations to provide all transmission services that would normally be available under FERC-jurisdictional tariffs, including generation interconnection services, and including services to generators and loads which are connected to the lower voltage systems of the Participating Transmission Owners (PTOs).  

Under Order 888, it is irrelevant whether the Existing Customer is connected at the transmission level or the distribution level: in either case, the Existing Customer is entitled to both interconnection service and transmission services.  Since the purpose of the RTO is to replace the TOs as providers of all such transmission services, the NWRTO must be positioned to supply all such services.  All of the RTO’s rules must therefore apply to all facilities that are owned by a Participating Transmission Owner, regardless of whether those facilities happen to be defined to be Transmission or Distribution.  

This is a critical issue for generators, power marketers and their customers, because we cannot hope to receive the benefits of an RTO if we remain hostage to the PTOs’ discriminatory application of rules simply because points of interconnection or points of withdrawal happen to be on PTO facilities which have not been designated as “RTO-Controlled Transmission Facilities.”

Having pointed out the problem, we believe that the solution lies in language that belongs in the NWRTO Tariff, not in the TCA.  But the TCA currently presupposes a very bad solution, by only obligating the PTOs for interconnection services at higher-voltage levels.   So our global comments on the TCA draft are that: (i) the PTOs’ obligations under the TCA must extend to all facilities (both T and D) which are used to provide jurisdictional services; (ii) the distinctions between “RTO-Controlled Transmission Facilities,”  “Transmission Facilities,” and “Critical Control Facilities” need serious reconsideration; and (iii) none of the PTOs’ obligations to provide transmission services should even be listed in the TCA, but should be in the Tariff instead.  (See General Comment #3.)

3.	Large portions of the TCA currently have language which specifies the duties of the RTO and obligations of the PTOs to provide transmission services. These duties and obligations define the essence of the RTO’s existence and they belong in the RTO Tariff.  None of these duties or obligations should be in the TCA, where they could be held hostage by a potential signatory to the TCA, completely undermining the concept of RTO independence.  Instead, the TCA should be made much, much simpler by applying the following two rules: (i) if a duty or obligation is related to provision of transmission service, it should be in the RTO Tariff; and (ii) the TCA should simply include a provision that binds the PTOs to the terms and conditions of the RTO Tariff.

4.	The supremacy of the RTO Tariff needs to be clearly established.  The RTO Tariff should take precedence over all other NWRTO agreements, including the TCA.  If this is not done, grid users will have absolutely no assurances regarding their rights, since they will not be parties to the myriad of other individually-negotiated RTO contracts.  TCA Section 25.18 would turn this important principle on its head by making the RTO Tariff (as well as GIAs and LIAs) subordinate to the TCA!

5.	The TCA should be a generic document, not a set of unique bilateral agreements between the NWRTO and the various PTOs.   The only thing that should conceivably differ from one TCA to another should be the lists of facilities that are included in the Exhibits to the TCA.  (This is similar to what is contemplated for the Scheduling Coordinator Agreement: all SCs sign the identical agreement.)   Clearly this is not contemplated in the current TCA because there are distinctions between “Initial PTOs” and other PTOs, and there is even a most-favored nations clause in the TCA.  No reason has been put forward as to why there is any legitimate reason that different PTOs should have different terms and conditions in their TCAs.  To the contrary, if a potential PTO can view its potential participation in the NWRTO as a negotiation, the NWRTO’s role can only be undermined and non-discriminatory transmission access can only suffer.

6.	The TCA is silent on the need for a Code of Conduct for the PTOs.  Since the PTOs are given key duties under the TCA (see 7.3.3, 7.3.5, 7.3.8…), the PTOs and their employees need to be bound to a Code of Conduct which clearly obligates them to work in the interest of the NWRTO.  

7.	Further discussion of the TCA at this point in the RTO development process is unproductive and amounts to putting the cart before the horse.  The work on the TCA (and the GIA, LIA and Tariff) ought to be suspended until the NWRTO working groups have determined the RTO’s planning policies and processes, its generation interconnection policies and processes, its transmission access and FTR model, its ancillary services model, its methodology for treatment of existing contracts, its rules for determination of what facilities will be included in the RTO’s operational control, its rules for RTO authority over the remaining facilities of the PTOs, etc.   Ninety percent of the issues related to the TCA cannot be realistically addressed until all of the above policy matters have been decided.

Specific Comments

1.	Throughout the document, the distinction between Initial PTOs and other PTOs should be eliminated.  (See General Comment #5.)

2.	Sections 2.2.1 and 2.2.2: The RTO should provide all services on day one.  The distinction between “Congestion Clearing” and other services is a very bad one.  The NWRTO would lose a tremendous amount of time if it had to define and implement both an interim transmission access regime and an “ultimate” transmission access regime.  (If it becomes necessary for the NWRTO to phase-in some functions, that can be addressed at a later time by putting some interim procedures into the Tariff.)  

3.	The NWRTO’s duties (specified in Sections 2, 4, 5 and elsewhere) should not be listed in the TCA.  They should be listed in the Tariff and incorporated in the TCA by binding the TCA signatories to the Tariff.

4.	Section 2.5:  Allowing withdrawal upon six months notice may not be appropriate.  If grid users purchase FTRs with a term of 1 or 2 years, they need to be assured that their rights will not be harmed by the withdrawal of a PTO.  So at a minimum, any withdrawal of a PTO needs to be conditioned on such withdrawal not creating any detrimental effect on the rights of NWRTO customers.

5.	Section 3: contemplates additional TCAs and sets up procedures to challenge such additional TCAs.  This would be entirely unnecessary if the TCA was a standardized document which was subordinate to the NWRTO Tariff and which could only be changed by the NWRTO’s filing for a change (which would then apply to all TCA signatories) at FERC.   Therefore, all of Section 3 should be deleted.

6.	Section 4.1: states that there will be “other transmission… facilities” controlled by an Executing TO.  This makes no sense.  All of a PTO’s transmission facilities must be under the authority of the RTO.  We do not believe either Order 888 or Order 2000 makes any distinction between different types of transmission facilities.

7.	Section 4.2.1: tries to address interconnection rights, but does so inadequately.   First, interconnection should be dealt with in the RTO Tariff, so most or all of  Section 4.2.1 is unnecessary.  Second, Section 4.2.1 creates a false distinction between interconnection with a PTO’s “Transmission Facilities” vs. interconnection with a PTO’s other facilities.  Under Order 888 no such distinction exists, and we do not believe that it is the intention of Order 2000 to create such a balkanization of the interconnection process or to create loopholes under which a PTO could subject a new generator to PTO-specific generation interconnection policies and procedures at lower voltage levels.

8.	Section 5.1.3: This section presupposes the manner in which pre-existing transmission rights are going to be handled.  This is premature.  In addition, the rules for handling existing contracts should be in the Tariff, not in the TCA.

9.	Section 5:  This describes the NWRTO’s duties.  These duties belong in the RTO Tariff, not the TCA.  All of Section 5 can be eliminated from the TCA.

10.	Section 5.2.3: Creates some sort of distinguishable service called “Congestion Clearing.”  This is not consistent with the direction of the working groups.  In addition, this Section assumes an “accept all schedules” approach, which is also inconsistent with the direction of the working groups.  Finally, the text which states that BPA can provide discriminatory access to Northwest regional loads is both (i) inconsistent with the basic principles of the NWRTO, and (ii) probably completely unnecessary in light of the congestion management model that is being developed in the working groups.

11.	Section 5.2.5:  The description of the mechanism for arranging for ancillary services is inconsistent with the direction of the working groups.

12.	Section 5.4.2:  The description of ancillary services mechanisms is outdated, both in its listing of the services and in its mechanisms for arranging for the services.  As with the rest of Section 5, it should be deleted, and the NWRTO’s and PTOs’ roles and obligations in ancillary services procurement should instead be described in the NWRTO Tariff.

13.	Section 6.1:  The concept that suspended services under pre-existing agreements should be extended beyond the primary term of the agreement makes no sense.  It would simply propagate the old-world in perpetuity, which is counter to the objectives of the RTO.  Instead of extending the terms of suspended agreements, PTOs should take on an obligation to not voluntarily extend existing agreements beyond their primary terms.

14.	Section 7.1.1: refers to Congestion Clearing.  There is no need to do so.  All references to “Congestion Clearing” should be eliminated from the NWRTO documents.

15.	Section 7.4: This ancillary services provision needs to be re-worked as the working groups develop their model.

16.	Section 7.5: We disagree with BPA’s suggestion that “licenses, laws and regulations” be extended to also include “safety and environmental responsibilities.”  The latter terms are undefined and amorphous and would simply create broad loopholes through which PTOs could violate the NWRTO Tariff.  If a PTO does indeed have responsibilities, those responsibilities ought to be clearly defined as “licenses, laws and regulations, or orders lawfully promulgated thereunder.”  And of course, disputes over the interpretations of such order should be subject to the RTO dispute resolution process.

17.	Section 8.3:  This Section would grant a PTO unilateral discretion over system restoration schedules and activities.  Such discretion could be used to favor the affiliates of the PTO or to harm the competitors of the PTO.  At a minimum, the NWRTO must establish non-discrimination standards and allow the use of RTO dispute resolution processes for arguments over PTO restoration practices, rather than issue a carte blanche to the PTOs in this important area.

18.	Section 9:  Is there really a need to define “Critical Control Facilities” as is currently contemplated (i.e., “facilities, protective relay systems and Remedial Action Scheme”)?  All transmission facilities (including protective relay systems, braking resistors and the PTO’s portions of Remedial Action Schemes) are already Transmission Facilities under the control of the NWRTO.  So all that appears to be left are generators and loads that participate in the RAS.  

	If the intent of Section 9 is to retain the encumbrances on certain generators and loads, can’t we be more explicit and either eliminate or more precisely define the term “Critical Control Facilities”?  

Second, it needs to be made clear (again, in the Tariff, not the TCA) how a generator or load achieves the status of being designated a Critical Control Facility. I.e., the designation cannot be involuntarily foisted upon a generator or load that was heretofore not designated such a facility.  Instead, such non-Critical Control Facilities can not be commandeered by the RTO, but can only become Critical Control Facilities by signing a mutually-agreeable contract with the NWRTO.

19.	Section 9.4: The intent of the concluding phrase should be made clearer by changing “shall not include equipment damage” to “shall not include equipment damage or foregone profits or other losses stemming from such damage.”

20.	Most of Section 11 belongs in the Tariff, not the TCA, because it states the duties of the RTO.

21.	Section 11.2: should cover generation interconnection requests as well as other transmission services. (This could also be handled by making sure that the definition of Transmission Services explicitly includes generation interconnection.)

22.	Section 12.1:  The PTOs’ obligations to interconnect are far too limited, and even reduced from current obligations under Order 888, because the language of the TCA would only obligate interconnection with “Transmission Facilities.”  Again, the details of generation interconnection policies and procedures need to be developed in the working groups and written into the Tariff.  But the limitation to “Transmission Facilities” is clearly inappropriate.

23.	Section 13:  The entire planning section needs to be re-worked; and in any event, it should be stated in the RTO Tariff, not the TCA.  The TCA should simply obligate the PTO to comply with the Tariff. 	

24.	Section 14.3: The entire Section should be eliminated, because the TCA ought to be a single, standardized document that does not change upon admission of additional PTOs.

25.	Section 15.4.3:  First, this Section begs a question:  is it clear that the NWRTO has the right to reject the application of a potential TO, if admitting the TO into the NWRTO would trigger massive tax-exempt bond replacement costs which would be spread to other grid users?  Second: with all of the costs that are described in Section 15.4.3, is there any relevance to 15.4.2?  (I.e., what costs remain in 15.4.2?)

26.	Section 16:  the entire TCR section is outdated and will need to be re-worked as the working groups address the issue of how to allocate the proceeds of the FTR auctions.  In addition, the language belongs in the RTO Tariff, not the TCA.

27.	Section 18.1 is too broad.  The NWRTO should not be permitted to release to the PTO any  information that it does not concurrently make available to all grid users through the RTO website.  I.e., the PTO should not be able to gain preferential access to any information that might be of value to any participant in the market.

28.	Section 20.1:  The limitation of liability language might or might not be acceptable, depending on the resolution of the question of the NWRTO’s liability to grid users for harm that is the result of NWRTO errors, NWRTO negligence or NWRTO violations of the NWRTO Tariff.  I.e.,  today, transmission owners are liable to transmission customers.  If the NWRTO takes over such liability, there is no harm to the customers.  But if the NWRTO does not take over such liability and it removes liability from the PTOs, then customers are harmed.

29.	Section 21:  Why is there a dispute resolution section in the TCA at all?  Why shouldn’t the TCA simply refer to the dispute resolution provisions in the RTO Tariff?  Is there any reason for any differences?  (And if so, shouldn’t those be listed in the RTO Tariff?)

30.	Section 24.1 obligates the NWRTO to maintain the confidentiality of all PTO-designated confidential data.  This may or may not be acceptable, depending on how the working groups determine what information will be made publicly-available through the NWRTO website.  (For example, operating plans should generally be considered public information.)  Perhaps the definition of “Confidential Information” needs to be tightened up to ensure that it does not become abused as the federal government has done with its “classified information.”

31.	Section 25.17:  Since this language is intended to only apply to WAPA, it should be specifically limited to WAPA so that other entities cannot enact local ordinances which would trump the NWRTO’s rules.  I.e., “either Party” should be changed to “WAPA” or to “federal power marketing authority”; and “law or regulation” should be changed to “federal law or regulation.”

32.	Section 25.18:  This section states that the TCA trumps the Tariff.  This is clearly inconsistent with the intent of Order 2000.

33.	Definitions:

	The following definitions should be eliminated from the TCA:  

1.	Access Pricing Area
2.	Additional PTO
3.	Area Issue Planning Committee
4.	Congestion Clearing
5.	Energy Imbalance Service
6.	Export and Through System Transmission Service
7.	RTO-Controlled Transmission Facilities (the only germane term should be Transmission Facilities)
8.	RTO-Critical Control Facilities
9.	Initial Participating Transmission Owners
10.	Non-Spinning Reserve Service
11.	Reactive Supply and Voltage Support Service
12.	Regulation and Frequency Response Service
13.	Scheduling, System Control and Dispatch Service
14.	Spinning Reserve Service
15.	Transmission Capacity Reservations

	The following definitions need to be updated:  

1.	Ancillary Services (which are being redefined in the working groups)
2.	Congestion
3.	Congestion Management Zones
4.	Control Area (“energy purchased from” should be changed to “energy sold to or purchased from”)
5.	Dispute Resolution (it should refer to the procedures in the RTO Tariff)
6.	RTO Transmission System Emergency (the current definition is far too broad and will be easily abused by the RTO)
7.	OASIS (which would be replaced by the NWRTO website)
8.	Regional Transmission Company (an additional criterion should be that the PTO does not have responsibility for providing energy services to any loads - i.e., it cannot be a market participant)
9.	Transmission Customer (should use the FERC Order 888 definition of Eligible Customer, with the addition of Scheduling Coordinators to the list)
10.	Transmission Services (specifically call out generation interconnection as a service, and eliminate “Congestion Clearing”)
11.	Uncontrollable Force (is “any other cause beyond a Party’s reasonable control” too broad a loophole?)

[CFI   NWRTO-TCA-comments-CFI-070800.rtf]