News 
2006
| Statement: April 20, 2006 | 
View
Printable PDF Version |
| Docket Number: ER05-1065-000 |
Commissioner Kelly's statement on Entergy Services, Inc.
“As staff's presentation summarized, this order addresses
Entergy's Independent Coordinator of Transmission (ICT) proposal,
which includes a participant funding proposal and a new weekly
procurement process (WPP).
As the draft order makes clear, we are approving an interdependent
package of reforms including the ICT, WPP and participant funding,
and this approval is largely predicated on the predicted benefits
of the package, particularly of the WPP.
I believe that Entergy's package of reforms can result in an improvement
over the status quo and I'm pleased to vote for it on that basis.
I will, however, emphasize one point.
I believe that participant funding can bring value to the public
interest, if it is well and fairly implemented . but if it is
not well and fairly implemented, then the public interest could
be substantially harmed in the long run as it could result in
the flight of investment dollars from the generation sector at
a time when such investment is still sorely needed.
To properly and fairly implement participant funding, you must
have two things. First, you need an independent entity to make
the determinations as to which costs should be participant funded
and which should be rolled into the transmission provider's rates.
I believe that Entergy's ICT proposal meets this requirement.
The second requirement, however, is an ongoing requirement associated
with one of the things the participant must get in exchange for
participant funding a transmission upgrade.
In order to avoid essentially double charging for transmission
service, which would clearly be unfair, an entity that directly
funds a transmission grid upgrade beyond the point of interconnection
is entitled to some type of transmission-related right in exchange.
In RTO markets, this has been a financial transmission right and
Entergy's proposal here is essentially a financial hedge as well,
though it differs in many other respects from RTO FTRs because
of the different circumstances present here.
The value of this type of right can be greatly influenced by minor
changes in the operation of the grid that may be difficult to
detect.
In other words, minor changes in operation could either preserve
or eliminate the value of this type of right.
In the past we have only approved this type of funding mechanism
in RTO regions where the independent operation of the grid eliminates
any incentive to make such minor changes in ways that would inappropriately
advantage one competitor at the expense of another.
The ICT's independent oversight of Entergy's operation of its
grid meets this ongoing requirement here; at least while the ICT
remains in operation.
If, for any reason, the ICT ceases to function and participant
funding continues to be desired in the Entergy region, the ICT
would have to be replaced with something of equal protective value.
For the present, once the ICT begins operation both the up-front
and ongoing requirements will be in place and I am voting for
this proposal, including its participant funding mechanism, on
that basis.
My thanks to the staff team and to my colleagues for all of the
hard work on this very important order.”
|
View
Printable PDF Version |
