Media 2007
Statement: February 15, 2007 | View Printable PDF Version |
Docket Number: RM05-17-000 & RM05-25-000 |
Commissioner Wellinghoff's statement on preventing undue discrimination and preference in transmission service
Congratulations
"I want to first thank our Print Shop for the overtime that they put in on this project,
and I want to recognize the rest of our staff, who picked up the slack from the team
that worked on the rule and made it possible for the Commission to continue to
function in an efficient and timely manner. They are good public servants.
I want to thank the team that developed this order for its countless hours reviewing
this voluminous record, conducting extensive outreach, and, of course, seemingly
never-ending writing and rewriting. John Moot, our General Counsel, also deserves
special mention for his leadership in guiding this massive undertaking. Since the
Chairman joined the Commission in 2003, OATT Reform has been his number one
priority. He should be commended for his foresight. Lastly, I would like to thank the
many commenters for the time taken to help educate us about what works and what
does not work in the real world, outside of the Commission, and for their creative
ideas.
Need for the Final Rule
Order No. 888 responded to a radical change in the electric industry. Since the
passage of the FPA in 1935, the electric industry had evolved from an industry
characterized by self-contained transmission systems covering a limited service area
to one witnessing rapid expansion of independent power producers and the potential
for broader markets and enhanced competition. This change was driven in large
measure by technological advancements. Since the issuance of Order No. 888, the
electric industry has experienced another radical transformation, again fueled in
large part by technological advancements and facilitated by Congressional and
Commission actions. The electric industry now reflects significantly increased trade
in bulk power markets, with the transmission grid being used more heavily and in
new ways. At the same time, there has been a decline in investment to support
these bulk power markets, and a failure to aggressively encourage advanced
technologies. Together, those trends are threatening reliability, causing billions of
dollars in congestion costs, and undermining competition.
We cannot simply build our way out of those problems. The impetus of change in
the past, and no doubt of change that we will see in the future, is
primarily technology. Therefore, we must spend smartly. We must spend efficiently.
We must promote investment in efficient transmission facilities and state-of-the-art
transmission technologies, as well as facilitate demand response, distributive
generation, and renewables, in order to begin to solve the nation's energy problems.
In EPAct 2005, Congress emphasized many of these same principles. In particular,
Congress required the Commission to promote reliable and economically efficient
transmission and bulk power markets by, among other things, encouraging
deployment of advanced technologies. Indeed, Congress provided us with guidance
as to the types of technologies to encourage, including, flexible AC transmission
systems, controllable load such as demand response, distributed generation, and
enhanced power device monitoring. Today's Final Rule expressly recognizes that the
reforms to the OATT we adopt today are consistent with the policies and principles
embodied in EPAct 2005.
Therefore, it is particularly timely that we address our open access rules for
transmission service. The Western Governors Association stated that it is important
to demonstrate that the existing grid is being efficiently utilized to build the case for
transmission expansion. I agree. I view OATT Reform as inextricably linked to
efficient grid management.
Important Aspects of the Final Rule
My colleagues will discuss many important aspects of today's Final Rule. Rather than
repeating those points, I would like to highlight a few aspects of the Final Rule that I
see as particularly noteworthy.
First, the reforms we make to the pro forma OATT today put demand resources, for
the first time, on an equal footing with other resources in directly contributing to the
reliability and efficient operation and expansion of the electric transmission system.
It provides that demand resources, distributed generation, and other non-generation
resources capable of providing the service may provide the ancillary services
Reactive Supply and Voltage Control, Regulation and Frequency Response, Energy
Imbalances, Spinning Reserves, Supplemental Reserves, and Generator Imbalances.
Further, we find that demand resources capable of performing the needed functions
should be permitted to participate on a comparable basis in the open, transparent
transmission planning process this Order requires. And we also provide a forum for
stakeholders to come forward with demand response project proposals that they
wish to have considered in development of the transmission plan.
Second, the final rule recognizes the intermittent nature of renewable resources like
wind. As a result of that recognition, we have in the Final Rule established a
conditional firm option for firm point-to-point service that will allow renewable
resources greater access to the transmission grid and, at the same time, make more
efficient use of existing grid capacity. In addition, the final rule states that
imbalance charges "must account for the special circumstances presented by
intermittent generators and their limited ability to precisely forecast or control
generation levels..."
To sum up, removing undue discrimination in transmission service and enhancing
and expanding the grid smartly will promote ever more competitive markets and
lower costs to consumers."
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