UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION

Transcription

1 UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Standards for Business Practices and ) Docket No. RM Communication Protocols for Public Utilities ) COMMENTS OF DUKE ENERGY CORPORATION ON NOTICE OF PROPOSED RULEMAKING I. INTRODUCTION AND EXECUTIVE SUMMARY On April 21, 2008, the Commission issued a Notice of Proposed Rulemaking proposing to incorporate by reference in its regulations the latest version (Version 001) of certain standards adopted by the Wholesale Electric Quadrant (WEQ) of the North American Energy Standards Board (NAESB). 1 These proposed OASIS standards were adopted by NAESB pursuant to the Commission s direction in Order No. 890 and Order No. 890-A. 2 (Duke) generally supports the Commission s proposal. One of Duke s franchised utilities, Duke Energy Carolinas, LLC (Duke Energy Carolinas) is a Transmission Provider with an Open- Access Transmission Tariff (OATT), and several Duke Energy business units are OATT customers. Herein, Duke provides comments with regard to two of the revised standards relating to the Open Access Same-Time Information Systems (OASIS): WEQ (RESALES) and WEQ (TRANSFERS). 1 Standards for Business Practices and Communication Protocols for Public Utilities, Notice of Proposed Rulemaking, 123 FERC 61,066 (2008) ( NOPR ). 2 Preventing Undue Discrimination and Preference in Transmission Service, FERC Stats. & Regs. 31,241 (2007) (Order No. 890), order on reh g, Order No. 890-A, 121 FERC 61,297 (2007), reh g pending.

2 II. COMMUNICATIONS All correspondence, communications, pleadings and other documents related to these proceedings should be addressed to the persons listed below. Jeffrey M. Trepel James B. Gainer Associate General Counsel Vice President, Federal Regulatory Policy 526 South Church Street (EC03T) 526 South Church Street (EC12ZC) Charlotte, NC Charlotte, NC III. COMMENTS A. Standard WEQ (RESALES) In Order No. 890, the Commission required assignees to execute a service agreement with the Transmission Provider governing reassignments of transmission capacity prior to commencement of the service. 3 Standard WEQ establishes a two-party transaction on OASIS (RESALES) between the reseller and the assignee. After the transaction is established (i.e., confirmed), the Transmission Provider is permitted to annul it if the assignee fails to execute the required service agreement. This procedure appears to place an inappropriate burden on the Transmission Provider to intervene in a transaction to which it is not a party. Instead, Duke recommends modification of the practice to provide for a three-party transaction, similar to the transaction outlined for TRANSFERS in Standard WEQ Standard WEQ (RESALES) applies to the resale of both Firm Point-to- Point (PTP) and Non-Firm PTP scheduling rights, in alignment with the Commission s intention. 4 Use of a blanket service agreement is permitted, and appears to be aligned with 3 Order No. 890, P Order No. 890-A, P 424 2

3 Order No. 890-A. However, the form of Service Agreement for Resales set out in the pro forma OATT refers only to firm sales and appears to exclude non-firm sales. In this respect, the form may require revision. Moreover, Transmission Providers have frequently stated that they have not received adequate guidance on a mechanism for reporting this transactional information in their EQR filings. Duke requests guidance, in the form of examples of an EQR filing, of multiple resale transactions under a blanket agreement. Alternatively, the Commission could rescind its requirement that the Transmission Provider report resale transactions in its EQR filings and substitute a requirement that summary reports showing a compilation of OASIS Resale reservations be posted quarterly on OASIS (perhaps indexed by Reseller). This alternative would be easier to implement while still providing the needed information. Standard WEQ permits the aggregation of multiple resale reservations. This could create administrative difficulties and Duke recommends against adoption of this practice. For instance, assume a customer aggregates two 50 MW Firm Resale reservations, then sells 75 MW. If one of the 50 MW reservations is displaced prior to the conditional deadline (Section 13.2(ii) of the pro forma OATT), it is not evident how the resale from the aggregated reservation should be impacted. Should the Transmission Provider recall 50 MW from the secondary resale, or should it recall only 25 MW from the secondary resale and recall the remaining 25 MW from the unsold portion of the aggregated reservation? These types of scenarios could become even much more complex in working with aggregation of Non-Firm reservations, which are subject to displacement up to one hour prior to start time. Duke Energy Carolinas has no record of any aggregation of reservations on its system and believes that the value to customers is nominal relative to the billing complexities which could be introduced. 3

4 Duke supports Standard WEQ , which requires the price of a Resale to be posted in units of $/MW-Hour Reserved. This requirement simplifies the calculation of bills and also provides the Commission with a consistent price format for comparison of resale transactions. Standard WEQ gives the example of a one hour of a Monthly Firm reservation being resold and it requires that the Resale reservation be a Monthly Firm Resale reservation lasting one hour. With the pricing requirement of Standard WEQ , the Transmission Provider can easily calculate the bill. If, instead, the standard required that the Resale reservation s price reflect a monthly rate (as has been advocated by some), then the Transmission Provider would be obligated to convert the monthly rate to an hourly rate for billing purposes. The Transmission Provider would then have to build billing algorithms to reflect the actual number of hours in each month in order to perform the billing calculation. The monthly rate concept could also lead to conflicts between the parties to the transaction on the total cost of the resale transaction cost if there were disagreements about the number of decimal places the Transmission Provider includes in the derived rate. If the pricing methodology prepared by NAESB is not acceptable, then Duke would support a requirement that the total resale price be included in the reservation, with the Transmission Provider billing the total amount to the Assignee in one bill and crediting the total amount to the Reseller in a single credit, regardless of the duration of the resale reservation. The practice is silent on resales of Conditional Long Term Firm reservations. Duke strongly recommends that the practice be modified to prohibit resale of these reservations so that Transmission Providers can perform effective management of these reservations and assure reliable operation of the transmission grid. However, if the Commission is unwilling to prohibit the resale of these reservations, it should only permit resale of these reservations during 4

5 periods where the reservations are unconditionally Firm. If the resale of Conditional Long Term firm reservations is permitted, the Commission should restrict all Resales to the remaining portion of the biennial reassessment period, where applicable. To do otherwise could impair system reliability by making it difficult for Transmission Providers to assure correct and timely curtailment of all Resales, resales of those Resales, etc. Additionally, if resales of Conditional Long Term Firm reservations are permitted, the use of a blanket service agreement as specified in WEQ apparently would not be permitted per Order No Pursuant to Order No. 890, Transmission Providers and Assignees are to execute a non-conforming Service Agreement for Resales prior to the start of service for each reservation because the service agreement must specify either (1) specific system condition(s) during which conditional curtailment may occur or (2) annual number of conditional curtailment hours during which conditional curtailment may occur. 5 B. Standard WEQ (Transfers) Standard WEQ , which provides for documentation on OASIS of a contract assignment, is a new functionality that is not addressed specifically in Section 23 of the pro forma OATT. Duke supports the addition of this functionality on OASIS, in that it (1) provides additional transparency to the market about ownership of transmission rights, and (2) provides a mechanism for fully transferring responsibility from one party to another. It is superior to the mechanism outlined in Section 23, in that it transfers financial responsibility completely to the third party, which is necessary particularly in cases where the original customer (Reseller) ceases to be an ongoing entity. It would also be useful when the original customer wishes to remove a financial liability from its books. Duke likes the functionality that requires all three parties (Reseller, Assignee, and Transmission Provider) to agree to the 5 Order No. 890, P 960 5

6 Transfer. This permits the Transmission Provider to validate the Assignee s creditworthiness prior to completing the transaction, as is done with all other reservations. Duke Energy also recommends that the Commission address the following issues with regard to Transfers: The term Transfer is used many places in the business practices (e.g., Available Transfer Capability, Transfer Protocol, Personnel Transfers, and Dynamic Transfers). Section 23 of the OATT is titled Sale or Assignment of Transmission Service. In order to minimize confusion, Duke recommends that all references to TRANSFER should be changed to ASSIGNMENT, or some other suitable term that describes the contractual agreement. REQUEST_TYPE in the Data Dictionary (WEQ 003-0) should be modified to include TRANSFER (or its replacement) as a Restricted Value, along with a definition of TRANSFER (or its replacement). Standard WEQ does not explicitly require posting of price to be paid by the Assignee to the Transmission Provider. Since all obligations are being transferred to the Assignee, the price should define the financial responsibility that is being accepted by the Assignee and should not be subject to renegotiation with the Transmission Provider. Duke recommends that this concept be addressed in the business practice and that the standard require the price of the assigned reservation to be the same as the parent reservation. Duke submits that this requirement would be much simpler and efficient than the procedure suggested by Footnote 165 of Order No. 890-A. Duke questions how a Reseller would retain a financial obligation (as suggested by Footnote 165) when there has been a full transfer of the Reseller s rights and obligations. Section 23 of the pro forma OATT should be modified to explicitly permit Transfers. 6

7 IV. CONCLUSION Wherefore, respectfully requests that the Commission consider these comments when promulgating the final rule in this docket. Respectfully submitted, Jeffrey M. Trepel Associate General Counsel 526 South Church Street (EC03T) Charlotte, NC James B. Gainer Vice President, Federal Regulatory Policy 526 South Church Street (EC12ZC) Charlotte, NC May 28,