Citation:
Abstract:
Excerpt from the Introduction:
The Federal Energy Regulatory Commission proposals for Order 888 Open Access Transmission Tariff (OATT) reform arise from a continuing frustration with the Commission’s efforts to provide open access to transmission both for its own sake and to support competitive markets. The Commission has found it difficult to meet the basic requirement to avoid undue discrimination and preference in transmission services. This difficulty follows in part from the nature of the electricity grid. But more important, the transmission access procedures promulgated in Order 888 are not consistent with the requirements of reliable and efficient operation of the grid, nor do they support workable competitive markets. A better approach, more closely aligned with actual grid operations and compatible with competitive principles, is obviously needed. Unfortunately, the narrow focus in the Commission’s Notice of Proposed Rulemaking (NOPR) does not allow it to see the problems inherent in the current Order 888 framework that must be addressed to achieve the Commission’s goals.
After many prior attempts at broader reforms to meet its expansive goals for industry reforms, the Commission seeks now to narrow its scope to advancing limited changes to the OATT. The focus is on improving the consistency and transparency of the determination of available transfer capability (ATC) as the primary means to address undue discrimination. But if inconsistent ATC calculations and methods are not the underlying problem, then the proposed “solutions” will fail.
The emphasis of the past analyses has been on the defects of the OATT contract path and ATC framework. Although the Commission’s own analyses have recognized these defects, the Commission has not been able to address these matters without entangling itself in a larger debate about electricity market design and electricity restructuring. Given the impasse, it may be that the emphasis on ATC imposes too much on the Commission if it is to find a path to preventing undue discrimination and preference in transmission services. A different approach is needed.