FERC Chair calls for seams agreements, warns of stranded investments

Speaking before the National Association of State Utility Consumer Advocates (NASUCA) on Nov. 12, in Baltimore, Md., FERC Chair Jon Wellinghoff called for implementation of seams agreements between RTOs in order to improve efficiencies.

He also warned of stranded transmission investment due to the move to distributed generation and microgrids.

Responding to a question from Indiana Office of Utility Consumer Counselor attorney Robb Mork regarding the PJM Interconnection (PJM) – Midwest ISO (MISO) seam, Wellinghoff, while not speaking specifically due to a pending case, noted that a re-dispatch agreement between the New York ISO (NYISO) and ISO New England resulted in $700m in savings.

Wellinghoff speculated there could be similar savings for such agreements for other seams and said he generally supported improved efficiencies between RTOs.

In response to a question regarding the possibility of stranded investments due to a move toward distributed generation, Wellinghoff agreed that several types of investment could be stranded due to enhanced utilization of such technologies. Big nuclear power plants, as well as transmission, could be stranded.

While FERC Order 1000 requires consideration of non-transmission alternatives like distributed generation, storage, and combined heat and power, “we could over-build transmission,” he warned since it is difficult to adequately consider non-transmission alternatives.

On the issue concerning more funding for consumer advocates to keep up with RTOs, Wellinghoff said such funding had been found in NYISO and PJM from monies from a Constellation Energy settlement case.He suggested that consumer advocates request funding from MISO through an assessment and promised to support such a move. 

Wellinghoff also noted FERC Order 1000’s requirement for coordination with neighbors, pointing out that FERC had given Southern (NYSE:SO) and Tennessee Valley Authority (TVA) more time to comply with the order due to their creation of a new planning region.

He predicted more natural events like Hurricane Sandy and last summer’s outages, which demonstrate the benefits of going local throughdistributed generation, the micro grid and microturbines. Such technology gives customers more control and improved reliability. 

Wellinghoff also addressed the new $40 charge Virginia Power imposes on solar facilities that are 10 kW or greater to recover stranded investment, noting that there is no such charge on a 9.9-kW facility. He saidmany utility fixed costs are recovered in the variable rates of utilities.

Furthermore, he called for allowing customers the ability to choose whether they want to participate in a utility demand side management program or throughdirectly bidding into the wholesale market.

The NASUCA conference continues through Nov. 14.