Solving the dilemma.
John Seelke is vice president, Consulting, with New Energy Associates. He advises clients on RTO and transmission service matters.
The rationale from the Federal Energy Regulatory Commission (FERC) for eliminating through-and-out (T&O) rates while simultaneously imposing a Seams Elimination Charge/Cost Adjustment/Assignment (SECA) is an acknowledgement that FERC is conflicted on a fundamental economic principle: regional transmission organization (RTO) loads use the transmission systems of exporting RTOs; therefore, it is correct for importing customers to compensate exporting RTOs for the use of their transmission systems. It is unfair for importing loads to get "free" transmission service from neighboring exporting RTOs. At the same time, FERC is convinced that T&O rates have a negative impact on electricity markets. As a result, FERC wants to eliminate direct T&O charges while at the same time compensating exporting transmissions systems through inefficient uplift charges.