Susan Kelly

Generators and demand-response providers are reaping rewards in forward capacity auctions, causing suppliers to go shopping for the most lucrative markets. Now the Midwest ISO is trying to catch up, by proposing its own auction for years-ahead resource bids. But does RTO shopping serve the interests of customers, who are legally entitled to rates that are just and reasonable? Why are some state policy makers advocating a return to old-school RFPs for long-term contracts?

New Jersey Gov. Chris Christie in February signed into law a bill that will have the state commissioning construction of 2,000 MW of new gas-fired power capacity and dumping it into the PJM capacity market at a $0 price. Maryland is considering a similar capacity-dumping scheme. What’s behind these efforts to manipulate capacity auctions — regional constraints or local politics?

In light of all the excitement created by smart-grid regulatory initiatives and stimulus funding, three clever tech startups have come forward with proposals for novel grid projects. In California, Western Grid Development proposes to install energy storage devices ranging in size from 10 to 50 MW at various discrete and strategic locations in PG&E’s service territory where the California ISO has identified reliability problems. Second, a company called Primary Power proposes to deploy a total of four advanced, 500-MVAR static VAR compensators (SVC) at three separate locations within the PJM footprint. Third, in Clovis, N.M., Tres Amigas plans to allow power producers to move market-relevant quantities of electric power and energy between and among the nation’s three asynchronous transmission grids: ERCOT and the Eastern and Western Interconnections.

PJM would dictate grid expansion, even if not needed for reliability, and then push the cost of the upgrades on those who use them the most.

Chairman Pat Wood and his Federal Energy Regulatory Commission (FERC) may well have given up on attempts to impose a standard market design (SMD) on the electric utility industry, but that doesn't mean the nation's grid system operators won't try the same thing.

In an ideal world, legislation would have already happened."

That was Elizabeth Moler, deputy secretary of energy, testifying as the first witness at a Feb. 20 public conference at the Federal Energy Regulatory Commission. The forum attempted to address how to ensure access to transmission as the electric industry builds a new framework to maintain system reliability.

Having just stepped down from the top spot at the FERC, Moler knew what to expect. She understood the limits of the FERC's statutory authority and its budget.