Some ideas for the transmission network
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GDS suggests expanding the Railbelt Reliability Council to include oversight of the operation of the Railbelt transmission grid
Alan Bailey for Petroleum News
GDS Associates, having conducted a review of the issues relating to the management of the Alaska Railbelt electricity transmission grid, has suggested that oversight of the grid could be added to the responsibilities of the Railbelt Reliability Council, as an alternative to forming a separate organization for transmission system management. Late last year all six of the Railbelt electricity utilities signed a memorandum of understanding for the formation of the RRC, and implementation of the RRC is now moving ahead.
During a Jan. 8 Regulatory Commission of Alaska public meeting GDS executives described their concepts for the RRC expansion. GDS, under contract to Alaska Railbelt Cooperative Transmission and Electric Co., had previously conducted a study that led to recommendations for the RRC formation.
The RRC, as currently constituted, will adopt and enforce reliability and operational standards for the electrical system; adopt and enforce system-wide interconnection protocols for the grid; and conduct system-wide integrated resource planning. The organization will also evaluate the use of security constrained economic dispatch of power generation in the system, seeking ways to make best use of the most cost-effective generation facilities.
But the management and operation of the transmission grid remains something of a problem. The grid is owned and operated by six independent utilities and the state of Alaska. This fragmented grid management arrangement leads, in particular, to problems with the stacking or “pancaking” of fees charged for the transmission of power across the grid, and to difficulties in justifying major grid upgrades: A single utility would likely struggle to justify funding for an upgrade when multiple utilities would typically benefit from the subsequent improvements to the grid operations.
Transco proposal Last year four of the utilities and the American Transmission Co. formed a transmission company, or transco, for managing the transmission system, and filed an application to the RCA for a certificate to enable the transco to go into operation. But, following a series of questions over the transco proposal, the certificate application was later withdrawn. Questions raised included concerns over the transco being run as a for-profit business, and concerns over the governance of the company. Governance is a major issue because of the need to balance the needs of the utilities with the needs of other stakeholders in the electrical system, including independent power producers.
The RRC, on its part, will be governed by a 13-member board that includes equal representation from the utilities and other stakeholders.
During the Jan. 8 RCA meeting Tony Izzo, CEO of Matanuska Electric Association, explained that, in response to last year’s transco proposal, MEA, in cooperation with Chugach Electric Association, had commissioned GDS to conduct due diligence on the transco concept. In addition, MEA had asked GDS to conduct a further study, to develop suggestions for how to achieve an independent, open and transparent management arrangement for the Railbelt transmission system. Izzo emphasized that the purpose of the GDS review has been to initiate a conversation among all the parties involved in the transmission grid management issue, building on the cooperation achieved in signing the RRC MOU.
Considered L48 best practices Paul Wielgus from GDS told the commissioners that the review had involved considering the best practices of transmission organizations in the Lower 48 and evaluating how these best practices might be adapted for use in Alaska. A particular issue arises from the fact that the grid management arrangements must be cost effective, especially given the fact that the Railbelt transmission system, while encompassing a large geographic area, involves electrical loads and generation capacity that are very small in relation to the scale of typical Lower 48 systems.
Any solution applied to the Railbelt must also respect existing legacy asset ownership and agreements; must enable robust funding for the construction and operation of facilities; and must facilitate a high level of stakeholder engagement, Wielgus said. In addition, the solution must encompass the need for organizational independence and transparency; support for economic dispatch, the involvement of the existing utilities; and the enforcement of Railbelt-wide standards, he said.
John Chiles from GDS also commented that trying to resolve the problems though combining the existing utilities into a single utility would likely result in issues revolving around the market power of the utility.
And GDS has questioned the advisability of using a for-profit transmission company in the Railbelt, given potential conflicts of interest resulting from the desire to maximize profits.
Regional transmission organization Instead, the GDS review has focused on a form of organization referred to as a regional transmission organization, or RTO. About half of the U.S. electrical transmission systems are overseen by RTOs, Wielgus said. An RTO has functional control over a transmission system but does not own or operate the transmission assets. And, key to the success of an RTO, is a high level of engagement with all stakeholders in the electrical system.
At the core of an RTO is an open access transmission tariff, or OATT, a document that defines the rules for transmission system access and use, including the fee structure for the system. The tariff is developed through a stakeholder process, is approved by a board of directors, and goes to a government regulatory body for approval. In Alaska the RCA would have regulatory authority over the OATT.
A tariff for Railbelt electrical transmission would need to enable a one-stop shop for transmission system use, with uniform terms for rates and access across the system. And planning for transmission upgrades would be top-down, system wide, with strong stakeholder engagement, and with the RTO ensuring that system efficiencies can be achieved, Chiles explained.
Existing legacy agreements, such as the agreements for the shipment of power from the Bradley Lake hydropower facility on the Kenai Peninsula, would be grandfathered into the OATT.
The utilities would continue to own and operate the existing transmission assets, under the terms of the OATT. New assets could be developed by the utilities, or by third parties, through a competitive bidding procedure. Cost recovery arrangements for new assets would need to be negotiated between the various parties involved. The RTO would oversee the bidding arrangements and cost allocation negotiations, with the RCA reviewing the results.
Bolt on to the RRC Taking into account the relatively small scale of the Railbelt transmission system, GDS suggests that, rather than establishing a separate RTO organization, the RTO functions could be bolted into the RRC, thus becoming subject to RRC governance. No separate transmission company would be required.
Functions to be added to the RRC would consist of functional control of the transmission system, OATT administration and ancillary services associated with the RTO. It would, however, be worth considering contracting out the RTO functions, at least initially, to minimize startup costs and to retain the possibility of a rethink based on initial experience of how the arrangements work, Chiles said.
GDS suggests that implementation would involve standing up the RRC, as is currently planned. The next step would be to develop a Railbelt systemwide OATT and to make the RRC responsible for OATT administration. However, achieving a consensus agreement among stakeholders over the terms of the OATT could prove a lengthy process, with cost allocation and the allocation of transmission rights often proving particularly contentious, Wielgus commented.
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