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RTO files its tariff
Organization overseeing Railbelt transmission system says how it will operate
Alan Bailey for Petroleum News
The Railbelt Transmission Organization, the newly formed entity for overseeing the fees charged for use of the Alaska Railbelt electricity transmission system, has filed its first tariff with the Regulatory Commission of Alaska. The tariff, which requires RCA approval, specifies how the RTO will determine the fees charged for use of the transmission system by electricity utilities and independent power producers in the Railbelt electrical system.
The concept is to develop and oversee a new Railbelt electricity transmission tariff arrangement that removes current impediments to competition in the bulk power market in the Railbelt. Because of the manner in which the current tariffs for the use of different sectors of the transmission grid stack on top of each other, the tariff arrangements tend to deter the development of new power generation that could transmit power over long distances.
The formation of the RTO was mandated by the state Legislature in a bill passed during last year's legislative session, with a deadline of July 1, 2025, to file an initial tariff with the RCA. Hence the tariff filing.
A mechanism for transmission fees The new tariff sets out the parameters and rules under which the fees for use of the transmission system will be set. The objective is to obtain RCA approval of the method that will be used to determine an open access transmission tariff, rather than at this stage proposing the rates to be charged for the use of the transmission system. Further steps are needed before the RTO can offer its services to the Railbelt electricity businesses, the RTO told the commission. And the Railbelt utilities will themselves need to make certain RCA filings, to establish the process for implementing the new transmission system rates, the RTO wrote.
As one of its initial steps in developing the tariff, the RTO employed some standard tests used by the Federal Energy Regulatory Commission to determine which components of the electrical system are "transmission assets," subject to RTO oversight. For example, some high voltage lines used by an individual utility may only be used by that particular utility and are, therefore, considered to be part of the utility's distribution system, and not part of the transmission system. The RTO has developed a map of all of the transmission lines that would fall under its jurisdiction.
Differences from the Lower 48 And, unlike regional transmission organizations in the Lower 48, the RTO is not responsible for the planning of changes in the transmission system. Nor, given the isolation of the Railbelt grid, does the RTO have to deal with interconnections with other transmission grids managed by other entities. In addition, given the terms under which the RTO has been legislated to operate, the organization identifies itself as a "transmission service administrator," rather than as a "transmission provider," as is common in the Lower 48.
To determine future rates for use of the transmission system, the RTO has adopted an existing methodology, but with modifications that recognize some unique characteristics of the Railbelt system. The costs incurred by each transmission system operator will be factored into an overall cost of service that is used, together with an acceptable rate of return, to establish the unified rate charged for use of the system.
One complication is the existence of "legacy agreements," previously established contractual agreements that will need to grandfathered into the new transmission system rates. The existence of these agreements will result in some continued discrepancies in the rates applied to different sectors of the grid -- in the Lower 48 it took many years for the transmission markets to address these legacy agreements, the RTO told the commission.
Transmission system constraints Another issue results from the constraints in the use of the transmission system that result from the existence of just one limited capacity transmission line between the Anchorage area and the Kenai Peninsula, and just one limited capacity transmission line between Southcentral Alaska and Healy to the north. The capacity on these lines is fully subscribed to Railbelt electricity utilities, to handle their native loads, leaving little firm transmission capacity available for other entities until additional transmission lines are constructed. The RTO may need to consider this issue when determining the revenue requirement that is used to calculate the unified rate charged for the use of the transmission system, the RTO told the RCA.
In its tariff the RTO has also specified a protocol for allocating the revenue requirements of the individual transmission system operators, when determining the rate charged for the use of the system, the RTO told the commission.
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