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Toward a transmission company; Railbelt grid decision this year?
The six Alaska Railbelt electric utilities have continued to make progress toward the potential formation of a transmission company, or transco, to operate the Railbelt power transmission grid, the utilities and the American Transmission Co. told the Regulatory Commission of Alaska in an Aug. 10 filing.
The utilities have made substantial progress in their assessments of the benefits to be gained from transco formation, and of the impacts of the transition on factors such as electricity rates. The utilities anticipate completing their assessments in the third quarter of this year. That would enable a decision on whether to proceed with the transco concept and, depending on that decision, an application for a certificate of public convenience and necessity for a transco could go to the commission in the fourth quarter this year, or in the first quarter of next year, the utilities reported.
The American Transmission Co. operates a transmission grid in Wisconsin and the Upper Peninsula of Michigan and has been helping the Railbelt utilities figure out how a similar arrangement might work in Alaska.
Currently five independent utilities and the state of Alaska own and operate different sectors of the grid. Following a study mandated by the state Legislature, in June 2015 the commission found that there would be benefit in grid consolidation and ordered the utilities to report quarterly on progress towards voluntary consolidation arrangements. The Aug. 10 filing was one of these progress reports.
Benefits of a transco Among the benefits anticipated from the formation of a transco are the ability of the transco to invest in required grid upgrades and the possibility of establishing a non-discriminatory, open access tariff for grid use - the “pancaking” of different fees charged by different utilities for the use of different sectors of the grid is perceived as a current obstacle to the flexible use of the grid by power generation facilities. One of the more difficult issues to be resolved is establishing an equable procedure for recovering the transmission system costs from the different utilities using the grid.
The commission has also ordered the utilities to report regularly on progress towards the voluntary formation of a unified operator for the grid. The concept is that a new entity would oversee policies for grid usage and development, and would also operate what is referred to as “economic dispatch,” the optimum use of the most cost-effective power generation facilities on the grid to meet the power load across the grid, as that load varies from moment to moment.
The unified operator would have authority over the actions of the transco.
Grid governance In discussions of the unified operator issue during a commission meeting held on Aug. 17 to review the latest progress reports from the utilities, it became clear that questions over the appropriate governance structure for the unified operator remain unresolved. At issue is the role of the utilities in the governance board, given the view that some have expressed that the utilities have the expertise that is necessary to make effective decisions over grid policies. Others, however, have argued that the unified operator must have a board that is independent from the utilities, thus ensuring a level transmission playing field for independent power producers, including entities wishing to implement new renewable energy power sources.
Anchorage pool Meanwhile, two of the utilities, Anchorage-based Chugach Electric Association and Municipal Light & Power have been forging ahead with the implementation of their own power pooling arrangement, merging the power supplies from their power generation facilities and, in effect, implementing economic dispatch within the Municipality of Anchorage. At this point, the utilities have “substantial agreement” on an arrangement to dispatch their lowest cost power to meet the forecast power load, using an agreed protocol, the two utilities reported. Another protocol will enable the settlement of generation costs between the utilities, given that the utilities will be using some power from each other’s generation facilities.
Wider expansion? The Alaska Railbelt Cooperative Transmission and Electric Co., or ARCTEC, an organization formed by several Railbelt utilities to coordinate grid upgrades, told the commission that the Anchorage pooling arrangement is being designed in a way that could be extended to other utilities in due course, thus enabling the expansion of “tight pooling” across a wider area of the Railbelt, with the ultimate possibility of economic dispatch across the entire grid. Matanuska Electric Association told the commission that modeling indicates benefits from economic dispatch in Southcentral Alaska, indicating value in expanding the Anchorage arrangement across a wider area of the region.
The utility group working on the proposed transco also told the commission that their assessment of transmission grid cost allocation is considering a wide spectrum of power pooling possibilities, ranging from individual power scheduling by individual utilities to full economic dispatch across the entire grid.
The commission has invited the utilities to talk about their proposals and initiatives at the next RCA public meeting, to be held on Aug. 24.
- ALAN BAILEY
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