C. Lack of Posted Information on TLRs and Curtailments
Another area of uncertainty for market participants relating to TLRs is the lack of information available on OASIS, particularly real-time information, concerning TLRs. Most OASIS nodes do not show curtailment amounts for each TLR. Those nodes that do list curtailment amounts do not show it for every TLR event. For instance, the top five TLR events in each of the four NERC regions for the summer of 2000 consist of 191 individual TLR events. However, 78 of those instances do not show any curtailment amount which would allow market participants to monitor if more curtailments are occurring than necessary (see Table 2-11).
No single OASIS site for the Midwest lists all the TLR curtailment information, although SPP is the best site for this information. The MAIN OASIS site sometimes lists a few TLR curtailment amounts, but not all. When the two sites list the same TLR event the curtailment amounts are inconsistent.
The NERC Web site does not show all TLR events or complete information on each TLR event that it does list. For example, the NERC real time database (TLR Active Log) lists TLR events that the monthly summaries (from the NERC TLR Log) omit. Likewise, the monthly summaries contain TLR events and information that the real time database omits. One market participant reported that a transmission provider denied a scheduling request because the transmission provider had called a TLR. The respondent could not find any evidence that a TLR had been called either on the NERC web site or the transmission provider's OASIS site. Another market participant provided an audio tape to Staff containing discussions with a transmission provider and other affected parties concerning a TLR that had been improperly implemented, causing the market participant a substantial financial loss.
When the software tools are used on a control area-to-control area basis, they may not correctly recognize and quantify all sources on the overloaded flowgate. When this happens the curtailment process becomes more inefficient as incorrectly identified transactions are curtailed. Also, correctly identified transactions may be curtailed by more than necessary.
While Staff received few data alleging specific economic losses from TLRs, at best, the lack of real-time information as to when TLRs are occurring reinforces the current insecurity and uncertainty of public power and other market participants which they expressed to Staff during this investigation. The consequence of this is a reluctance to rely on long-term transactions, thereby harming the liquidity of the market.
D. Lack of Standardized Protocols
In addition to the lack of standardized information on curtailments discussed above, another area of market uncertainty is the lack of protocols for calculating Available Transmission Capacity (ATC), Capacity Benefit Margin (CBM) and handling transmission requests and scheduling. The lack of standardized protocols results in inadequate information for potential requesters of service. As a result, it is difficult to efficiently market electric power over an area as wide as the Midwest. The Midwest currently is a balkanized region in which 61 control areas do not have uniform procedures for calculating ATC and CBM, processing transmission requests and scheduling, thereby creating uncertainty in the marketplace.
The problems of non-standardized protocols, discussed below, are not likely to be completely solved by RTOs if the RTOs retain multiple control areas and procedures. For example, it is not enough for an RTO to calculate ATC for its members if the members provide the data used by the RTO to calculate ATC. Otherwise, given that the control areas contain generation units of the transmission providers, the incentive for those providers to favor generation will continue.
1. Uncertainty in ATC and CBM Calculations
There are no consistent rules for calculating and posting ATC and CBM. For instance, SPP posts ATC by flowgate while the other regions post ATC by control areas. Transmission providers have wide latitude to use various methodologies to calculate ATC. This variance comes about from different assumptions about reliability, dissimilar engineering approaches and a host of historical and operational parameters. The result is that ATC may be calculated differently on two sides on an interface. This appears to be an issue with the existing regulations, which do not provide for specific methodologies for calculating ATC and CBM.
Another issue is that ATC is often inaccurately posted on the OASIS even if calculated under the standard for the utility posting the ATC. Several market participants alleged that certain transmission providers in the Midwest were not accurately posting ATC. One market participant alleged that transmission providers in the Midwest regularly post incorrect amounts for ATC and documented three examples. This appears to be an issue concerning enforcement of existing regulations concerning the posting of ATC on the OASIS.
This past summer, Commission Staff conducted an audit of all OASIS sites to determine compliance with section 37.6 of the Commission's regulations (18 C.F.R. ยง 37.6 (2000)). The audit findings were consistent with the allegations of the market participants. For example, Staff found that one transmission provider had no ATC records for constrained paths and that two transmission providers did not post ATC 7 days in advance. Staff is evaluating the data collected and is weighing follow-up options.
As a result of the lack of standardized procedures for calculating ATC and CBM, and the inaccurate posting of ATC, market participants cannot determine what transmission capacity is available so that they can make deals to provide energy to their customers. This has an effect on the amount of transactions and is a limit on liquidity.
2. Lack of Uniformity in Processing Transmission Requests and Scheduling Service
Another issue that came to light in the Midwest is that there is a lack of uniformity in processing transmission requests and scheduling service. This appears to be an issue with the scope and coverage of existing regulations regarding what is required. For example, reservations are not handled the same way across the entire Midwest. MAPP uses an e-mail procedure while the other three regions use OASIS sites. Two market participants complained that transmission providers are able to change their "Business Practices" on the OASIS sites with little or no notice. One of those market participants alleged that this is particularly a problem with regard to next hour service, which is not covered by the OATT, but which is a major source of business for marketers and can be a source of quick response power. One market participant complained of a unilateral change by a NERC region that limited the quantity of requests that could be made to certain delivery points within a certain time. The participant argued that the Commission should have approved the change before it took effect.
One market participant noted that a particular transmission provider waits until the end of the day to accept or deny requests for next-day service, instead of making decisions as requests are made on a first-come first-served basis. As a result, the market participant stated that it did not have the flexibility to make alternate deals if its request was wholly or partially rejected.
In addition to the issues concerning possible gaps in the existing regulations concerning transmission requests and schedules, there is also the issue of compliance with existing regulations in these areas. Staff's audit of OASIS sites in the summer of 2000 uncovered several areas in which Midwest transmission providers were not compliant or only partially compliant with the requirements concerning the posting of information on the OASIS. Specifically: some transmission providers did not always post the reasons for denial of transmission requests; others did not post schedules for daily non-firm transmission service; and some did not post all service requests and prices. As with the deficiencies noted concerning ATC calculations, Staff is evaluating the data collected and is weighing follow-up options.