This article comes from law firm Stoel Rives LLP (www.stoel.com)
Among FERC’s (Federal Energy Resource Commission) recent proposals is to add a new rate schedule to the pro forma OATT (Open Access Transmission Tariff) through which transmission providers can recover the costs of holding reserve capacity needed to manage the variability of generation resources serving load within a transmission provider’s balancing authority area or exporting to load elsewhere. This new Schedule 10 would be modeled on Schedule 3 (Regulation and Frequency Response) and would require transmission providers offer the service, to the extent feasible from its own or available resources, to customers taking transmission service from a generator located within the transmission provider’s balancing authority area. A transmission customer subject to a rate schedule will be required to take service or demonstrate that it has satisfied the regulation obligation through dynamic scheduling or self-supply from generation or non-generation resources. Transmission providers will not be allowed to charge under both Schedule 3 and Schedule 10 for the same transaction.
Like Schedule 3, Schedule 10 will consist of two components: a per-unit rate and a volumetric component. FERC proposes that it is reasonable for transmission providers to use the same per-unit rate currently established in Schedule 3 when charging for service under Schedule 10. Where a transmission provider seeks to apply a different rate under Schedule 10, it would have to justify the cost differences to the Comission. With respect to the volumetric component, FERC stated that different types of resources impose different levels of variability. Thus, each transmission provider will be required to propose a method for apportioning the volumes of regulation reserves based on the characteristics of its individual system. However, a transmission provider may not assign different volumetric requirements to different generation resources without demonstrating that the differing volumes are commensurate with the actual variability exhibited by VERs (Variable Energy Resource) on the system and implementing intra-hourly scheduling and power production forecasting.
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