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PUR Guide 2012 Fully Updated Version

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Reliability

Benchmarking Storm Restoration

Superstorms call for superior responses.
There's no such thing as an average superstorm, and every situation requires a unique strategy. But data on utilities' performance in response to major storms helps identify best practices -- and lessons learned.

Preventing Tomorrow's Blackout

The case for tighter coordination among transmission planners and protection engineers.
Recent outages show the importance of proper transmission system design. As the grid becomes more complex, meeting NERC reliability standards and proper assessment of power grid reliability will require closer coordination between system planners and protection engineers.

Bridging the Seams

With no single entity in charge, transmission planning has plagued projects that span multiple regions. A new framework offers a solution.

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Figure 1 - Building Blocks for an Effective Interregional Planning and Cost Allocation Framework
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Cost Allocation Principles: An Expanded List
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FERC Order 1000 listed six principles for cost allocation for interregional transmission planning. FERC’s list, however, could be expanded as follows:

1) Commensurate with Benefits: The cost of interregional transmission projects should be allocated to regions such that they are at least roughly commensurate with total benefits identified for each of the regions based on the benefits and metrics specified. Neither region should be allocated a share of the cost of an interregional project in which it receives no benefit.

2) Transparency: The application of cost allocation methodologies and identification of benefits and beneficiaries must be transparent.

3) Different project types: Different cost allocation methods may be applied to different types (e.g., reliability, economic, or public policy requirements) or different portions of transmission facilities.

4) Quantify and Monetize: The identified benefits should be quantified and, if possible, monetized based on all internally used and additionally specified interregional benefit metrics. Non-monetized and non-quantified benefits should also be recognized in the assessment of the overall reasonableness of proposed interregional project cost allocations.

5) Benefits at Least Equal to Avoided Costs: The regions should agree that the monetized reliability, load serving, public policy, or other benefit of an interregional project will be at least equal to the avoided cost of achieving the same benefit solely through cost-effective local or regional transmission upgrades.

6) Hurdle Rate: If benefit-to-cost ratios are used to assess the desirability of an interregional project to a region or the regions as a group, the benefit-to-cost threshold must not exceed 1.25.

7) Regional Net Benefits: Benefits to each region need to be sufficiently large so that each region’s share of benefits exceeds its share of costs consistent with region-internal benefit-cost criteria.

8) Internal Cost Recovery: The costs allocated to each region must be recoverable through the existing internal—local and regional—cost allocation process of each region.–JP, JWC, and DH

Author Bio: 

Johannes Pfeifenberger and Judy Chang are principals of The Brattle Group. Delphine Hou is a former Brattle associate. This article is based on work undertaken for the Southwest Power Pool’s Regional State Committee and the associated report, Seams Cost Allocation: A Flexible Framework to Support Interregional Transmission Planning, April 2012, available at www.spp.org and www.brattle.com. The authors acknowledge sole responsibility for the content of this article.

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Interregional planning under FERC Order 1000

A Virtuous Cycle

Data and experience show that serving customers well translates into better rate case outcomes. Conversely, poor performance starts a downward slide. J.D. Power and Associates research shows the correlation between customer service and financial returns.

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Figure 1 - Approved ROE And Customer Satisfaction
Figure 2 - Customer Expenses And Satisfaction
Figure 3 - Profitability and Customer Satisfaction
Figure 4 - Virtuous Cycle of Customer Satisfaction
Figure 5 - Rate Case Gap And Customer Satisfaction
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Andrew Heath, Senior Director, Energy Practice, J.D. Power and Associates

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How customer satisfaction drives returns on equity for regulated electric utilities.

Transmission Rate Incentives

Did FERC Jump the Gun?
In an October order, the Federal Energy Regulatory Commission (FERC) trimmed the authorized rate incentive for the RITELine transmission project by one-third. The action prompted Commissioner Moeller to ask whether the commission is retreating from its incentive policy on needed transmission lines.

Managing Overgrowth

Vegetation Management and FERC Compliance
An integrated approach can trim the cost of keeping utility rights of way clean -- and green.

States' Rights, Gamed Markets

RTO Bidding Rules
FERC OK's PJM's capacity price floor, but questions remain about 'legitimate interests.'

Making Solar Grid-Friendly

Why integrating utility-scale solar will follow the wind model.
If made fully “grid-friendly,” utility-scale solar ought to be able to act like a traditional power plant — aiding voltage stability and supporting grid integrity during transmission system disturbances.