Docket No. 7523
Wheeling and Interconnection Subgroup
July 27, 2009
Notes of Initial Subgroup Meeting Agenda
Date/Time:
July 27, 2009 starting at 1:00 PM
Location:
PSB 4th Floor Conference Room
Participants:
John Spencer, VEPPI; Dan Scruten, Agency of Agriculture; Andy Perchlick,
REV; Chris Cole, GMP; Mary-Jo Krolewski, PSB; Kevin Perry, VEC; Bruce
Bentley, CVPS; Martin Bowen, CVPS; Sean Foley, DPS; Mathew Rubin, VIPPA;
and Morris Silver, CVPS.
1.
Review of Agenda. Participants briefly discussed the proposed agenda that had been
distributed to participants in advance and posted on the PSB web page.
2.
Discussion of Ground Rules. Participants agreed to undertake discussions to encourage a
free flow of ideas recognizing that individual participants represented various
organization and could not bind their organizations absent specific authorizations which
would require that the organization review final recommendations once developed
through discussions.
2.
Wheeling Proposals. Participants discussed the need to develop a recommendation to the
Board on how to address wheeling for the power to be purchased and allocated to the
Vermont distribution companies. Toward that end the following proposals were
discussed:
a.
Facilitator Arranges for all Wheeling. Under this model, the SPEED Facilitator
would fulfil the role of transmission customer and would arrange for the wheeling
required for the purchase of Standard Offer Power from all qualifying resources to
all distribution utilities and to add the wheeling costs to the power purchase costs
and distribute the same to the distribution utilities. This would permit the SPEED
Facilitator to develop expertise in the administration of wheeling arrangements
which may be able to be automated and to reduce the burden on utilities and
producers. Participants noted that not all utilities currently have wheeling tariffs
and that it may be incumbent on the utilities to develop such an arrangements.
Participants also noted that since a utility could be a wheeling provider and a
wheeling recipient it may be possible for the SPEED Facilitator to net the costs
and payments as a part of this process.
b.
Include the Cost for Wheeling in the Rate and Charge the Producer. Participants
also identified a proposal whereby an estimate of the cost for wheeling would be
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included in the costs upon which the rate producers’ rate are based and then
require the producer to pay for wheeling. If the wheeling costs incorporated in
the rate is based on an estimate of the average or reasonable cost to wheel a
project’s power to each utility, such an arrangement could create an incentive for
the producer to develop projects that minimize wheeling costs. Participants
recognized that a similar issues arises in connection with interconnection costs.
c.
Composite Utility System Treatment. Participants discussed the potential to
continue the wheeling strategy in use in connection with the purchase and
allocation of power by the Purchasing Agent under Rule 4.100 (Vermont’s
application of PURPA). Participants recognized that this arrangement was put
into place prior to the adoption of FERC Order 888 requiring the filing of Open
Access Transmission Tariffs or “OATTs”. Three Vermont utilities (CVPS, GMP
and VEC) reported that they have “stub” tariffs that are a part of the ISO-New
England OATT. The CVPS stub includes terms and conditions for wheeling
across distribution facilities.
Participants discussed a concern that the composite utility system proposal may
be inconsistent with the terms and conditions of the existing OATT tariffs. While
it may be possible for a transmission-owning utility to discount wheeling,
discounts must be administered in a non-discriminatory way. This creates the
opportunity for significant unintended consequences. For example, if a utility
discounts wheeling on a particular path for a qualifying SPEED project
participating in the Standard Offer program it may be required to discount all
wheeling for all projects on that path.
Participants also discussed the fact that at this time it cannot be determined if
projects participating in the Standard Offer program will be evenly distributed
amongst the various utilities. As a consequence issues were identified concerning
utility parties needs to avoid undue cross subsidization that would harm customers
in some service areas while benefitting customers in others.
3.
Relationship of Wheeling/Interconnection and Settlement Subgroups. John Spencer
provided an update on the issues and ideas raised in the Settlement Subgroup. John
explained that the Settlement Subgroup was looking at strategies that treat projects as
load reducers. Participants asked whether this strategy would raise any wheeling
concerns and to explore this matter in continuing dialog.
4.
Interconnection. Participants discussed the need to consider the interconnection
standards applicable to Standard Offer program producers.
a.
Technical Requirements. Participants recognized that since standard offer
projects might be quite small the requirements of the Board’s Interconnection
Rule might not be closely tailored to the needs of these projects. Participants
considered the potential to use the Net Metering Technical Requirements for such
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projects. See PSB Rule 5.100. Participants also recognized that interconnection
requirements for project that are not net metering projects are governed by PSB
Rule 5.500. There appeared to be an apparent consensus that it would be an
appropriate goal for the Subgroup to recommends a unified set of standards that
would apply regardless of the business arrangements entered into by the producer.
Participants discussed the fact that these standards may have to be technology
and/or size specific. Utility parties stressed that they need to assure that the
interconnections are safe, reliable and stable, and are designed to enable the
proper administration of the electric system.
5.
b.
Threshold. Participants discussed whether the 150 kW threshold set out in Rule
5.100 is a reasonable threshold to use in establishing interconnection standards.
CVPS raised concern that this threshold may be too high depending upon whether
a project is located and the type of project at issues. Participants agreed to
consider methods to match standards that are appropriate to various types and
sizes of potential projects.
c.
Regulatory Changes. Participants discussed the procedures that might need to be
followed in order to amend the Interconnection Rule and whether changes could
be made on an interim basis by Order or Temporary Rulemaking.
d.
Statewide Standards. CVPS reported that it had been working to develop
technical standards for interconnection and suggested that it might be helpful to
see if these standards could serve as a basis for the development of statewide
standards. CVPS offered to provide a copy of its working draft of these standards
for review by participants. This would include a draft template for an
interconnection agreement and operating protocol. Participants expressed an
interest in reviewing these materials.
Next Steps. Participants agreed to consider and provide responses as appropriate on or
before Thursday August 6, 2009 to the following questions that arose during the
Subgroup meeting.
a.
Under a proposed “settlement option” the “Settlement” subgroup is looking at
keeping all the Act 45 SPEED projects as “behind–the-meter load reducers”.
There would be a Vermont financial settlement which would reconstitute the
benefits and liabilities to the utilities on a pro-rata basis, however on a regional
level the benefits to the utility of an interconnected facility would go through the
ISO and remain with the interconnected utility. Would “load reducer” projects be
subject to wheeling charges under this scenario?
b.
Is treatment of project as load reducers permissible under the OATT?
c.
Is it possible to develop a separate stub tariff for SPEED projects under the
OATT? Can the FERC jurisdictional utilities aggregate the Act 45 SPEED
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projects into a category for “promoting renewable energy” and discount the
wheeling to zero, and not be “discriminatory” and “precedential” under FERC
888?
d.
Can a bilateral agreement between a Standard Offer producer and the
interconnecting utility be developed to avoid the need for wheeling with just the
cost allocated by the SPEED Facilitator.
e.
Does the Vermont PSB have jurisdictional authority to set up a Vermont system,
(“the Vermont Composite System”) which will avoid wheeling tariffs for SPEED
projects under Act 45, and allow the utilities to be in compliance with FERC 888.
Remember that FERC has decided that in New England open access to the
transmission systems is not available for smaller generation projects.
f.
CVPS is the only utility which charges for wheeling at the distribution level. In
other jurisdictions and in Vermont dockets the Regulators have found positive
benefit for locating distributed generation on distribution lines. Is it necessary to
charge for distribution level wheeling.
g.
Is there a size for projects that is too small to and should not be allocated to other
utilities or for which wheeling would not be required? Is there a size project that
is small enough that FERC would not require conformation with the OATT
requirements and FERC 888?
h.
Apparently under FERC rules, if a utility refuses to purchase power from an
independent power producer, that utility is obligated to transmit, at no cost, the
power from an independent power producer to the service territory of an adjacent
utility. Can this mechanism be used to avoid wheeling by ACT 45 SPEED
projects by the Vermont FERC jurisdictional utilities.
i.
Can the Board issue a general order that amends the existing rules on
interconnection on an interim basis pending a formal rule making. See 3. V.S.A.
sec. 845.
The next meeting of the Wheeling/Interconnection Subgroup shall be held on Monday
August 10 at 1:00 pm.
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