Feds allow new system for oversight of electricity distribution

Tuesday, Oct. 31, 2000 | 10:47 a.m.

New regulatory orders from the Federal Energy Regulatory Commission will change the oversight of power transmission when the electricity industry is deregulated in Nevada.

FERC issued two orders last week that affect the transition from a regulated to a deregulated electrical industry. The restructured system has been delayed indefinitely by Gov. Kenny Guinn and may be further reviewed by the Nevada Legislature next year.

The first order would allow the establishment of an oversight committee instead of the proposed Mountain West Independent System Administrator to serve as a "traffic cop" overseeing the transmission of power to the various competitive companies that would serve consumers as soon as competition begins.

Duane Nelson, director of transmission business development for Nevada Power Co. and Sierra Pacific Power Co., two utilities working under Reno-based Sierra Pacific Resources Inc., said FERC is authorizing the establishment of a market monitoring committee to serve as overseer of the transmission lines.

That way, he explained, it would be assured that the existing utilities don't have a competitive advantage when transmission of power is scheduled.

Cost savings is the biggest reason for proposing the oversight committee, Nelson said. Under the Mountain West system, independent monitoring costs were expected to be about $21 million for three years, he said. Under the committee, described by Nelson as a "glass house" arrangement, the cost would be less than $1 million for the same period.

Users of the transmission system would sit on the committee as well as representatives from the state's Bureau of Consumer Protection and the Public Utilities Commission.

The committee would only function until a regional transmission organization overseeing the interests of deregulated utilities of several states is formed.

The second order asks Sierra Pacific Resources to revise a compliance filing that spells out how the company will make excess power available on the open market once its Nevada customers' electricity needs are met.

Bill Branch, director of rates and regulatory affairs for Sierra Pacific and Nevada Power, said the FERC order arose from a complaint from the California Power Exchange, which oversees the movement of electricity between companies in that state.

The California Power Exchange asked FERC to require the owners of power plants in Nevada to give it more lead time on calculating the amount of "released capacity," the electricity available to be sold on the open market once all of Nevada's projected needs are met.

Branch explained that utilities use variables like weather forecasts and projected use based on the day of the week as a guide to determining how much power would be needed on a given day. The capacity that remains can be auctioned to companies in other states.

Sierra Pacific, which currently owns several power plants but intends to sell them, made a filing with FERC that said it would issue released capacity projections 16 hours in advance. But the California Power Exchange said that would be two hours too late to include in its daily auction.

FERC ordered Sierra Pacific to make another filing within 30 days addressing the issue, noting that it issued an earlier directive to make released capacity projections 24 hours in advance.

Branch said FERC approved the draft orders at a meeting last week, but final orders haven't been forwarded to Sierra Pacific or posted on the agency's Internet site.

He said he didn't expect there to be any problems with Sierra Pacific drafting a revised compliance filing incorporating an earlier deadline.