FERC is to Ercot As Spider is to ______.

Michael Giberson

“Will you step into my parlor?” said the spider to the fly;
“’Tis the prettiest little parlor that ever you did spy.
The way into my parlor is up a winding stair,
And I have many pretty things to show when you are there.”

Jon Wellinghoff, the chief spider at the Federal Energy Regulatory Commission, invited ERCOT to step into the federal parlor. Or, at least, that is what it will sound like to some folks in the ERCOT area.

Actually, Platts reported FERC chairman Wellinghoff was only suggesting that the “Electric Reliability Council of Texas should consider increasing the capacity of ERCOT’s now-minimal interconnects with neighboring grids.”

“If Texas could be more strongly interconnected to the Midwest, forexample, they could integrate even more wind into the system,” Wellinghoff said in a teleconference from Chicago.

“It would be a benefit to them, from that standpoint, and should be something that they ought to consider. Maybe we could still give them an exemption from FERC,” Wellinghoff said, making a reference to ERCOT’s desire to remain largely outside FERC jurisdiction.

Did he say “Maybe we could still give them an exemption”? “Maybe”? Just “maybe”?

Wellinghoff is going to have to be a little more wily if he hopes to get this particular fly into the FERC parlor.

By the way, there are sound economic reasons for strengthening interties between the regions. And whether or not the interties are strenghtened, the rules governing power flows over interties could be made more dynamic and responsive to changing spot prices in the two regions. But for some of the same reasons that federalists applaud states as “laboratories of democracy,” it is useful to have a part of the U.S. power system under somewhat separate regulatory authority. ERCOT can do its own thing to a degree not possible elsewhere in the States, and FERC and the rest of the world can learn from the successes and failures.

However, there is an alternative to strenghtening the interties between ERCOT and the Eastern Interconnection (and banking on the “maybe exemption”), and that is to expand existing transmission lines from the Southwest Power Pool into the wind power rich areas of central west Texas, and allow wind farms in the region to choose between delivering into SPP or into ERCOT.

It is already the case that ERCOT will build power lines into the Panhandle and South Plains portions of Texas, an area long outside of ERCOT and in SPP, in order to encourage wind power resource development in that area.  Another transmission project proposes to reach out from ERCOT to interconnect generation currently linked to the Entergy Texas system in the southeast corner of the state. A few existing generators are connected both to ERCOT and to the Eastern Interconnection.  So this kind of competition around the ERCOT fringes is already happening a tiny bit.

SPP is already planning to add more transmission capability into the Panhandle and South Plains part of Texas.  All the feds would need to do is encourage SPP to add lines a little deeper into the state, and the PUC of Texas should accommodate the effort.  Overlapping transmission capability would make it easier for both systems to accommodate variable wind power output.

The move would enhance wholesale power competition in the region and encourage the development of renewable energy resources, both priorities of the current Commission.

ERCOT may well be wary of too readily accepting the Chairman’s invitation. The fable of the spider and the fly turned out badly in the end, from the fly’s point of view. But there is real value from increasing the ability to trade power between systems, so some sort of deal should be pursued.

(N.B.: When you go into arm’s length negotiation with a spider, always remember it has eight arms.)

One thought on “FERC is to Ercot As Spider is to ______.

  1. Many people believe that ERCOT’s alleged independence from FERC is a bit of a fiction. Last year I spoke to Pat Wood about this issue – he is somebody with intimate knowledge of this situation, having been head of the State PUC in Texas and having been head of FERC. He said that FERC chose to not regulate ERCOT, only because they did not feel the need to, and not because they were not allowed to. That is, according to Wood, if FERC wanted to regulate ERCOT they could and would. ERCOT’s alleged “indepndence” is anachronistic and inefficient. Adding 20 or 30 GW of wind to a closed system the size of ERCOT will only make it unreliable and expensive. Connecting with the rest of the Eastern Interconnect is in everybody’s best interest.

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