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RCA finishing Railbelt electric system letter to Legislature
Alan Bailey Petroleum News
The Regulatory Commission of Alaska is sending a letter and accompanying documentation to the Alaska Legislature, informing lawmakers about the status of efforts towards more unified arrangements for the management and operation of the electrical system in the Alaska Railbelt. The commission has been holding a series of public meetings, reviewing the contents of that letter, and finetuning the essential messages that the commission wants to convey.
Since 2015, following a directive from the Legislature, the commission has been encouraging voluntary efforts by the utilities toward a more unified approach. During a commission public meeting on May 8, commissioners commented that, while on the one hand the utilities have demonstrated a willingness to work together and have made significant progress on several fronts, voluntary efforts have thus far failed to result in any institutional change.
The overall intent is to minimize the cost of electricity for consumers, while maintaining an acceptable level of supply reliability. The idea also is to facilitate access to the system for independent power producers.
Merit ordered economic dispatch One particular concern is that an initiative by Chugach Electric Association, Municipal Light & Power and Matanuska Electric Association to institute a protocol known as merit ordered economic dispatch came to an abrupt halt in October 2018, because of complications arising from the proposed purchase of ML&P by Chugach Electric. The idea of economic dispatch is that utilities will make continuous use of the cheapest available power generation across the electrical grid - the three Southcentral utilities had identified the possibility of more than $16 million in potential cost savings from this type of power pooling arrangement.
Having had since 2015 to proceed with voluntary efforts, the time has now come for the commission to work with the Legislature to develop actions that will institutionalize merit ordered dispatch, Commissioner Robert Pickett commented during the May 8 meeting.
The commissioners did, however, express a note of caution that those actions, and the next steps to be taken, need to be carefully thought through, to build on the progress that has been made without undoing what has already been achieved.
And Commission Chair Stephen McAlpine expressed concern that, although the commission now needs to work with the Legislature and the state administration to develop steps to institutionalize the power pooling arrangements, the commission does not have all the information relevant to a full understanding of what has happened.
Close to implementation At the point when the Southcentral utilities put their economic dispatch initiative on indefinite hold, the utilities had agreed on the business arrangements for the power dispatch procedures and appeared to be almost ready to put the procedures into effect. They commented that the protocols that they had developed could be applied for other Railbelt utilities, thus opening the possibility of extending the power pooling arrangements across other parts of the grid.
Commissioner Antony Scott commented that an effective next step might be to figure out how to start instituting economic dispatch through the formation of an Anchorage-based power pool, given that the three Southcentral utilities had been on the verge of achieving this arrangement.
Reliability standards The utilities have made significant progress towards another of the objectives that the commission had recommended in 2015: the institution of a consistent set of reliability standards for the Railbelt grid, and the formation of an electric reliability organization to oversee the operation of the grid and mandate the use of the standards.
In April 2018, following a major amount of work, the utilities filed a consistent set of standards. Since then the utilities have been working to develop a set of cyber and physical security standards to add to those standards. In October of that same year the utilities filed a memorandum of understanding for the formation of the Railbelt Reliability Council, or RRC, an entity that would enforce the reliability standards; enforce system-wide interconnection protocols for the grid; conduct system-wide integrated resource planning; and evaluate the economic dispatch of power generation in the system.
The RCA has concerns over whether it has the necessary statutory authority to regulate the RRC and has suggested statutory language that could resolve this problem. The commission also seeks statutory authority to approve integrated resource plans for the electrical system, and for the pre-approval of major upgrade projects in the system. In response, the Alaska House of Representatives has introduced a bill to the Legislature.
Pickett said that ensuring the implementation of an appropriately regulated electrical reliability organization is the most important of the commission’s recommendations to the Legislature. Meanwhile the commission will use its existing authority to enforce the consensus standards that have been developed.
Transmission company The other component of grid unification that the RCA recommended in 2015 is the formation of a transmission company to operate the transmission grid. A so-called transco could simplify and improve the economics of using the transmission system by introducing a single transmission rate; implementing non-discriminatory grid access; and providing a mechanism for the funding of grid upgrades.
After some initial optimism in 2015, there was a succession of announcements and delays over the years regarding transco formation. Ultimately, in February of this year the Alaska Railbelt Transmission LLC, or ART, an electricity transmission company for the Railbelt grid, applied to the commission for a certificate of public convenience and necessity. But two of the Railbelt utilities, Chugach Electric and MEA, have chosen not to participate in the new company.
Job classification inflexibility As part of its communication to the Legislature over the Railbelt grid issue, the RCA is also expressing concerns over its capacity to handle the workload involved in the evolving requirements for regulating the electrical system. In particular, inflexibility in the state administration’s job classifications makes it difficult to assign appropriately skilled staff to the required roles - it may prove necessary to hire consultants to fill resulting skill gaps, the commission is telling the Legislature.
- ALAN BAILEY
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