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Article # 0014

Procedure for conducting a Jurisdictional Allocation/Open Access audit of a regulated electric utility system

 

By William J Cochran, P.E.
 


Subject: Jurisdictional Allocation/Open Access audits are conducted in order to allow State Retail Commissions  to set reasonable tariffs for all state retail customers.

                                
                         General Overview

1) Jurisdictional allocations and Open Access analysis are based on engineering oriented operational audits of the operation of an integrated electric utility system at 34.5 Kilovolts (Kv) and above.

2) The only premise or foundation for a jurisdictional allocation and a Open Access audit is a reliability definition of assets. Generation and transmission facilities that directly benefit all jurisdictions served by a utility, in terms of ensuring continuous delivery of firm power to all firm customers, should be allocated to all jurisdictions using some allocation methodology.  In the same light, the capability of a transmission plant for serving native and non- native (wheeling) load is enhanced by the facilities characterized as "rolled in" facilities. ( See FERC findings on "rolled in" in Case ER 76-184) . Jurisdictions include all state public service commission  regulated Retail, Federal Energy Regulatory Commission (FERC) wholesale, municipalities  and not for profit Cooperatives.

3) The engineer with the responsibility of jurisdictional allocations will develop the allocator using a selected methodology. The engineer with the responsibility of Open Access will identify the added "rolled in" capability of transmission plant, the wheeling already contracted and the megawatt interface at all the tie points with other utilities, municipalities and cooperatives.


Economics does not play any part in jurisdictional allocations or Open Access analysis. Reliability is the only constraint to look at when conducting jurisdictional allocation and Open Access. The reason for the reliability standard is electric utility systems are designed , constructed and operated first and foremost to avoid a 'system blackout" ( loss of load). Therefore everything else is secondary and not even considered until all reliability standards, tests and contingencies are met.

            Goals of a Jurisdictional Allocation Audit

The goal of a jurisdictional allocation audit is to allocate fixed capacity assets among the native load jurisdictions such as FERC wholesale, multiple state retail, cooperatives and municipalities. A jurisdictional audit is limited to fixed capacity assets (plant) contained in FERC Uniform System of Accounts 310 through 358  . An engineer has to review the configuration, capacity and sizing of generation and transmission plant to make judgements on capability of plant and conclude what plant is beneficial to all jurisdictions. Again, reliability benefit is the sole basis of jurisdictional allocations

            Goals of an Open Access Audit

The goal of an Open Access audit is to identify the total capability of a utility transmission facility for serving native and non-native load. Non native load could include load from Federal mandated wheeling involving agencies such as the Tennessee Valley Authority (TVA) and the Southwest Power Association (SWPA). In order to identify the total capability of a transmission system the Open Access engineer must determine those facilities in FERC Uniform System of  Accounts 360 through 367 that should be "rolled in" with transmission facilities carried in FERC Uniform System of Accounts 310 through 358 ( FERC Accounts)


The capability standards or tests for determining Open Access "roll in" reliability benefits have been adopted by many  State Retail Commissions  and in many FERC Orders and Opinions.  Examples of capability standards can be seen in the findings of the Missouri Public Service Commission Orders ER 80-48, ER 80-42, ER 82-265 and ER 90-90-101. The multiple FERC Orders and Opinions are reflected in FERC Order ER 76-184.

      Selection and Development of an Allocation Methodology

The appropriate methodology is based on load shape and the past justifications of generation capital formation. Load shape can be determined from Statement BC in any FERC rate filing by an electric utility. The BC Statement will show scheduled outages for 5 years and reserve margins by month for 5 years. Reserve margin is strictly a reliability statement and is based on the highest single coincident peak ( 1 CP)


Arguably, then the 1 CP could be used for every utility. However, the 4 CP is a reasonable alternative for utilities that have summer peaks that are not statistically "significantly different" over the entire 4 moths defined as "summer". This is expressed as "reserve margin differentials" in many FERC Orders ( See FERC Order ER 80-315/452 page 52 thru 59 Schedule 22). These multiple summer peaks are characterized by both the FERC and some state Retail commissions , such as the Illinois Commerce Commission , as consistent reoccurring maximum "seasonal peaks".


FERC and Retail Commission findings regarding  "seasonal reserve" and utility Scheduled Planned Maintenance documents  can be used to support a conclusion that there is a distinct pattern separating the four summer months from the 8 non summer months. The 4 CP methodology can be employed when distinct patterns of reserves plus the utility's planned maintenance scheduling confirms the average percentage reserve for the four summer months are consistently and materially lower than those of the 8 summer months. FERC and Retail Commission Orders have found that summer peak demands must be deemed to be cost causative when utilities build and schedule maintenance to meet summer peak loads.

 

Both the FERC and  Retail Commissions have concluded that because a utility has sufficient capacity to meet non-summer peaks notwithstanding its scheduling of the overwhelming majority of maintenance during the non-summer moths any economist's "use" or "time of use" argument over a 12 month period "lacks merit". The FERC and retail commissions have findings that the real cost causative peaks are the summer peaks not the non summer peaks.

The best argument for selecting a 1 CP or a 4 CP is that jurisdictional allocations to each jurisdiction should be consistent with the justification of creating these assets. Having a large reserve margin in non-summer months accompanied by the overwhelming planned maintenance during the non-summer months supports the reliability argument concerning "system blackout" and the cost causative nature of the summer peaks in assuring adequate reserves.
Statement BC in any FERC filing and an engineering reliability study can defuse any economist's position before a commission that "use" over some time period not capability to meet maximum demands should be the basis for allocation.

         How to conduct a Jurisdictional Allocation Audit

Before a 1 CP or 4 CP methodology can be used, the coincident peak(s) must be audited to ensure that the proper firm coincident peak or peaks is/are identified. This requires a balancing out a utility's load control area for each of the peaks used in the selected methodology. Once a utility's entire load control area is balanced out then each jurisdiction's contribution to the total peak(s) must be identified.


The best place to start is with the 1 hour (integrated) highest system peak that the utility has reported during a time period normally characterized in rate proceedings as the "test year".

To initialize the investigation, the below data requests (DR) or interrogatories should be sent to the utility the day it files is minimum filing requirements and have been assigned a case number.

1) Furnish all workpapers supporting jurisdictional allocation of plant

2) Furnish and Identify that hour/day/month of the highest 1 hour coincident peak (system peak) and identify that peak in megawatts (MW)

3) Furnish all dispatcher interchange logs/sheets that day

4) Furnish all telemetered printouts from the dispatch center that system peak day detailing or documenting all MW flow at all tie poins or interconnect points wth utilities, municipalities and cooperatives.

5) Furnish all generation logs for the day of system peak. Ensure that net output of each plant is identified. Also identify gross output that day.

6) Furnish all interchange/interconnection FERC approved contracts/agreements with other utilities, municipalities and cooperatives. Ensure that all FERC approved schedules are attached. Be sure to include all amendments. Be sure to provide all currently effective FERC tariffs for each schedule.

 7) Furnish all MW readings at all 34.5 Kv and above transmission and "distribution" lines, not telemetered on an hourly basis tied to another retail jurisdiction, FERC jurisdictional entity or non FERC regulated Cooperative, municipality, or such agencies such as TVA or SWPA. for the day/hour of the system peak asked for  under DR or interrogatory #2 . Identify the source of this reading to be ; circular meter chart, magnetic tape reading, paper punch card, channel meter recorder or whatever (digital) device used to record this peak

8) Identify all "wholesale" customers served inside utility's load control area not identified in DR or interrogatory #4. List their peak during the system peak. Furnish the circular meter chart, magnetic tape, digital recorder, channel meter reading , used to identify their peak.

9) Furnish a copy of all geographic transmission/ "distribution"maps/plats for all 34.5 Kv  and above facilities carried on utility's books under FERC Accounts 350 through 367 and contained in utility's continuing property records. Be sure to specifically designate any facilities as "not owned" that are on utility's maps but not owned by  the utility.

10) Furnish all copies of 1 line electric Schematic diagrams of transmission/ "distribution" 34.4 Kv and above facilities contained in utility's FERC Accounts 350 through 367and in utility's continuing property records. Be sure to designate as "not owned" all facilities on utility's drawings that are not contained in utility's FERC Accounts or continuing property records.

11) Furnish a copy of utility's latest "loss study"

12) Furnish copies of all "interruptible contracts"

13) Furnish the "BC Statement" from last rate case filing before FERC

14) Identify all customers with their own generation. Identify the type of generation owned by these customers ( ie. Base, peaking intermediate) . Furnish any meter readings on the ties to these customers.

                            Conclusion

Appropriate responses to DR's or interrogatories will allow an auditor to balance out the load control area and verify the system peak. This analysis allows the development of an allocator since appropriate responses will allow the auditor to explicitly tie each jurisdiction's contribution to system peak.
Once system peak has been balanced out and tied to all all jurisdictions contributions to that system peak the same method can be applied to the other summer peaks should the auditor conclude a 4 CP is appropriate.

Article # 0014     TEST QUESTIONS:

1.   Jurisdictional Allocation/Open Access audits are conducted in order to allow State Retail Commissions  to set _____ for all state retail customers.

  1. the utility provider

  2. kickbacks

  3. operating requirements

  4. reasonable tariffs

2.   Electric utility systems are designed , constructed and operated first and foremost to  ________.

  1. avoid a 'system blackout" ( loss of load)

  2. make a profit for the jurisdiction or shareholders

  3. meet the National Electric Code requirements and specifications.

  4. use as little fuel and produce as little pollution as possible.

3.    In this article, what does FERC stand for?

  1. Federal Emergency Response Commission

  2. Federal Energy Regulatory Commission

  3. Fiduciary Energy Rationing Committee

  4. Federal Electrical Regulation Corporation

4.   What is the goal of an Open Access audit?

  1. To ensure that all utility transmission facilities, and their customers are heavily regulated and confused.

  2. To identify the total capability of a utility transmission facility for serving native and non-native load.

  3. To provide the public with information about how their electrical power is generated and used

  4. All of the above

5.   The reserve margin is based on the

  1. highest single coincident peak

  2. lowest single coincident peak

  3. median coincident peak

  4. Four (4) month coincident peak

6.   Load shape can be determined from _____ in any FERC rate filing by an electric utility.

  1. Statement BC

  2.  Statement LS

  3. the supply and demand curves

  4. maps of the utilities supply area

7.   Jurisdictional allocations and Open Access analysis are based on engineering oriented operational audits of the operation of an integrated electric utility system _____

  1. at 34.5 Kilovolts (Kv) and above.

  2. at 34.5 Kilowatts (Kw) and above.

  3. at 14.5 Kilovolts (Kv) and below.

  4. at 14.5 Kilovolts (Kv) and above.

8.   FERC and retail commissions findings show that the real cost causative peaks occur during the ....

  1. summer peaks.

  2. daylight hours.

  3. non-summer peaks.

  4. none of the above.

9.   The goal of a jurisdictional allocation audit is to allocate _____ among the native load jurisdictions

  1. risk and cost

  2. fixed capacity assets

  3. wheeling loads

  4. reserve plant capacity

10.   Appropriate responses to DR's or interrogatories will allow an auditor to . ...

  1. balance out the load control area

  2. verify the system peak

  3. a. and b.

  4. none of the above

 

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