Energy Law

WestConnect Utilities Experiment to Eliminate Rate Pancaking in Southwest

By Kristin McKeown

Eight WestConnect utilities, including Arizona Public Service Company, El Paso Electric, Nevada Power, Public Service Company of Colorado, Public Service Company of New Mexico, Southwest Transmission Cooperative, Tri-State, Tucson Electric Power, and WAPA, petitioned FERC on June 10 for guidance on a proposed two-year experimental transmission pricing initiative that would eliminate rate pancaking in the Southwest.  The proposed experiment will offer customers the option to purchase hourly non-firm point-to-point transmission service at a single regional transmission rate instead of having to pay pancaked rates under each provider?s open-access tariff.

WestConnect proposes to charge the transmission customer a single, flat rate that would be equal to the highest non-firm ceiling rate charged by a participating transmission owner.  In addition to an administrative charge for the experiment, the transmission customer would pay for scheduling and dispatch, along with reactive and voltage control.  Under the experiment, regional service would result in a lower rate than is currently available.  By charging this flat rate, WestConnect expects the reduced and simplified rates will increase transmission use.  Revenues will be distributed on a pro rata basis to each participating transmission provider. 

The WestConnect utilities have asked FERC to respond by September 15, 2008, and anticipate beginning the experimental pricing on February 1, 2009 for two years.  At the end of the two year period, WestConnect would evaluate the experiment?s effect on grid utilization and the participants? revenues.

Full post as published by Energy Legal Blog on June 30, 2008 (boomark / email).