Evaluación de los sistemas de abastecimiento de agua de la comunidad

RTOs are relatively new organizations that are formed by voluntary market

participants, defined by technological system boundaries, and span political jurisdictional boundaries. They are authorized by the Federal Energy Regulatory Commission (FERC) under the Federal Power Act of 1935 and are central to energy policy implementation. This section describes the relationship between RTOs and state and federal authority for electricity rate regulation.

The Federal Power Act established a division of authority over rate regulation between federal and state agencies. FERC was responsible for interstate electricity sales, whereas state and local regulators were responsible for intrastate electricity sales.

Because utilities typically had few interstate sales, FERC responsibilities were limited. State and local agencies were the primary electricity regulators responsible for protecting the public interest (Lyons, 2014). However, electricity industry restructuring has

transformed this division between federal and state authority.

In the late 1990s, FERC required utilities to provide open, non-discriminatory access to transmission customers and encouraged the formation of RTOs to manage

6 _{In 2014, two important actions were taken to improve economic efficiency and reliability. FERC issued} Order 764 requiring intra-hourly transmission scheduling to reduce barriers to integrating variable resources and other market inefficiencies. However, liquidity in these markets has been limited.

Additionally, NERC authorized the bifurcation of the Western Electricity Coordinating Council leading to the founding of Peak Reliability to serve as a reliability coordinator for the Western Interconnection with responsibilities to provide situational awareness and real-time monitoring.

transmission and oversee wholesale electricity markets (Federal Energy Regulatory Commission, 1996a, 1996b, 2000). 7 _{As a result, all independent power producers,} including renewable energy generators, can purchase transmission services at the same rate that the utility charges itself and utilities can voluntarily chose to participate in organized wholesale electricity markets managed by RTOs.

RTOs and electricity industry restructuring complicate the distinction between federal, state, and local regulatory responsibilities (Table 2.2). FERC Order 888, which required open access to the transmission grid, and subsequent interpretations and clarifications have established FERC authority over all investor-owned utility

transactions made through the interconnected interstate transmission grid (Greenfield, 2010).8 Thus, investor-owned utilities are subject to FERC regulation of transmission and wholesale electricity rates and state regulation of distribution and retail electricity rates.

Table 2.2. Regulatory Authority by Type of Utility and Region

CAISO1 _Non-RTO

Investor-Owned Utility State FERC

State FERC Publicly Owned Utility2 Local

FERC3 Local

4

1. CAISO itself is a regulated utility as defined in the Federal Power Act and operates through an

7 _{FERC Order 888 reinterpreted provisions in the Federal Power Act to require FERC-jurisdictional} utilities to provide open, non-discriminatory access to transmission customers (Eisen, 2016; Federal Energy Regulatory Commission, 1996a; Lyons, 2014). Additionally, Order 888 encourages, but does not require, the formation of independent system operators (ISOs) to manage transmission and oversee wholesale power markets. Subsequently, FERC Order 2000 further defined the requirements for an entity to qualify as an ISO or RTO (Federal Energy Regulatory Commission, 2000).

8 _{To implement this requirement, Order 888 requires all jurisdictional utilities to file a pro forma open-} access transmission tariff (OATT) that contains minimum terms and conditions of non-discriminatory access. Thus, all investor owned utilities are subject to FERC regulation through OATTs. In contrast, government agencies, certain electric cooperatives, and federal power marketing administrations are not universally required to file OATTs (Eisen, 2016).

open-access transmission tariff. CAISO is also subject to a California state organic statute. 2. Publicly-owned utility (POU) for the purposes of this study include government agencies, certain electric cooperatives, and federal power marketing administrations. This definition departs from the formal definition in the Federal Power Act.

3. FERC has authority to review a non-jurisdictional utility’s rates if they are a component of an RTO’s rate design (Pac. Gas & Elec. Co. v. FERC, 306 F.3d 1112, 1114 (D.C. Cir. 2002)

Transmission Agency of N. Cal. v. FERC, 495 F.3d 663, at 671-72 (D.C. Cir. 2007)).

4. FERC authority over POUs is limited to compliance with mandatory reliability standards and controls to prevent market manipulation (FPA 215 (16 USC 824o) FPA 222 (16 USC 824v)).

In contrast, government agencies, certain electric cooperatives, and federal power marketing administrations are generally exempt from federal rate regulation.9 These types of utilities are often referred to as non-jurisdictional utilities and for the purposes of this study will be referred to as publicly owned utilities. Local agencies and boards of directors regulate transmission, distribution, and all sales for municipal utilities and

electric cooperatives.10 _{However, a publicly owned utility that voluntarily chooses to}

participate in an RTO is subject to full rate review by FERC. Thus, for publicly owned utilities, joining an RTO involves relinquishing autonomy over rate regulation.

9 _{The Federal Power Act uses the term ‘public utility’ in a manner that departs from common usage. The} Act defines a public utility as "any person who owns or operates facilities subject to the jurisdiction of the Commission," that is, "any person who owns or operates" facilities for the transmission of electric energy in interstate commerce and to the sale of electric energy at wholesale in interstate commerce. Furthermore, the Act exempts federal, state, and local agencies, electric cooperatives, and federal power marketing administrations, with limited exceptions, from the plurality of FERC authority (Eisen, 2016). For the purposes of this study, publicly owned utility (POU) or public power utility refers to government agencies, certain electric cooperatives, and federal power marketing administrations.

10 _{Federal Power Act Section 211A, established by the Energy Policy Act of 2005, expands FERC} jurisdiction over the transmission system by authorizing FERC to order an unregulated transmitting utility to file changes to or replace its voluntarily-filed Open Access Transmission Tariff (OATT) to address undue discrimination regarding access to its transmission system. This provision was used for the first time in 2011 when FERC ordered the Bonneville Power Administration to revise its wind curtailment practices to comply with the undue discrimination standards in Section 211A and file an OATT. These curtailment practices, orders, and revisions are still under dispute (Dennis & Brecher, 2015).

Furthermore, experience in RTOs across the U.S. has demonstrated the blurring of federal, state and local responsibilities around certain policy issues and technology

innovations. The operation of organized wholesale markets affects policy decisions that traditionally have been under state jurisdiction, such as resources adequacy and

transmission planning. Additionally, many new technologies, like storage and demand response, cannot be identified as providing only wholesale or retail services. With the expansion of organized markets and regional governance, the clear division of authority between federal and state regulators has given way to a more complex regulatory system that includes multiple and indirect authorities (See Rossi, 2016).