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Electric flow under new managers

Newly created federal agency controls multi-state power grid
Friday, April 1, 2005 | 12:00 a.m. CST; updated 2:18 p.m. CDT, Thursday, July 3, 2008

If everything goes as planned, Columbians shouldn’t have noticed anything different when they woke up this morning and they turned off their alarm clocks and flipped on their coffee makers. But for everything electric, today marks a new beginning.

The Midwest Independent System Operator, a federal agency based in Indiana, was scheduled to take control at midnight of more than 97,000 miles of transmission lines and more than 100,000 megawatts of electricity generation over 1.1 million square miles from Manitoba, Canada, to Missouri, and from eastern Montana to western Pennsylvania.

A representative of the Federal Energy Regulatory Commission, which established and regulates the system operator, said the system will help prevent blackouts, ease congestion on transmission lines and result in more reliable pricing.

Columbia Water and Light Director Dan Dasho, however, remains skeptical about changing the way the city gets its electricity from sources other than the Municipal Power Plant, which can supply about 20 percent of the city’s power needs.

“The question is, when this system goes into place, will the lights stay on?” Dasho said. The city is prepared to increase the output of its coal-fired plant or start its natural gas turbines today if necessary, he said.

The small mountain of paperwork Dasho has accumulated from the new electricity monitor since November reflects the complexity of the new arrangement. For one day’s power purchase, the Midwest system operator will send the city four bills: one estimate seven days after the purchased from the grid; one in 14 days, one 55 days later, and a final bill 109 days after the initial transaction.

“That’s a major piece of work for just one day’s bill,” Dasho said.

Complications have already arisen. On Wednesday, the regional organization told Columbia officials it could not honor three electric contracts because of paperwork snafus: MU’s contract to get 20 megawatts from Kansas City Power & Light; Columbia’s contract with the Board of Public Utilities in

Kansas City for 20 megawatts; and the city’s contract to purchase electricity generated from landfill gas at the Milam landfill near St. Louis.

By Thursday, The Energy Authority, an energy adviser in Florida, had resolved those issues. Columbia hired the group in December and is paying it $28,000 a month through December to ensure the transition goes smoothly.

“Columbia will be in good hands,” said Shel Ferdman, vice president of marketing for The Energy Authority. Ferdman also said the new setup brings an opportunity for Columbia to sell power from its power plant, which he said could increase the city’s ability to compete in the wholesale market. “We believe Columbia is well-prepared to be successful and this will result in more reliable pricing,” he said.

HOW IT WORKS

Columbia will continue to get about 80 percent of its power from the same outside sources, such as Ameren. However, if the regional organization decides the transmission lines are too congested, the city will have to buy energy from other wholesale sources, making prices less predictable.

“The price of power changes every hour,” Dasho said.

The system operator has 1,471 nodes or monitors on the regional electric grid that will post prices every five minutes in the real-time market and once a day, at 5 p.m., for the next day. Pricing information from a sample of the monitoring points will be posted at www.midwestmarket.org.

Gary Rasp of Midwest Independent System Operator said the change will make it more efficient to transmit electricity and make use of power plants. Previously, Columbia would have to pay a fee for each transmission line it used to purchase power from out of state. Now, there is one cost for transmission.

Despite the assurances, Dasho is skeptical.

“In the morning, you tell them what you need and what you have, and in the afternoon they call you back and say, OK we want you to run a couple of units tomorrow,” Dasho said. “Tomorrow comes and you run those units and power flows into your system and you have no idea what you just paid. They don’t tell you till seven days later when you get your first bill.”

If that price was high, the city is stuck paying that price even if it could have generated its own power for less, Dasho said. “Everyone has the same access on the grid no matter who they are or where they are,” Rasp said.

He also said that an independent market monitor will ensure that there is no manipulation of the market.

But Dasho isn’t too confident about that claim. “They’re setting up a marketplace which I believe can be gamed,” Dasho said.

He said that big electric generators such as FirstEnergy and Cinergy stand to profit.

“It’s exactly the same as California where big utilities were allowed to hold on to generation; they (MISO) are independent marketers whose job is to sell electricity to the highest payer,” Dasho said.

Rasp said the system will create an overall savings of transmission costs estimated at $225 million, but he wasn’t sure how bills might shake out for individual utility customers.

And that is exactly what has municipal utilities like Columbia, which has relatively inexpensive electricity, worried. “Everybody will basically be paying a level cost across the region,” Dasho said. “Here’s the problem: people in Illinois pay a lot for electricity; people in Missouri don’t.”

“We have no interest in sharing our native generation somewhere else,” said Jeff Davis, chairman of the Missouri Public Service Commission. The commission will work with the regional distributor, Davis said, to help ensure that Missouri’s fairly inexpensive generation isn’t transmitted out of state.


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