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Q: actual cost of electricity transmission ( Answered 5 out of 5 stars,   1 Comment )
Question  
Subject: actual cost of electricity transmission
Category: Business and Money > Economics
Asked by: clb108-ga
List Price: $50.00
Posted: 01 Nov 2003 10:43 PST
Expires: 01 Dec 2003 10:43 PST
Question ID: 271700
I am investigating the economics of an alternate energy plant. It
needs to be out in the boonies and would be about 1,000 miles away
from where it will be used. I know about the cost to connect to the
power grid, so ignore that cost. The cost that I need to know is how
much will it actually cost to transmit electricity across 1,000 miles
of the power grid to where the consumers of the electricity will be.

If the costs are different for different areas, then an average and
cost range is good enough. Just doing budgetary numbers now.

Clarification of Question by clb108-ga on 03 Nov 2003 14:57 PST
How many regions are there? I am assuming that if you are transmitting
across more than one region, you need to pay multiple fees. Is there a
map of all the regions in the US and are all the fees comparable to
the MidwestISO?

If 1 MW is put into the grid, is any loss of power factored in, or is
credit for the full MW given at the destination? It seems that most of
the costs for transmission might actually be compensating for the
power lost over distance.
Answer  
Subject: Re: actual cost of electricity transmission
Answered By: hlabadie-ga on 03 Nov 2003 15:02 PST
Rated:5 out of 5 stars
 
The "actual cost of electricity transmission" is affected by so many
variables, including the type of market that is selected, that the
only answer that can be given is one that is greatly simplified.

At the simplest level, the cost is determined by the terms of the Open
Access Transmission Tariff (OATT). Electricity is sent by the Provider
through the network of the Independent System Operator (ISO) to the
Customer. The ISO charges for the use of the network and its services
based upon the Tariff. The Tariff and the Schedules of fees are
usually posted on the Web site of the ISO or of the ISO's Open Access
Same-Time Information System (OASIS) site.

In addition to the simple cost of using the transmission lines, there
are a number of ancillary services that must be purchased, mainly
dealing with reliability requirements.

The basic arrangements are summarized here:

Transmission Reservation and Energy Scheduling
Certified Supplier Guidebook
http://www.cinergycge.com/about_cinergy_corp/cge_customer_choice/Certified_Suppliers/Guidebook/default_chapter_9.asp

"A certified supplier serving end-use customers on CG&E's distribution
system will need to arrange for transmission and ancillary services to
deliver power and energy through Cinergy's transmission system for
ultimate delivery to end-use customers.

The certified supplier must either arrange for these services under
the applicable OATT as the transmission customer or make arrangements
with a transmission scheduling agent (TSA) to contract with the
transmission provider for transmission services. The TSA is ultimately
responsible for all transmission and ancillary services provided on
behalf of a certified supplier. In this chapter, the Transmission
Customer is referred to as the TSA."
[...]
"Reservation and scheduling of capacity and energy will be governed by
the applicable OATT and rules established by industry groups...Energy
will be scheduled in accordance with the terms and conditions of the
applicable OATT.  The current Cinergy OATT is posted on the Open
Access Same-time Information System (OASIS) as required by FERC..."
[...]
"Transmission Service

Transmission service is high-voltage, bulk transport of power and
energy from generators to load recipients. The arrangements for and
use of transmission service on the Cinergy system is governed by the
applicable OATT. The OATT defines the rates terms and conditions
associated with network transmission service. The TSA must first sign
a transmission service agreement with the transmission provider to
initiate service under the OATT. The standard forms of these
agreements are included as attachments to the OATT and are also
available from the transmission provider's OASIS home page.

In order to serve end-use customers on CinergyŌųΩs system, a TSA
must sign an OATT service agreement and request service on the OASIS
for network transmission service. The TSA must reserve firm
transmission service (network) from its generating capacity source,
which it owns or has under contract, in order to list the designated
resources for Network Service. The TSA must also make arrangements for
ancillary services when it signs the service agreement."
[...]
"TSA Scheduling and Settlement

Whole Megawatts (MWs): For any hour when the entity acting as a TSA
supplies electric energy to its end-use customer it must submit a
schedule. Scheduling shall be done in whole MW amounts. Scheduling of
ones and zeros will be permitted for loads of less than one MW.

Certified Suppliers using a TSA cannot submit schedules or propose
schedule changes. The TSA is responsible for submitting all schedules
and changes. The TSA will be the sole point of contact with the
Cinergy Control Area and the transmission provider in regards to all
scheduling and settlement activities."
[...]
"Ancillary Services Overview

Ancillary Services are those services necessary to support the
transmission of capacity and energy from resources to load while
maintaining reliable operation of the transmission system. There are
six ancillary services defined and available under the applicable
tariff.  These are listed below by Service Schedule number and name:

    * Schedule 1  Scheduling, System Control, and Dispatch Service
    * Schedule 2  Reactive Supply and Voltage Control
    * Schedule 3  Regulation and Frequency Response
    * Schedule 4  Energy Imbalance
    * Schedule 5  Spinning Reserve
    * Schedule 6  Supplemental Reserve 

The following must be purchased from the transmission provider:

    * Schedule 1 (Scheduling, System Control, and Dispatch Service)
    * Schedule 2 (Reactive Supply and Voltage Control) 

The TSA must make arrangements with the transmission provider to
supply or purchase the following ancillary services:

    * Schedule 3 (Regulation and Frequency Response)
    * Schedule 4 (Energy Imbalance)
    * Schedule 5 (Spinning Reserve)
    * Schedule 6 (Supplemental Reserve)"


The Schedules of Prices for the Midwest ISO can be found here:

Updated Discounted Pricing Information
Point to Point Transmission Service Rates
http://oasis.midwestiso.org/documents/miso/pricing_new.html

MISO Ancillary Service Pricing (Excel spreadsheet format .xls)
http://oasis.midwestiso.org/documents/miso/MISO_Ancillary_Service_Pricing_100603.xls

MISO Transmission Pricing by Sink (Excel spreadsheet format .xls)
http://oasis.midwestiso.org/documents/miso/MISO_Transmission_Pricing_by_Sink_100303.xls
 

Example:

ANCILLARY SERVICES - SCHEDULE 1								
Scheduling & Dispatch								
								
	 ON-PEAK      OFF-PEAK	     ON-PEAK	     OFF-PEAK				
     	HOURLY	       HOURLY	       DAILY          DAILY		
	$/MW-HR	       $/MW-HR	      $/MW-DY	     $/MW-DY	
METC	0.16153846154 0.07671232877   2.5846153846   1.8410958904

        WEEKLY	      MONTHLY	YEARLY
        $/MW-WK	      $/MW-MO	$/MW-YR	
	12.923076923	56	672	

	 ON-PEAK      OFF-PEAK	     ON-PEAK	     OFF-PEAK				
     	HOURLY	       HOURLY	       DAILY          DAILY		
	$/MW-HR	       $/MW-HR	      $/MW-DY	     $/MW-DY	

MISO	0.15136765562	0.07188235701	2.4218824899	1.7251765682
       
        WEEKLY	      MONTHLY	YEARLY
        $/MW-WK	      $/MW-MO	$/MW-YR	
	12.10941245	52.474120615	629.68944738

ANCILLARY SERVICES - SCHEDULE 2		
Reactive Supply & Voltage Control

        ON-PEAK	       OFF-PEAK	       ON-PEAK	       OFF-PEAK			
        HOURLY	        HOURLY	       DAILY           DAILY
        $/MW-HR	        $/MW-HR	       $/MW-DY	       $/MW-DY
MISO **	0.37347444302	0.17735772636	5.9755910883	4.2565854327	

WEEKLY	        MONTHLY	       YEARLY
$/MW-WK	        $/MW-MO	       $/MW-YR
29.877955441	129.47114025	1553.653683


and so on.


Midwest Open Access Transmission Tariff Text

Welcome to the Michigan Electric Transmission Company
http://www.metcllc.com/miso_oatt_tariffs.html

OPEN ACCESS TRANSMISSION TARIFF FOR THE MIDWEST INDEPENDENT
TRANSMISSION SYSTEM OPERATOR, INC.
As of April 1, 2002
http://www.metcllc.com/documents/oatt/oatt_text_040102.pdf

MidWest ISO OASIS
http://oasis.midwestiso.org/OASIS/MISO
http://oasis.midwestiso.org/documents/miso/pricing_new.html


Other ISOs

New York ISO
http://www.nyiso.com/oasis/index.html
http://www.nyiso.com/markets/index.html

ISO New England (New England Power Pool)
http://www.iso-ne.com/

California ISO
http://www.caiso.com/
http://oasis.caiso.com/


SEARCH TERMS

://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&safe=off&q=Pjm+interconnect&btnG=Google+Search
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&safe=off&q=Midwest+ISO&btnG=Google+Search
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&safe=off&q=OASIS+ISO&btnG=Google+Search


hlabadie-ga

Clarification of Answer by hlabadie-ga on 03 Nov 2003 15:07 PST
There are ISOs in the Northeast, the PJM, the California, Midwest,
Southeast, etc. There are zones in the regions. There is currently a
debate about setting up a mandatory system of Regional Transmission
Organizations. As it is, the rules of operation are voluntary.

There is generally a 4.5-5 percent transmission loss that is factored
into the end cost.


hlabadie-ga

Clarification of Answer by hlabadie-ga on 03 Nov 2003 15:15 PST
Links to the Regional Reliability Councils can be found here:

NERC Regional Reliability Councils
http://www.nerc.com/regional/

Links on those pages will lead to the lists of members of each
council, including the various ISOs for each region.

hlabadie-ga

Clarification of Answer by hlabadie-ga on 03 Nov 2003 15:42 PST
Correction: line losses account of 4.5 percent of _cost_.

Federal Energy Regulatory Commission
Working Paper on Standardized Transmission Service
and Wholesale Electric Market Design
http://www.ferc.gov/industries/electric/indus-act/smd/nopr/work-pap.PDF

             PJM
         $ Millions    % of Total
                             Cost
Line Losses  $491            4.5%


              NY
         $ Millions     % of Total
                              Cost
Line Losses  $380             4.5%


hlabadie-ga

Request for Answer Clarification by clb108-ga on 03 Nov 2003 16:05 PST
Information overload... I can't make any sense of all these tarriffs.

It sounds like best case, it costs $692 per year for a MW. This is a
small fraction of the actual value of the electricity.

What would the worst case (Seattle to Miami, or San Diego to Bangor
Maine) cost?

I am looking for a range of best case (seems to be around 0.1% the
value) and worst case cost of ??% the value of the electricity.

Clarification of Answer by hlabadie-ga on 03 Nov 2003 16:57 PST
You aren't adding in the "ancillary services." For instance, the one
cited in the Answer for Reactive Supply & Voltage Control is $1553.65
per year.

The highest cost that I see on the spreadsheet is over $35000 per
year.
MISO Transmission Pricing by Sink (Excel spreadsheet format .xls) 

/OTP.XXXX	35919.9696

Clarification of Answer by hlabadie-ga on 03 Nov 2003 18:01 PST
Note that the practice of levying a "through and out" fee has been
ruled out by FERC. Long-distance transmission is not made more
expensive, therefore.

US FERC urged to rehear ruling on electricity fees
http://www.forbes.com/newswire/2003/08/25/rtr1065537.html


hlabadie-ga
clb108-ga rated this answer:5 out of 5 stars

Comments  
Subject: Re: actual cost of electricity transmission
From: hlabadie-ga on 01 Nov 2003 18:27 PST
 
Rates vary from one ISO to another.

For instance, the MidWest ISO:

A. Schedule 1 - Michigan Electric Transmission Company LLC
For transactions where the point of delivery or the Transmission
Customer’s load is physically located in the Michigan Electric
Transmission Company LLC zone, the Transmission Customer shall pay the
following rates for Scheduling, System Control and Dispatch Service:
Yearly Charge per MW $ 672.00
Monthly Charge per MW $ 56.00
Weekly Charge per MW $ 12.92
On-Peak Daily Charge per MW $ 2.58
Off-Peak Daily Charge per MW $ 1.84
On-Peak Hourly Charge per MW $ .16
Off-Peak Hourly Charge per MW $ .08


Those outside the ISO pay an average.

The .pdf for the Schedule can be found at:

http://www.midwestiso.org/tariff/As_Accepted_tariff.shtml

hlabadie-ga

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