I. Background

June 20, 2000 VIA OVERNIGHT DELIVERY The Honorable David P. Boergers Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C. 20426 Re: New England Power Pool, Docket No. ER00-_____-000 Interim Charges Related to New York Phase Angle Regulator Failure Dear Secretary Boergers: Pursuant to Section 205 of the Federal Power Act and Section 35 of the Commission’s regulations, the New England Power Pool (“NEPOOL”)1 hereby files an original and six (6) copies of this transmittal letter and supporting materials to implement cost recovery arrangements relating to measures undertaken by the Vermont Electric Power Company (“VELCO”) to address potential reliability problems arising from the failure of a Phase Angle Regulator (“PAR”) in Plattsburgh, New York. This filing provides for the recovery of an amount not to exceed $4.5 million on the same basis as Congestion Costs2 are allocated under the NEPOOL Tariff. NEPOOL requests that the Commission accept this filing to become effective July 10, 2000, in time to permit costs incurred by VELCO with respect to this issue since June 1, 2000 to be reflected in NEPOOL bills in order to reimburse VELCO on a timely 1 The issue of the locus of unilateral filing rights with respect to the transmission-related provisions of the Restated NEPOOL Agreement and the NEPOOL Tariff is the subject of dispute which is reserved pursuant to Section 17A.7 of the Restated NEPOOL Agreement. Nothing in this submittal is intended to express, assert or concede any position on behalf of any NEPOOL Participant or group of Participants (including the NEPOOL Participants Committee and the NEPOOL Transmission Owners Committee) as to the reserved issue. 2 Capitalized terms used but not defined in this letter and referenced materials are intended to have the same meaning given to such terms in Sections 1 and 6 of the Restated NEPOOL Agreement or Section I of the Restated NEPOOL Open Access Transmission Tariff (“NEPOOL Tariff” or “Tariff”). The Honorable David P. Boergers June 20, 2000 Page 2 basis. VELCO has estimated that if the arrangements covered by this filing were not implemented, reliability in Vermont over the summer would be jeopardized and the region could reasonably expect incremental Congestion Costs of up to $8.8 million, which are avoided by the arrangements described herein undertaken by VELCO. I. BACKGROUND On March 22, 2000, a phase angle regulator (“PAR”) located in Plattsburgh, New York failed. The PAR is on the 115 KV interconnection between Plattsburgh, NY and Sand Bar, VT (the “PV-20 Line”). The PAR is essentially a transformer with tap settings that can be changed to control the flow in an AC line by changing the impedance. Although the PAR is operated and maintained by NYPA, NYPA represented to VELCO that it is not needed for reliability in New York and NYPA would not repair or replace the PAR absent a commitment by New England to pay for the costs of such activities. In light of the reliability implication for New England of the loss of the PAR and based on NYPA’s representations regarding New York’s need for the equipment and refusal to repair this equipment otherwise, the Chief Executive Officer of VELCO agreed to cover the repair costs. Attachment 1 to this transmittal letter reflects that agreement. When the PAR failed, the PV-20 Line was automatically de-energized. The PV-20 Line was restored to service on March 28, 2000 through a temporary fix which bypassed the PAR, and has remained in service since that time. VELCO has arranged to have NYPA expedite the repair of the PAR and it is anticipated that the PAR will return to service on or about December 31, 2000 under the present timetable for repair. The PAR outage creates the potential for severe reliability problems in Vermont under certain contingencies, as well as the potential to limit imports into New England from New York and/or Hydro-Quebec. Although the PV-20 Line is currently in service, without the control afforded by the PAR, or some other means, flows over the PV-20 Line can in some circumstances exceed the Line’s design capacity. Under those circumstances, the PV-20 Line would have to be de-energized to protect it from physical damage. If the PV-20 Line is removed from service, VELCO will be unable to provide first contingency service in the most populous and economically vital region of Vermont, and involuntary load shedding may be required. VELCO has reported that the most critical period of the PAR outage will begin on or about June 1, 2000. The Vermont Public Service Board has concurred with VELCO’s assessment that, unless additional facilities are made available during the PAR outage to provide more reliable first contingency coverage, and given the probability of occurrence after June 1, 2000 of any of the most significant major contingencies – such as the loss of the Highgate and Sandy Pond facilities or of local transmission lines – there is a fifty to eighty percent chance that the load in the greater Burlington, VT area would have to be shed at least once this summer to prevent a more wide-spread voltage collapse. Restoring the load would require two to six hours The Honorable David P. Boergers June 20, 2000 Page 3 and if the contingency that necessitated the load shedding were permanent or long-term, VELCO would have to institute rolling black-outs to prevent further collapse. In addition, PV-20 flows need to be regulated to appropriate levels in order not to limit imports from New York or Hydro-Quebec. Without PV-20 in service, imports into New England across the New York ties are reduced by approximately 100 MWs. With PV-20 in service and no other equipment installed, it was possible to regulate power flows by altering the pattern of dispatch of generation in Vermont, and by limiting imports of power from New York into New England. This solution will not be effective, however, when Vermont electric loads reach and exceed 750 MW simultaneous with high levels of imports into New England from New York and/or Hydro-Quebec (approximately 800 MW and 1500 MW over Phase II respectively). Vermont load levels of 750 MW are expected to be achieved in more than 3000 hours this year. ISO-New England has advised that it plans to call for imports of up to 1500 MW from New York and 1800 MW over Phase II from Hydro-Quebec this summer. Given increased energy needs within the regions during the summer months, limiting imports from New York and/or Hydro-Quebec is highly undesirable, and could threaten reliability region wide. During the import conditions described above, VELCO intends to control power flows across the PV-20 Line by inserting a 30 ohm inductor coil and additional capacitor banks at its Sand Bar Substation in Milton, VT. Insertion of the coil will increase impedance on the Line, but will also significantly degrade voltage performance of the Vermont system. Accordingly, without the additional capacitance, it would not be possible to keep the inductor coil inserted, and the PV-20 Line would have to be de-energized.3 These steps will provide a gross level of control that cannot be varied to meet particular system conditions. The impedance will deprive the system of the voltage support that has previously been provided by the PAR. Consequently, the Vermont system will require greater reliance on local generation and voltage ampere support services from generation (“VAR support”) for first contingency coverage than had been required when the PAR was in operation. Existing facilities are not capable of providing the necessary VAR Support.4 Accordingly, the expected reactive power demands necessary to provide first contingency 3 The estimated cost for the installation of the capacitor bank to support the inductor, including control and protection facilities, is $35,000. The estimated cost of the capacitors themselves is $60,000. These costs are not going to be recovered through the Section 7.5(g) proposal which is the subject of this filing. 4 VELCO is installing a FACTS device at its Williston, VT substation. When that device becomes operational on or about May 1, 2001, there will be adequate reactive support in the area without the need for additional facilities. The Honorable David P. Boergers June 20, 2000 Page 4 coverage in the absence of the PAR can only be met by the dispatch of uneconomic units in Vermont, assuming those units are available. VELCO has estimated that out-of-merit dispatch of units to address this situation would result in Congestion Costs during the period of the PAR outages of $8.8 million. VELCO has responded to the PAR outage by adding a leased 18 MW generating unit at VELCO’s Sand Bar Substation in Milton, VT, which has been converted to operate alternatively as a synchronous condenser capable of supplying up to 15 MVAR. The converted unit, currently owned by NRG, was previously deployed as a generating unit in Somerset, Massachusetts and is referred to as “Somerset Jet 1.” NRG has agreed to lease Somerset Jet 1 to VELCO at a cost of $560,000 per month for the first six months, and $520,000 per month thereafter. These lease costs include the cost of staffing the operation of the unit twenty-four hours per day, seven days per week. Connection of the unit to the grid will require installation of a step-up transformer, which will be rented at a cost of $25,000 per month. In addition to these two monthly costs, the following additional costs will also be incurred: Item Cost Costs to convert the generator to operate as a synchronous condenser $ 5,000 Relocating the generator $ 60,000 Site preparation costs $ 140,000 Emission control costs5 $ 175,000 Based on the above, VELCO projects total costs for the arrangements and equipment through the end of December 2000, when it is anticipated that the PAR will return to service, to be $4.5 million.

Load more