Entergy procurement to count IPP participation

The weekly procurement process (WPP) Entergy will use beginning next May will be evaluated by the amount of fuel it saves and by the number of independent power producers participating in the procurement, Ken Turner, Entergy’s director of weekly operations, said in an interview.

IPPs had worried in a meeting of stakeholders held August 23 in Houston that the actual savings would be inflated by the method Entergy will use to evaluate fuel savings. The true amount of savings is critical because the Federal Energy Regulatory Commission said it approved Entergy’s plan to hire an independent coordinator to oversee its transmission grid based on the amount of savings the weekly procurement process would produce.

IPPs would prefer Entergy join a regional transmission organization than have its transmission grid overseen by an ICT.

“We can measure the number of IPPs actually participating and if we see an increase that’s a success,” Turner said.

The WPP also will be evaluated on the percentage of IPP offers that are accepted. “Over time we should see them get smarter about their bids,” Turner said. Entergy would not disclose the bids offered by the winning IPPs. “That sets a floor and it’s not in the best interest of our ratepayers,” he said.

Entergy currently has a WPP in which it accepts bids from IPPs for the week ahead. Once a bid is accepted, the IPP has to apply for transmission service. Under the new WPP, once a bid is accepted it is automatically granted transmission service. “We’re going to make it all seamless,” Turner said.

Currently Entergy’s existing generating plants have the right to ship power on the transmission system under Entergy’s open access transmission tariff. Under the new system, once an economic bid is accepted then the existing “network resource” is dropped from the transmission schedule and the IPP added. “The whole process is focused on getting the most economical power to Entergy’s customers,” Turner said.

To measure the fuel savings Entergy will compare “hold harmless” purchases to the purchases under the new method. The hold harmless measure will only include purchases outside Entergy’s own generation that have firm transmission service. That includes purchases from longer-term solicitations, not purchases from the current weekly solicitations, Turner said.

A third measure of how well the new weekly procurement process is working is the number of complaints about the process from market participants, Turner said.

The WPP would not replace bilateral transactions between Entergy and a third party, However, the third party will still be required to obtain transmission service.

Entergy’s role in the WPP is to receive all information and determine which bids are economic and will be accepted, Turner said. “The ICT will be looking over my shoulder and will grant transmission service,” he said. Primarily the ICT will make sure Entergy is not “fudging” the input and not giving preferential treatment to Entergy’s generating resources, Turner said.

The ICT, which is the Southwest Power Pool, helped Entergy develop the WPP process.

“My hope is we will get a lot of participation from the IPPs and they will figure out what their bids need to be,” Turner said. He hopes the IPPs will bids will have the flexibility to be load- following. “Some won’t be flexible, but we just can’t have all inflexible bids,” he said.