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UPDATE 1-ITC turns on Michigan-Ontario power transformers
April 5, 2012 / 5:12 PM / 6 years ago

UPDATE 1-ITC turns on Michigan-Ontario power transformers

* PARs could save hundreds of millions in costs
    * Projected to control unscheduled power costs

    By Scott DiSavino	
    April 5 (Reuters) - ITC Holdings Corp on Thursday
turned on power transmission equipment along the
Michigan-Ontario border in hopes of making the power flow more
reliably and efficiently.	
    The long-awaited phase angle regulator (PAR) transformers
are designed to control unscheduled flows of power around Lake
Erie. Grid operators have said stopping the Lake Erie loop flow
could save millions of dollars in electric costs for consumers
in Ontario, Michigan, Ohio, Pennsylvania and New York.
    The new transformers are at ITC's Bunce Creek substation in
Michigan and will join similar devices already in service on the
Ontario side of the border at Lambton and Keith.	
    Once this equipment becomes operational, Ontario's
Independent Electricity System Operator (IESO) and the U.S.
Midwest power grid operator, the Midwest Independent
Transmission System Operator (MISO), will begin using the
transformers to maintain power flow equal to the net import and
export schedule, to the extent possible.	
    MISO, which oversees the ITC transmission system in
Michigan, operates the power grid in parts of 11 U.S. Midwest
states and the province of Manitoba in Canada.    	
    Although operating in this mode will cause a slight
reduction in transmission capability, IESO said in a report a
couple of weeks ago that the reduction in inadvertent power
flows should improve energy trade.    	
    Since the U.S. Department of Energy approved of the
operation of the new transformers in March, Michigan-based ITC
has been testing the equipment.	
    Power traders said they have noticed anomalies in the power
market during that time - prices or power flows higher than
usual in some areas and lower in others - but could not say for
certain if the testing of the PARs had anything to do with those
so-called anomalies.	
    The testing caused no reliability problems, and officials
said they expected the transformers to improve reliability.    
For a timeline see 	
    WHO PAYS?	
    Now that the transformers are on line, U.S. energy
regulators must decide who pays for their construction and
    In December 2010, the U.S. Federal Energy Regulatory
Commission (FERC) accepted a proposal by ITC and the MISO to
allocate some of the cost of building and operating the
transformers to the PJM and New York ISO power grids.	
    PJM is the biggest power grid operator in the United States,
overseeing the system in parts of 13 U.S. Mid-Atlantic and
Midwest states and the District of Columbia.	
    The New York ISO oversees the New York power grid.	
    In the past, ITC said it cost about $41.6 million to install
the two PARs at Bunce Creek with a projected annual revenue
requirement of about $11.4 million. 	
    But PJM and the New York ISO have opposed that
cost-allocation plan since they were not required to pay for the
transformers in the past.	
    After a FERC-sponsored settlement discussion produced no
agreement, the grid operators and ITC now heading into the FERC
hearing phase.	
    PJM and the New York ISO have asked FERC for an expedited
decision since the grids expect to receive a bill for the PARs
soon now that the transformers are on line.

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