CEP CEP Grid Infrastructure & Transmission 1 — Questions and Answers
Question 1: Which U.S. federal agency regulates the interstate transmission of electricity and approves transmission tariffs?
- Environmental Protection Agency (EPA)
- Federal Energy Regulatory Commission (FERC) (Correct answer)
- Department of Energy (DOE)
- North American Electric Reliability Corporation (NERC)
Correct answer: Federal Energy Regulatory Commission (FERC)
FERC regulates interstate electricity transmission, approves open-access transmission tariffs, and oversees wholesale electricity markets.
Question 2: What is a 'congestion charge' in electricity transmission?
- A fee for exceeding contracted transmission capacity
- A cost that arises when transmission constraints prevent lower-cost power from flowing to a delivery point (Correct answer)
- A penalty for curtailing scheduled generation
- A surcharge applied during peak demand hours
Correct answer: A cost that arises when transmission constraints prevent lower-cost power from flowing to a delivery point
Congestion charges reflect the price difference between a generation source and the delivery point when transmission constraints limit power flow, forcing use of more expensive local generation.
Question 3: In LMP (Locational Marginal Pricing) markets, what three components make up the total LMP at any node?
- Energy + capacity + ancillary services
- Energy + congestion + losses (Correct answer)
- Generation + transmission + distribution
- Fuel cost + O&M + profit margin
Correct answer: Energy + congestion + losses
LMP = Energy component (system marginal price) + Congestion component (cost of transmission constraints) + Loss component (cost of electrical losses).
Question 4: What is the role of a Regional Transmission Organization (RTO) in the U.S. electricity market?
- It owns and operates generation assets in its region
- It provides independent management of the high-voltage transmission grid and runs competitive wholesale markets (Correct answer)
- It sets retail electricity rates for end-use customers
- It enforces environmental regulations on power plants
Correct answer: It provides independent management of the high-voltage transmission grid and runs competitive wholesale markets
RTOs independently operate transmission systems, dispatch generation to balance supply and demand, and administer wholesale energy, capacity, and ancillary services markets.
Question 5: Which term describes the maximum amount of electricity that can be reliably transmitted over a transmission path without causing reliability violations?
- Firm transmission capacity
- Available Transfer Capability (ATC) (Correct answer)
- Capacity factor
- Transmission loss factor
Correct answer: Available Transfer Capability (ATC)
Available Transfer Capability (ATC) is the remaining capacity on a transmission path after accounting for existing reservations and reliability margins.
Question 6: A customer purchases electricity in an RTO market and takes delivery at a load node with an LMP of $45/MWh, while the hub LMP is $40/MWh. What does the $5/MWh difference represent?
- A capacity charge for peak demand
- The combined congestion and loss components at that delivery node (Correct answer)
- A distribution tariff surcharge
- The renewable energy premium
Correct answer: The combined congestion and loss components at that delivery node
The difference between a node LMP and the hub LMP represents the congestion and loss components specific to that delivery location.
CEP CEP Grid Infrastructure & Transmission 1
Which U.S. federal agency regulates the interstate transmission of electricity and approves transmission tariffs?