CEP CEP Grid Infrastructure & Transmission 2 — Questions and Answers
Question 1: What is the purpose of 'firm transmission service' in energy procurement?
- To guarantee uninterruptible power delivery with the highest curtailment priority (Correct answer)
- To provide low-cost interruptible capacity during off-peak periods
- To reserve generation capacity at a specific plant
- To secure discounted rates for large industrial customers
Correct answer: To guarantee uninterruptible power delivery with the highest curtailment priority
Firm transmission service provides the highest priority reservation on the grid, ensuring the scheduled power delivery is curtailed only as a last resort in emergency conditions.
Question 2: Which mechanism allows large electricity buyers to financially offset congestion costs by purchasing instruments tied to specific transmission paths?
- Renewable Energy Certificates (RECs)
- Financial Transmission Rights (FTRs) (Correct answer)
- Capacity Performance bonds
- Ancillary service credits
Correct answer: Financial Transmission Rights (FTRs)
FTRs are financial instruments that pay the holder the congestion revenue between two nodes, hedging the congestion cost component of LMP for scheduled power flows.
Question 3: In the context of grid reliability, what does 'N-1 contingency' mean?
- The grid must remain stable after the loss of any single transmission or generation element (Correct answer)
- One renewable unit must be available for every fossil fuel unit online
- Net load must stay positive even during minimum demand conditions
- The grid must operate with one fewer RTO than currently active
Correct answer: The grid must remain stable after the loss of any single transmission or generation element
N-1 reliability standard requires grid operators to maintain stable operations following the sudden loss of any single transmission line, transformer, or generating unit.
Question 4: What is 'distribution loss factor' (DLF) and how does it affect energy procurement costs?
- A multiplier applied to metered consumption to account for energy lost in the local distribution network, increasing billed energy (Correct answer)
- A discount on transmission charges for customers with high power factors
- A fee assessed for connecting distributed generation to the grid
- A ratio used to calculate reactive power compensation requirements
Correct answer: A multiplier applied to metered consumption to account for energy lost in the local distribution network, increasing billed energy
DLF accounts for electrical losses in the distribution system; metered consumption is multiplied by DLF so the customer pays for energy lost between the transmission point and their meter.
Question 5: Which North American grid reliability organization sets mandatory reliability standards for bulk power system operators?
- Federal Energy Regulatory Commission (FERC)
- North American Electric Reliability Corporation (NERC) (Correct answer)
- National Renewable Energy Laboratory (NREL)
- Electric Power Research Institute (EPRI)
Correct answer: North American Electric Reliability Corporation (NERC)
NERC develops and enforces mandatory reliability standards for the bulk electric system across the U.S., Canada, and parts of Mexico, with FERC oversight in the U.S.
Question 6: What is 'reactive power' and why is it relevant to energy procurement?
- Power stored in capacitors and released during peak demand to lower energy costs
- The component of electrical power that does not perform work but is required to maintain voltage levels in AC systems, often subject to utility charges (Correct answer)
- Power generated by renewable sources that varies with weather conditions
- The difference between contracted and actual energy consumption in a billing period
Correct answer: The component of electrical power that does not perform work but is required to maintain voltage levels in AC systems, often subject to utility charges
Reactive power maintains the magnetic and electric fields necessary for AC equipment operation; utilities often charge large customers with poor power factor for excessive reactive power consumption.
CEP CEP Grid Infrastructure & Transmission 2
What is the purpose of 'firm transmission service' in energy procurement?