Alliance order

At yesterday's FERC meeting the Commission voted out an order in the Alliance
RTO proceeding. This is another example how the new Commission, changed with
two new members, can put more teeth in the RTO process. The order requires
Alliance to establish an independent board to make all the business decisions
for the RTO until final approval for the RTO is granted. Further, the order
directs that a stakeholder advisory committee should advise the independent
board. FERC is concerned that business decisions prior to implementation of
the Alliance RTO are made solely by the Alliance Companies. The order
directs Alliance Companies to decide which alternative business plans they
intend to implement and file with the FERC within 45 days.

Commissioner Massey issued a concurrence with the order in which he argues
for the establishment of a mediation proceeding (like Northeast and
Southeast) to direct the two RTOs - Alliance and MISO - to work to develop a
single Midwest RTO. Though Massey did not get any other votes for this
process now, Commissioners Wood, Brownell and Hebert, seemed to support the
objective of single regional RTOs in the four main regions of the country,
including NE, SE, MW and West.

Although no commitments were made, it is quite possible that FERC will order
a mediation-type proceeding (as in NE and SE) if the Alliance RTO does not
expand its scope in the near future.

Attached is a summary of the order.