RTO Orders - Grid South, SE Trans, SPP and Entergy

The Southeast RTO orders are out and have followed through with what we
expected from the discussion at the FERC meeting.

The SPP and Entergy RTO proposals have been rejected because they fail to
satisfy the scope and configuration requirements of Order No. 2000. The
Commission notes that the required discussions between SPP and Entergy and
its neighboring RTO/TOs has led to no increase in the original scope and
configuration. The filings by SPP and Entergy were brief, indicating only a
lack of interest by other RTOs or utilities in joining to enlarge scope; they
failed to specify any details of the talks, what changes could be made or
what could be fixed to accomodate combination with other RTOs. The order
states that the Commission favors the development of large, regional
transmission organizations reflecting natural markets. The Commission
indicates that they favor four RTOs - NE, SE, MW and West. Therefore the
order requires the participants in SPP and Entergy to participate in
settlement discussions as set out in the mediation order. Note that these
meetings will start next Tuesday, July 17 before a FERC ALJ.

The Southern Company RTO is also found by the FERC to fail the scope
characteristics of Order No. 2000. The order finds that Southern's approach
to focus on MOUs and seams issues with its neighbors is inadequate. The
order states, "We reiterate: the Commission's goal is to have a single RTO in
the Southeast, and to have that single RTO operational as soon as possible."
The Commission recognizes that start-up costs in forming a larger RTO may be
more, but that over the longer term, large RTOs will foster market
development, will provide increased reliability and will result in lower
wholesale electricity prices. The order therefore directs the parties to the
mediation as stated above.

The Grid South participants are also directed to the mediation which is
starting on next Tuesday. It is a lengthier order with more details on other
aspects of RTOs, including Independent Board requirement, congestion
managment, interconnection procedures, planning process and CBM. Therefore,
I am attaching a summary of the order. One of the important findings of the
order is that GridSouth is not sufficiently independent; the Applicant TOs
are making policy decisions that should be made by an independent board.
Therefore, the order requires GridSouth to install an independent board and
file a compliance filing within 90 days.

If anyone wants copies of the orders, let me know.