FERC Meeting on Northeast RTO

Northeast RTO Mediation Report

The Commissioners heard a report from the ALJ who presided over the Northea=
st RTO mediation. As you may recall, the Judge did not support our positio=
n (which was to get a single Northeast RTO up and running, with PJM leaders=
hip and based on the PJM system) by no later than November 2003 (the PJM pr=
oposal). As expected, the Judge reiterated his disagreement with the PJM p=
roposal and urged the Commission to take a "go slower" approach that includ=
es a minimum 12 month up-front assessment of technology and "best practices=
" determinations. =20

Pat Wood first questioned why the Board makeup should consist of existing I=
SO board members. He acknowledged that the existing ISO board members have=
experience but questioned whether the benefit of having their experience i=
s outweighed by the possibility of continued parochial interests that may b=
e retained by these board members. He thinks perhaps the board should be m=
ade up of totally new board members. Ironically, in the mediation only a c=
ouple of consumer advocate-types supported this type of approach. Everyone=
else believed that using the existin ISO board members makes more sense si=
nce they all have experience. We supported a board makeup weighted in favo=
r of PJM so that implementation of the PJM system would be assured. Pat se=
ems to think this presents too much of a political problem.

Pat also expressed concern that FERC not take action that would upset the e=
xisting, functioning markets. He said FERC should not force a result if it=
does not know what the outcome will be and could disrupt the existing mark=
ets. He questioned whether they should take a different, slower approach i=
n the northeast, perhaps putting some regional functions into place soon (e=
.g., interregional transmission planning and expansion) and put off other i=
ssues (a single real time balancing market) that may be harder to implement=
at first. Pat says that technology assessment is a big issue and can be a=
show stopper if it is not done correctly. Under the PJM proposal, the new=
RTO would form by the end of the year and would start market design (based=
on the PJM system) immediately. Doing an upfront assesment could delay im=
plementation significantly. He said perhaps some things can be done sooner=
than 18-24 months. If he is thinking that long-term is 18-24 months, then=
we could be okay because the PJM plan takes 24 months to implement. But, =
his statements on technical assessment are troubling and sound like he may =
be willing to delay the startup of market design until this takes place.

On the positive side, Nora Brownell reminded everyone that New York and PJM=
have very similar systems but they have a lot of problems working together=
and that these problems may be a hindrance to the developing retail market=
s. She seems to think that things cannot remain as they are.

Nothing was decided and it is unclear when FERC will issue an order in this=
proceeding. We will keep you posted.

Sarah