Reuters:FERC gives states role in RTO formation

Jim - Is this purely political or is the FERC giving the states "real" authority?

Thanks - Jeff
---------------------- Forwarded by Jeff A Brown/HOU/EES on 10/29/2001 07:43 AM ---------------------------

"Dick S George" <dsg47@earthlink.net< on 10/28/2001 09:19:07 PM
To: "DS George" <dsg47@earthlink.net<
cc:
Subject: Reuters:FERC gives states role in RTO formation

CC list suppressed...
The battle to determine which form reduces cost and who's
study we are to believe the Marketer's or the State's
rages on...dsg
FERC to give states a role in RTO formation

By Chris Baltimore (Reuters) WASHINGTON, Oct 24 (Reuters)

U.S. federal energy regulators on Wednesday pledged to
create a new body to cooperate with state officials on the
planning of regional transmission grid combinations after
complaints that they were left out of the process.

The Federal Energy Regulatory Commission, which oversees
the country's power grid operators, has ordered utilities
in the Southeast, Northeast, Midwest and West to combine
their assets into a handful of regional transmission
organizations (RTOs) by the end of the year.

The agency has pushed hard to create the RTOs to avoid a
repeat of the power crisis in California last winter, in
which the antiquated U.S. grid prevented more power from
flowing into the state.

FERC commissioners acknowledged on Wednesday that some
changes were needed to address criticism from state
utilities regulators that they were left out of the RTO
rule-making process.

STATES GET SEAT AT THE TABLE

FERC Commissioner Nora Mead Brownell, a former
Pennsylvania regulatory official, proposed creating a
regional council that would share authority between FERC
and states on setting RTO policies.

Citing states' confusion about FERC's direction and
inconsistent internal agency communication, Brownell, in a
memo to commissioners, said the council "can provide the
necessary flexibility that we will likely need moving
forward to RTO formation."

The request was made by David Svanda, commissioner of the
Michigan Public Service Commission, on behalf of six other
Midwest states at FERC's workshop on RTOs last week.

The move is "a ceding of jurisdiction ... to state
regulators for us to co-govern the process with them,"
FERC Chairman Pat Wood told reporters after the meeting.
Wood previously headed Texas' state utility regulatory
agency.

Of state commissions, Wood said "they need to be invited
with a nice seat at the table, not just standing at the
door taking tickets."

COST-BENEFIT ANALYSIS PROMISED

FERC also promised to prepare a formal cost-benefit
analysis of RTOs for states and consumers, after some
states raised concerns that the costs did not justify the
benefits. The agency did not say when the study would be
completed.

On Tuesday, the New York Independent System Operator (ISO)
released its own cost-benefit study, which asserted the
creation of a large Northeastern RTO could boost consumer
power bills by some $90 million a year.

The non-profit New York ISO would also be put out of
business by a regional for-profit RTO.

However, a separate study issued last month by energy firm
Mirant Corp , a supporter of RTOs, concluded that a
Northeastern RTO would save consumers $440 million
annually.

At the meeting, FERC commissioners heard staff
presentations on RTO development progress in the
Southeast, Northeast and Midwest.

But few new details emerged on the ultimate direction FERC
will take in guiding utilities.

Wood said that more specifics would be available at the
next meeting on Nov. 7, just a month ahead of FERC's Dec.
15 deadline for RTO membership.

Under FERC's plan, the RTOs would be for-profit groups in
the U.S. Northeast, Midwest, Southeast and West. Each
region would combine public utility transmission
facilities to provide open access, more reliable power and
lower rates for consumers.