[BETA] Fortnightly

Six midwestern utilities have agreed to establish an independent system operator (ISO) to ensure nondiscriminatory open access to their combined bulk-power transmission systems.

Plans for the "Midwest ISO" should be filed at the Federal Energy Regulatory Commission (FERC) late in 1996. Members include American Electric Power Co. (AEP), Centerior Energy Corp., CINergy Corp., Detroit Edison Co., Northern Indiana Public Service Co., and Wisconsin Electric Power Co. Together they own 38,830 miles of combined transmission lines, and service 106,350 square miles in eight states. The core companies plan to invite transmission owners in the East Central Area Reliability Council, and Mid-America Interconnected Network to join the Midwest ISO.

The utilities are forming working groups to develop protocols on operations, administration, planning, pricing, management structure, and dispute resolution. Ownership of transmission facilities would not transfer to the ISO, but would stay with the utilities.

According to Standard & Poor's (S&P), the Midwest ISO "has been fathered by low-cost producers, AEP and CINergy, and appears to be consistent with FERC's goal of a nondiscriminatory open access transmission system." S&P notes that AEP has supported a one-price, regional transmission rate plus congestion pricing and the elimination of rate pancaking (em a package that would benefit low-cost electric generators. S&P believes that high-cost producers such as Centerior and Detroit Edison joined simply to take part in system development. It predicts that agreement may prove difficult and time-consuming because the group includes utilities with such different cost structures and financial profiles.

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