[BETA] Fortnightly

"THESE ARE THE DOG DAYS OF DEREGULATION." That's how Federal Energy Regulatory Commission chairman James Hoecker put it last month in Houston at his luncheon talk at the Sixth DOE/NARUC National Electricity Forum. He bemoaned the "evidence of delay" in restructuring that now "clearly exists."

Don't be fooled. What Hoecker has up his sleeve is nothing less than a full-scale overhaul of FERC Orders 888 and 889. I could see no other explanation as I sat in the audience, listening as the chairman acknowledged that transmission markets are still plagued by discriminatory practices, in words that sounded very much like they could have come from John Anderson (at ELCON), Steven Kean (Enron), Kathryn Patton (Dynegy), or any number of other executives from power marketers or their ad hoc coalitions who have been complaining for some time now about abuses by transmission-owning utilities. Further evidence shows up on page 19 in the order of Sept. 16 approving the Midwest ISO, where the FERC promised a rulemaking "or other generic proceeding in the future" to address regional coordination.

Yet this sequel to Order 888 is destined not just to strengthen ISO formation or to rehash the transco-ISO debate, but to spark a revolution.

IT'S TRUE, OF COURSE, that last April the FERC held a public conference to examine the future of nonprofit regional independent system operators, which would control transmission still owned by utilities, and various alternatives, such as for-profit transcos, which would both own and operate the grid. In fact, as a follow-up to that April meeting, the commission held seven regional conferences at locations around the country between May 28 and June 8, 1998. These meetings addressed specific regional characteristics and institutional factors that bear on the formation of ISOs. Many ideas emerged, including models such as a "wireco" and the so-called "transco-lite." (A wireco is a for-profit wire-system manager that takes its operating instructions from an ISO. A transco-lite owns some, but not all, of the grid in a given region.)

Nevertheless, I believe Hoecker has left the ISO thing far behind. I say he has come 'round to a more complex idea - a vision of transmission as a commercial enterprise. If he hasn't, he should. No one has said it better than did the coalition led by Anderson's Electricity Consumers Resource Counsel, in the petition filed at the FERC on March 25 by attorney Jeffrey Watkiss: "The very concepts of load server and native load are anachronisms that should be replaced with the nomenclature of markets: seller and buyer." On Sept. 21, the Electric Power Supply Association weighed in with comments supporting the petition. And DOE Secretary Bill Richardson lent further support when, on Sept. 29, he authorized the FERC to divide the country into districts to promote regional coordination.

Can Hoecker achieve this new vision for transmission? Commissioner Massey, for one, seems on board, judging from his comments in Houston at the ISO breakout session, held in the next room right after Hoecker closed his luncheon talk. There's a catch, however, since the FERC lacks authority over public