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MAPP, MISO & PJM: Three Regions Fight Over Wires, Prices and Profits

Fortnightly Magazine - February 1 1999

occurring, and PJM has not investigated whether or not such things are occurring, but the ability exists to make such things occur."

Bruce W. Radford is editor of Public Utilities Fortnightly.

Taken by Surprise? The ISO collaborative that wasn't.

The Agreement:

"Applicants agree to work cooperatively for the purpose of forming a regional ISO. ¼ [A]pplicants and MP&L agree [that] MAPP has the background expertise, experience ¼ and ¼ credibility ¼ to expeditiously implement an ISO."

Settlement agreement whereby Minnesota Power & Light Co. (as Minnesota Power Inc. was then known) agreed not to oppose Primergy merger if Northern States Power Co. and Wisconsin Electric would work to form an ISO. Filed Oct. 4, 1996, FERC Docket EC95-16-000.

The Squabble:

"Recently, representatives of Northern States Power have stated that NSP intends to vote against the proposed MAPP ISO and regional tariff; NSP is now publicly campaigning other MAPP members to vote against ¼

"Minnesota Power believes such actions by NSP can be viewed as a violation of its FERC-filed ¼ Settlement Agreement."

Letter, Sept. 10, 1998, from Donald J. Shippar, then senior vice president, customer service and delivery, Minnesota Power, to Anthony Schuster, director and vice president of transmission systems, Northern States Power Co.

The Breakup:

"Dear Donald:

"By now I'm sure you are well aware of our position on the proposed MAPP ISO and regional tariff. ¼ We are voting against ¼ because we think the ISO concept itself is fundamentally flawed.

"We've been working on what we think is a better proposal. ¼ Development of an independent transmission company has been under way for more than a year. [W]e believe it is gaining acceptance in many circles. We are recruiting partners and intend to file our application with FERC in 1999.

"I would be happy to discuss these concepts with you to determine whether the ITC can accommodate your needs."

Letter, Oct. 14, 1998, reply from Anthony G. Schuster to Donald Shippar.

Strung Along?

"I have since learned that NSP was actively working on the development of an ITC ¼ beginning in the fall of 1997. NSP's ITC activities were kept secret. In fact, I believe NSP's representatives on the MAPP committees were taken by surprise by the company's sudden repudiation of ISOs."

Affidavit of Stephen D. Sherner, senior vice president, energy sourcing, Minnesota Power Inc., filed Dec. 21, 1998, FERC Docket EL99-20-000.

Loss Leader? Cinergy sees revenues falling as a member of Midwest ISO.

Excerpts from testimony of Jon C. Procario, vice president, electric operations, Cinergy Corp., filed Dec. 8, 1998 in FERC Docket ER98-1438, supporting MISO request for 11.5 percent return on equity:

Q.

Please describe the financial risks associated with joining an ISO.

A.

There is a substantial risk of the loss of millions of dollars of transmission revenues.

Q.

Have you calculated a potential impact on Cinergy of joining the Midwest ISO?

A.

Yes. [T]he most likely figure is ¼

$8 million dollars [during the initial six-year transition period].

Q.

Are there other financial risks?

A.

Yes. Cinergy may be required to construct [transmission] facilities and