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Electric Transmission: Do State Regulators Still Have a Voice?

Fortnightly Magazine - November 15 1999

New England ¼ would be costly and could destabilize the evolving market."

Another problem arises: The New York and New England ISOs appear to fail the FERC's RTO standards because other parties (transmission owners in New York; NEPOOL in New England) can unilaterally modify the ISO transmission tariffs. The New York PSC suggests that the FERC should carve out a safe harbor exemption to allow such changes if utility transmission owners (TOs) have no other choice to collect their embedded-cost revenue requirement. The New England PUCs offer a different solution. Building on ideas noted in other comments, they suggest that TOs would lease their capacity to the RTO. The RTO would repackage the capacity to customers in a sort of submetering arrangement under a single RTO tariff. According to the New England comments, the TOs would still be free to file unilateral tariff changes, with their single customer being the RTO.

The Midwest. The Illinois Commerce Commission typifies the views of many PUCs in the Midwest - that the FERC should mandate RTO participation and perhaps even draw the RTO boundaries. This view has emerged because the Midwest states are caught in the middle of disagreements between the Midwest ISO and the proposed Alliance transco. That schism threatens to balkanize transmission markets in the Midwest with two RTOs, neither of which would cover a fully contiguous area. Even with two RTOs, many sections of the Midwestern grid would likely remain outside of RTO operations.

As Illinois explains, the FERC's voluntary "minimalist approach" is "not sufficient" to obtain RTO objectives. And in Ohio - virtual ground zero for the RTO debate - the PUC appears even less charitable in its evaluation of the FERC's voluntary approach:

"By asking companies to either file RTO proposals or a description of efforts to participate in an RTO, the FERC is begging for companies to game the system."

In Wisconsin, the PSC urges the FERC to devise a very large RTO that would embrace both the MAIN and MAPP reliability councils (the Mid-America Interconnected Network and the Mid-Continent Area Power Pool). Wisconsin stresses that a single broad market would iron out differences between MAPP and MAIN over reliability standards and operational protocols: "[A]n efficient independent market in the Upper Midwest will not and cannot exist until an RTO that incorporates both MAIN and MAPP is formed."

This Wisconsin view reflects concern over the state's isolated peninsular transmission grid, but would place the highly constrained and bottlenecked MAPP/MAIN interface at the heart of the RTO area. Here, Wisconsin seems at odds with the more common view from the Ohio PUC that "congested and bottleneck facilities should be located at the boundary of an RTO."

The Southeast. The Florida PSC appears to have taken the lead for the Southeast PUCs. In its comments, it offers what is essentially a legal brief to argue the case that the FERC lacks jurisdiction to force utilities to cede control of their transmission assets. Florida claims the FERC cannot rely on Federal Power Act sec. 202(a) for authority to mandate RTOs.