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Electric Transmission: Do State Regulators Still Have a Voice?

Fortnightly Magazine - November 15 1999

appears to require utilities to take actions that extend far beyond the 'interconnection and coordination of facilities' that the FERC is permitted to encourage."

The PSC adds that once an RTO was formed, the FERC policy would force utilities to give up significant rights "normally associated" with transmission ownership, "including section 205 rights to file for changes in rates, terms, and conditions of service."

The Alabama PSC fully endorses the Florida argument. South Carolina reiterates many of the same concerns.

The West. RTO formation in the Western Interconnection is complicated by the presence of federal and other public power marketing agencies, like the Bonneville Power Administration, that are not subject to FERC jurisdiction.

These agencies appear sensitive to the transmission cost shifting that may flow from postage-stamp pricing that assigns a single transmission access price to a broad region. Thus, state PUCs in the West tend to favor zonal license-plant access fees, whereby users pay rates reflecting embedded-cost investment in their own control areas. The Washington Utilities and Transportation Commission typifies this view:

"Coming from a state with both high- and low-cost transmission providers, we are concerned about the self-serving recommendations of those parties who stand to gain the most from advocating mandatory RTOs that ignore historical net transmission costs and the way the system was developed."

In fact, the Wyoming PSC goes so far as to suggest that benefits of RTO formation are uncertain at best because the West already is integrated into a single wholesale market.

Several Western PUCs, including Nevada, Idaho and Washington, urge the FERC to clarify that it will accept a so-called "RTO-Lite," such as an independent scheduling administrator (ISA). (An ISA simply monitors the scheduling decisions of current TOs and offers dispute resolution service.) In fact, the Nevada PUC set out standards for a grid ISA in an order it issued last winter. The Nevada PUC adds that as of early fall, it was reviewing the Mountain West ISA proposal filed with the FERC by Nevada Power Co. and Sierra Pacific Power. See Nev. PSC Docket 97-8001, Feb. 1, 1999 (setting ISA standards), and FERC Docket EC99-100-000, filed July 29, 1999 (the proposed Mountain West ISA).

Meanwhile, the heavy dependence on hydroelectric power in the West colors the view of PUCs, as their states rely more heavily on transmission systems to import power during low-water years. Thus, PUCs in the West tend to favor more protection of native load rights.

In its RTO comments, the Idaho PUC complains that the FERC rarely mentions the term "native load" in the RTO NOPR, and even then sometimes in a dismissive manner. Idaho urges the FERC to remember the May 14 decision in Northern States Power v. FERC (8th Circuit, 176 F.3d 1090).

Idaho acknowledges that utilities should not "glibly" cite native load needs when denying transmission service, but then warns that "certain states clearly still feel the burden of paying close attention to the needs of native customers."

Texas. The Lone Star State stands as a region unto itself. The state PUC shares some of the philosophy of