Electric Transmission: Do State Regulators Still Have a Voice?

Fortnightly Magazine - November 15 1999
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How the FERC's RTO case has split the PUCs into five warring factions.

With momentum building for competition in retail energy markets, and with the real authority seeming to shift to the federal government, do regulators at the state public utility commissions (PUCs) still have a voice in setting policy for the electric transmission grid? After all, the Federal Energy Regulatory Commission enjoys exclusive jurisdiction over interstate transmission service. That's the one major utility sector likely to remain heavily regulated for some time.

Even so, some state PUCs appear to be gaining a measure of turf in the transmission sector. That is occurring as state legislatures pass new restructuring bills that purport to grant authority to PUCs to review the conditions by which utilities may transfer their transmission assets to new grid institutions, such as ISOs (independent system operators) and transcos (independent, for-profit transmission companies).

This surprising trend emerges from comments filed by state PUCs late this summer and in the early fall in Docket RM99-2-000. In that proceeding the FERC set guidelines, structures and functions for regional transmission organizations, also known as RTOs.

Consider the states of Ohio, Virginia and Wisconsin. Each has passed a law requiring jurisdictional electric utilities to transfer control of transmission facilities to a regional transmission entity (RTE), which might operate as an ISO or a transco. These laws are drafted in a way that will require state regulators eventually to pass judgment on the qualification and attributes of the new state-mandated ISOs or transcos, even as the FERC proceeds to set its own benchmarks for federally regulated RTOs.

Conflicts are bound to arise.

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