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Fortnightly Magazine - December 1999

but the 1996 Act does not mandate perfection." CC Docket No. 99-295, filed Oct. 19, 1999 (F.C.C.).

Yet the New York attorney general was not convinced.

"While the areas of deficiency are few in number, they are great in consequence," said Spitzer in his reply comments filed Nov. 8. Among other things, Spitzer stressed the high percentage of loop orders from competitive local exchange carriers (CLECs) that Bell Atlantic had to process manually. On this point Spitzer won agreement from the U.S. Department of Justice, which also cited manual processing in opposing certification of local competition based on the current record.

As the DOJ noted in its evaluation, "Heavy reliance on manual processing unnecessarily increases CLEC costs and creates a significant risk [of] ¼ service problems when order volumes substantially increase."

Added Spitzer, "We agree ¼ that the 'perfect' should not become 'the enemy of the good,' but in critical areas, Bell Atlantic is starkly not providing nondiscriminatory access."

IN ENERGY, THE FOCUS IS ON THE SEAMS BETWEEN MARKETS. Will it prove easier to coordinate transactions between several different regional transmission organizations (RTOs)? Or will the FERC find it more convenient simply to merge a few small RTOs into one large grid operator?

At the conference in Albany, Hoecker used every opportunity to threaten FERC action, suggesting that the PJM, New York and New England ISOs "should be allowed to become bigger." In other words, said Hoecker, "It is difficult to know whether addressing seams issues is the optimal solution as opposed to seriously reassessing the bounds of existing markets."

One anecdote in particular seemed to capture Hoecker's imagination. He cited RTO comments filed by The Southern Company that claimed that a customer wanting to transmit power 500 miles from Boston to Washington, D.C., would pay $14 per megawatt-hour for transmission across the three ISOs, v.s. $3 for 500 miles across Southern's grid system. Hoecker added, "The test of your success will be better rates [and] lower transaction costs across the Northeast."

Mollie Lampi, a conference attendee from the Pace Energy Project, saw coordination between ISOs as a "real positive move," since she believes the Northeast is simply too large for a single control area. Engineer Richard Felak disagreed, seeing a mega-RTO as possible, "with the proper timing, ground rules and infrastructure." Harvard Professor William Hogan noted that a single mega-RTO in the Northeast would carry a larger megawatt load than the entire Western Interconnection, which could be either good or bad in the long run.

"There may be long-run benefits," Hogan acknowledged. "In the short run, however, there is little doubt that an attempt to merge the three areas would set the process back for years. Far more important is to get the basic market design right in each region."

By contrast, an anonymous source at Albany (representing the power producer and marketer segments) feared that state interests might unite to defend balkanized markets and stave off any FERC-induced broadening of grid boundaries.

"I see serious political barriers to the idea of New York, PJM and NEPOOL moving closer together," the