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News Digest

Fortnightly Magazine - March 1 2000

guidelines proposed by the Federal Energy Regulatory Commission.

So in November, MISO proposed to add a new appendix to its agreement to allow an independent transmission company (ITC) to coexist as a second-tier entity within the ISO structure. It bent over backwards to invite a new ITC. It opened the door for the member companies of the proposed independent Alliance transmission company to join the MISO and retain its separate identity.

Then something went wrong on the way to the dance. It turned out that the Alliance companies weren't interested. But somebody else was. That somebody was Commonwealth Edison, which joined with IES Utilities, Interstate Power and MidAmerican Energy in mid-December to petition the FERC to form an ITC to operate within MISO.

AND COMMONWEALTH EDISON WOULD NOT PLAY SECOND FIDDLE. It would operate its own control area, manage grid congestion and arrange for supply of ancillary services. It would design an extensive system of incentives to attract more suitors and more investment. It would eliminate the long-held primacy of native load rights. Aren't those the things that the RTO should do? Pretty soon, industry wags started touting the ComEd transco as the new belle of the ball.

Enron fell in love: "[We] strongly endorse the petitioners' commitment to eliminate the native-load exemption."

Alliance was bemused: "[T]he Midwest ISO speculates that the Alliance Companies may wish to participate in the Midwest ISO. The Alliance Companies wish to comment on that speculation."

Dynegy preferred to wait till spring, for the RTO workshops: "[T]he timing of [the] proposal is such that if acted upon by the FERC now, it would be taken off the table in terms of the open and collaborative process."

But it came down to the American Public Power Association to explain what had happened, in its comments filed on Jan. 14:

"APPA believes that if approved, the ComEd et al. ITC proposal will ultimately result in the dissolution of the Midwest ISO as proposed and approved by the commission. Should MISO survive, it will become the mere titular king of its region, with symbolic, not real authority over various ITC fiefdoms."

MEANWHILE, MISO WAS STILL AWAITING APPROVAL of its Appendix I proposal to amend its ISO agreement and structure, filed Nov. 1 in FERC Docket ER00-448-000. When MISO announced its idea, many in the industry had called it "conceptual."

Representing a coalition of transmission customers, attorney Sam Randazzo urged the FERC to go slow: "In the absence of critical facts, the commission should refrain from any action in this proceeding that would prevent it from exercising the full scope of its powers in the future."

However, when ComEd filed its ITC proposal on Dec. 30 in Docket No. EL00-25-000, some apparently thought it too specific. Listen to Wabash Valley Power Association, in its comment filed Jan. 12:

"[T]he ITC proposal ¼ goes too far, too soon. ¼ The incentives proposed ¼ are excessive. ¼ Petitioners propose a 200-basis-point enhancement on return on equity for divestiture ¼ There has been no demonstration that such incentives are necessary."