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Fortnightly Magazine - May 15 2000

restructuring law, gave the ISO two years after startup to revisit the question.

Now the ISO is trying to do just that. It is trying to revamp its entire pricing scheme to achieve that original goal of a simple, single gridwide postage-stamp price for access to the transmission network. At the same time, the ISO wants to phase in the change in such a way that it offers an incentive for some of the big municipal government-owned utilities (GOUs) out West to consider joining the managed grid. One of the those big munis is the Los Angeles Department of Water and Power. But L.A. is having none of it.

When the ISO's governing board of independent stakeholders met in March, it voted 16-5 to adopt Amendment 27. But, as the LADWP points out, "Every GOU representative on the ISO governing board [four out of four] voted against the proposed access charge a unanimous rejection."

BACK EAST, ON APRIL 27, ALL FOUR SITTING FERC COMMISSIONERS WERE TESTIFYING before Sen. Frank H. Murkowski's Energy and Natural Resources Committee. They were weighing the relative merits of some eight separate pieces of federal legislation, including the Republican bill, S. 2098, and the offer from the Clinton Administration, S. 1047. While commissioners Massey, Breathitt, and Hébert each offered something different, none of them disagreed with Chairman Jim Hoecker's call for congress to help the FERC bring public power into the arms of the managed grid.

Said Hoecker, "Because our jurisdiction over [public power] transmission-owning entities is limited, approximately one-third of the nation's integrated transmission grid is beyond the reach of Order 888's open-access requirements.

"While I am pleased to say that a number of [public power] utilities such as the Bonneville Power Administration and the Western Area Power Administration have voluntarily offered transmission services under FERC-approved open-access tariffs, many others have not."

But now consider what it would mean for the city of Los Angeles to join the California ISO under the ISO's new rate plan in Tariff Amendment 27.

Like other municipal utilities, Los Angeles came late to the transmission game. Its transmission lines on the whole are much newer than those of the investor-owned utilities, and thus tend to be more expensive.

In fact, Los Angeles is the largest participant in some of the most recent high-voltage transmission lines constructed in California--the Mead-Adelanto, Mead-Phoenix, and Southern lines--rated at 500 kilovolts. Because of these additions of high-voltage transmission lines, Los Angeles controls and pays for approximately 25 percent of the total transmission import capacity into California, while serving approximately 10 percent of the load. Thus, Los Angeles has the greatest amount of unused transmission capacity into California.

Now you might think L.A. would like the idea of throwing those high-priced lines into the HVAC pot, and paying a cheap grid-wide average access charge in trade. But the ISO's TAC plan would stretch out the phase-in to 10 years, delaying benefits to Los Angeles. Meanwhile it would offer a complex web of "hold harmless" safeguards to current ISO participants to protect them from cost-shifting. Those safeguards would