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Fortnightly Magazine - May 15 2000

include, among other things, a cap of $72 million per year on costs shifted to the investor-owned utilities that would lose their preferred license-plate pricing, plus a another cost cap on the ISO's grid management charge.

So overall, Los Angeles and public power generally see no profit in Amendment 27. As SMUD says, "The ISO's proposed hold harmless provision, touted as a balm to cure misgivings about joining the ISO, falls far short of its intended goal. The numbers do not lie."

Los Angeles raises the bar high for Hoecker, the ISO, and any other RTO seeking to pull public power into the fold: "It is crucial to keep in mind why [for] Los Angeles and other GOUs, transmission costs are higher. It is not because GOUs have been inefficient or imprudent in constructing their transmission systems. The differential in transmission costs is primarily a function of timing.

"Much of this investment is of recent vintage, which results in higher transmission costs.

"Los Angeles will measure any proposed transmission rate method. First, there can be no net increase in costs in any year during the transition period due to participation in the ISO."

Lots of luck.

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