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New Analysis

The ISO forges ahead, with or without its members.
Fortnightly Magazine - February 15 2001

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Six members announced in December that if the FERC were to grant permission to Dynegy, Exelon, and Ameren to leave MISO, then they would leave too (but not otherwise). In a Dec. 19 filing with FERC, the six-Hoosier Energy, Cinergy, Southern Indiana Gas & Electric, Wabash Valley Power Association, Central Illinois Light Co., and Southern Illinois Power Co-op-asked permission to withdraw from the MISO effective the same day FERC authorizes the separating companies to leave. (.)

Using the same argument, Louisville Gas & Electric Co. and Kentucky Utilities Co. soon followed, filing with FERC a request to withdraw from the ISO and be allowed recovery of related costs. (The merger of the operating utilities' parent companies, LG&E Energy Corp. and KU Energy Corp., was conditioned on participation in the MISO, and in the merger order the FERC said any request to withdraw would be evaluated based on impact on competition in the Kentucky Utilities Co. destination markets.)

But MISO claimed that any member seeking to withdraw should be required to propose mitigation measures to abate any degradation to system reliability and market efficiency. MISO pointed out that if its corporate organization is a factor motivating departure, then its form can be changed. That might be done, said the MISO, through actions such as its transformation into a for-profit entity or an umbrella transmission coordination entity—the Midwest Transmission Coordinating Authority.

According to MISO, Exelon's ComEd subsidiary was the cornerstone. "Blasting a hole in the MISO does not propel the public interest standards forward in the context of scope and configuration," said the ISO. It put the blame squarely on ComEd, stating that its decision to withdraw "has created an environment for many other transmission owners to announce their departures solely as a protective measure for themselves and their customers." MISO also named other utilities it said were reassessing plans to join the ISO due to the uncertainty—Southwestern Public Service Co., UtiliCorp, Dairyland Power Co-op, Great Rivers Energy, Otter Tail Power, and Minnesota Power.

Meanwhile, on Jan. 24, with Commissioner William Massey dissenting in both cases, the FERC by votes of 2-1 issued two orders relevant to MISO. First, it approved a compliance filing by the Alliance companies, finding that Alliance met the scope and configuration requirements under Order No. 2000 (). Second, it deferred action on the request by Illinois Power to leave the MISO (). Instead, FERC wants one last effort for the parties to negotiate a settlement, and allowed them one month before a settlement judge to work things out before FERC issues a ruling. Newly appointed FERC chair Curt HŽbert, when queried after the meeting, made clear that if it were up to him, he would allow Illinois Power to withdraw from MISO because he believes RTO membership should be voluntary.

Commissioner Massey dissented on the scope and configuration of Alliance, calling it "shaped like a stretching snake" and that his "worst fear" had been realized because the order stresses seams management rather than scope and configuration. But Hébert disagreed, and said that the Alliance order "does not find