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News Analysis

With power markets now regional, the Pacific Northwest ponders responsibility for blackouts and outages.
Fortnightly Magazine - March 15 2001

limitation would affect the ratepayer, as well as TransConnect LLC, the independent transmission company that would operate within the RTO.

Lincoln Wolverton, consultant to ICNU, calls the agreement a "blanket prohibition against liability." The agreement, Wolverton says, seems to clear RTO West and the utilities of liability in cases of negligence. "The language was too restrictive," he says.

But again, the utilities argue that they are just trying to maintain the status quo. Tariff limitations of liability, they say, have generally shielded utilities from liability to customers for service interruptions, except in cases of willful misconduct or gross negligence, and that's a good thing—even for the end-user, because it keeps rates low. Furthermore, the courts have recognized that "the customers most vulnerable to interruptions are in the best position to protect themselves through back-up generation." In other words, the industrial users for whom ICNU advocates should be somewhat responsible for their own power quality.

According to the utilities, in today's litigious environment, not limiting liability, in fact, could spell disaster: "[G]iven the imagination and resourcefulness of today's litigants and absent tariff protection damages resulting from a single interruption of service event could result in plaintiffs owning the utility or the imposition of astronomical rates to recoup liability payments."

Finally, say the utilities, imposing the bulk of liability on electric providers not only will increase the cost of electric service, but "may well render insurance unavailable at any cost." A Jan. 16 response by ICUN states that RTO West's later filing contains no "substantive changes to the four main documents," including the agreement limiting liability.

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