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The Rules of the Grid: Transmission Policy and Motives Gehind It

Making sense of RTO Week, the mediation talks, and FERC's promised new rulemaking.
Fortnightly Magazine - December 2001

a modular manner ... the analytic engines 'plug in' to the framework. ...

"These factors that make changes so burdensome in New York are possibly contributing to some of the perceptions by the New York ISO that it is difficult and risky to pursue a path such as the RNMC plan. ..."

At the New York ISO, decision making is shared explicitly by a stakeholder Management Committee that works in tandem with the ISO board. Modification of New York ISO tariffs under the Federal Power Act requires approval of both the ISO board and the Management Committee. And in New England, the ISO works as a matter of contract on behalf of the participants committee of the New England Power Pool (NEPOOL). Such practices were made plain by a group of municipal utilities from New England:

"The most direct way to ensure RTO accountability is to continue to accord decisional rights to RTO stakeholders, including determining whether to make Section 205 filings.

"New England stakeholders have held such rights under the 'sector' voting structure contained in the FERC-approved Restated NEPOOL Agreement."

By contrast, the big power producers and marketers argued that stakeholders must play an advisory role only, with no decisional authority over the filing of tariffs. But the municipal utilities answered from New England:

"Keeping consumers away from the negotiating table," they said, "but expecting them to pick up the tab ... is a recipe for poor decision making and litigation."

Independent Transcos. Even some transmission owners found themselves on opposite sides. Consider, for example, the proposal by more than a dozen electric utilities in the Northeast, including National Grid, representing almost 70 percent of investor-owned grid assets in a new combined Northeast RTO, to create a so-called "independent transmission company" (ITC), operating across 13 states on the eastern seaboard. This group, known as the "ITC proponents," also has engaged in discussions with Hydro One Inc., the owner of most of the transmission system in the province of Ontario. The proponents opposed any idea to give tariff-filing authority to a transition-stage board of directors created to form a new combined NERTO. Presumably, such authority would remain with the owners during the transition.

By contrast, a group of transmission owners within PJM remained leery of granting too much power to an ITC: "Having sat through every day of the mediation process," they saw "many questions left unanswered" about the plan proposed by National Grid.

The PJM owner group talked of one approach by which an ITC might "own or operate the Northeast RTO's entire electric system and exercise all functions of the Northeast RTO other than market administration." The PJM group said it preferred a different construct-an ITC that would own and maintain grid facilities, but leave it to the RTO to be the system operator, service provider, and administrator of market, tariffs, the generator connection queue, and the planning function."

In the end, it fell to the Maine Public Utilities Commission (PUC) to offer the most sanguine advice, urging everyone-and especially the FERC-to keep focused on markets, not interest groups: "In