Professor Mark T. Williams goes in depth on the TXU leveraged buyout.
the current state of industry restructuring, we think this is the best situation.
Joint planning is essential. The best expansion plans in the world will remain just that if they are not implemented. By ensuring that TRANSLink as an owner and operator leads the planning process in its region, the process ensures that the least-cost system solutions will be explored and implemented. Siting and land acquisition are significant costs of grid expansion. Since TRANSLink will be accountable for construction and grid investment and will derive income from timely grid expansion, it has an incentive to explore and promote alternatives that are the easiest and least expensive to implement.
Key Benefit 3: Efficient and Cost-Effective Operations and Maintenance
A large part of the transmission business is in the control system operations that maintain and preserve short-term reliability and employee safety. System control operators are responsible for managing and monitoring the grid on a near-term and real-time basis and developing and directing the operating guidelines and switching rules that preserve reliable and safe operations. Under the FERC order, TRANSLink also will be responsible for scheduling transactions over its system and will provide certain ancillary services.
At TRANSLink, these short-term reliability functions will be performed or, in the case of the public power entities, directed by TRANSLink to ensure independence. TRANSLink's operations will be subject to the oversight of MISO/SPP as the super-regional reliability coordinator to ensure that TRANSLink's operations do not impair reliability on neighboring systems, and vice versa. MISO/SPP also will provide oversight of TRANSLink's operating protocols and will be responsible for supplying ancillary and congestion management tools necessary to enable the market. As in the case of planning and expansion, this functional split will allow TRANSLink to retain significant control over the grid it owns and operates, which is in the public interest.
Perhaps the best example of how an ITC promotes efficiency is TRANSLink's proposal to consolidate five of seven control areas currently in its region into one. Control area consolidation is cost effective and efficient in several respects. First, by expanding its control area, TRANSLink will increase the size of the energy-balancing region of the generation and load it serves. This will promote greater generator diversity, increase reliability, maximize useful transmission capacity and facilitate Standard Market Design.
Key Benefit 4: Product and Service Innovation
In its FERC filing, TRANSLink proposed an innovative rate design that addresses many of the cost-shifting issues that have bogged down debate over moving from individual utility to regional transmission tariffs. The FERC has yet to approve that rate-design proposal. TRANSLink's proposed rate design is intended to reflect both the local and inter-regional purposes of the grid and to ensure fair allocation of expansion costs among generators and load. The TRANSLink proposal avoids regional Balkanization by limiting its use to transactions that begin and end on its system, and by providing reciprocity with the MISO/SPP tariff. TRANSLink hopes the FERC will approve its rate design proposal.
As TRANSLink moves forward, it will continue to look for opportunities to add value for its customers. Under the FERC's