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Regulators' Forum: A Fight Over Market Design

FERC's attempt to standardize markets have some state regulators up in arms.
Fortnightly Magazine - November 15 2002

always look at cost-benefit type of issues. We're going to be looking at the very important role for states, even though we recognize that these markets are going to be much more regional in nature… We need to ensure that the state commission not only has a voice, but also has an independent, kind of elevated role in the SMD process…

Transmission obviously is a very, very important issue to us. In Michigan we also have loop-flow problems and other types of problems like that. We want to make sure we are at least setting a framework so that these issues can be resolved, albeit in a regional but nondiscriminatory nature for any particular state.

What do you think of FERC's increased assertion of jurisdiction over transmission in the SMD?

Michigan has played a crucial role not only on behalf of our individual state, but I am on both the Department of Energy's Electricity Advisory Board, and I am one of the co-chairs of the National Governor's Association (NGA) task force on electricity infrastructure… NGA is saying that because these markets are moving more towards a regional focus, that if you have a transmission issue that's either siting or planning that is regional in nature, then let the affected states work collectively to address that issue… States must be given a real opportunity to solve planning and siting issues collectively, other than FERC just coming in and taking over that authority. Actually one of the things we do like in the SMD is that FERC has recognized a very important regional dynamic here, and has gone a long way to supporting the NGA's call for these multi-state entities, and suggested that maybe these regional-state entities take on even more authority.

What is the future of electric restructuring in Michigan?

Overall we're very positive on it. Our market just fully opened to all customer classes this past January 1. Our legislation passed in 2000, and so far … we are moving ahead kind of cautiously and slowly… Right now our industrial customers are the most interested in switching. But our commercial customers are interested in switching, and we're even seeing that down to the smallest customers. Overall, statewide about six percent of the load has switched. A little smaller than we'd like, but it's going steady-there aren't major problems.

In a post-September 11 world, how is your commission handling utility security issues?

We have been working very closely with Michigan state police and with our affected industries. The governor of Michigan has set up a state homeland security entity. Measures are being taken-from basic measures to where do you put personnel at these big nuclear plants. New check-in devices-to all sort of other measures being taken to adequately address security. That's a very important issue for us because we do have several nuclear plants.

I am not as worried about pipelines. We just sited a very controversial pipeline in Michigan. Opponents tried to use the scare tactic that terrorists would try to target this heavily underground, heavily fortified pipeline… But the nuclear plants