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Flexibility is key as FERC moves toward a final rule.
Fortnightly Magazine - April 15 2003

key reason is the uncertainty that the ever-evolving nature of the SMD proposal has created.

Although the commission has made positive statements in several RTO orders that it will not overturn decisions already made, how the commission will interpret what is finally decided and what is open to change remains uncertain. The commission should make clear that approvals already obtained will not be overturned when it issues the final SMD rule.

Include Non-Jurisdictional Facilities

Finally, the commission should take all available steps to ensure that non-jurisdictional utilities (municipal, cooperative, public utility district, and federal power marketing agencies) participate in RTOs. Non-jurisdictional utilities also should meet the same SMD obligations imposed upon jurisdictional utilities. Regional wholesale markets and key SMD features such as resource adequacy and regional transmission planning simply won't work if a significant segment of the generation and transmission capacity can choose to sit on the sidelines.

A strong reciprocity obligation is fundamental to promoting strong, inclusive regional wholesale energy markets. This is especially important in the West, where non-jurisdictional entities-large federal and state government-owned utilities-control the majority of the transmission and generation.

In addition, non-jurisdictional entities, some of which are among the largest market participants in their respective regions, should not be able to gain a competitive edge by taking advantage of competitive markets while not assuming some of the obligations that go along with making these markets work.

Although we hope that non-jurisdictional utilities will voluntarily agree to participate in RTOs and urge the commission to promptly approve any such reasonable RTO agreements, the commission must enforce a strong reciprocity obligation.

As the SMD rulemaking process moves toward its conclusion, EEI looks forward to working closely with the commission, policy-makers from the states, and all other stakeholders on creating an efficient and robustly competitive wholesale electricity marketplace.

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