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The Regulators Forum - States to Feds: Don't tread on Me

How far do states rights go in transmission planning?
Fortnightly Magazine - November 15 2003

1980s we have allowed large customers of local distribution companies to purchase their own gas supplies and have the gas utility transport that gas. More recently, we have lowered the thresholds to permit all nonresidential customers the right to purchase gas and seek transport.

F: Now that it appears FERC's standard market design is diluted and delayed, in what direction do you think FERC should move with SMD?

LAJ: We have filed a number of comments with the FERC in response to the SMD. For the most part, the Florida PSC believes that the SMD was overly intrusive into areas of state jurisdiction and used a command and control approach to creating RTOs that was not necessary. The voluntary approach with regional flexibility as originally articulated in Order 2000 seemed to be a more productive strategy to achieve the desired result. Thus, the SMD and the resultant pushback from a number of Southern and Western states have resulted in the FERC issuing the White Paper, which indicates more sensitivity to state concerns about regional differences, different market designs, and greater flexibility on startup schedules.

The comments we heard at our regional workshop in Tallahassee suggest to me that the FERC is responding to the concerns expressed by many states. It appears this new direction will be more reflective of state/federal collaboration. Clearly, the creation of regional state committees in overseeing regional transmission organizations would be an important venue for states to share regulatory oversight with the FERC in an organization that has aspects of both state and federal jurisdiction. This new approach is, in my opinion, more likely to result in voluntary participation by utilities and a greater willingness of some reluctant state commissions to look favorably upon the establishment of RTOs.

F: What is the issue of most concern in Florida?

LAJ: As I stated earlier, the Florida PSC is charged with ensuring an adequate and reliable supply of energy to meet the needs of Floridians. That responsibility requires us to be concerned with balancing reliability and rates. Fortunately, Florida's electric utilities are not experiencing any type of crisis situation. Historically, our rates have been at or below the national average. We have been able to construct infrastructure in a timely manner in the face of exponential growth of customers and demand, and the more cautious approach we have taken with respect to moving toward competition has served us well.

Having said this, there are some generic utility issues that are on the radar screen. First, Florida is becoming increasingly dependent on natural gas for electric production. We currently get about 25 percent of our generation from natural gas. Within 10 years this figure is expected to be almost 50 percent. Given some issues of both supply and volatility, we need to always be cognizant of the need for fuel diversification. Second, infrastructure siting and construction have created some minor issues in the past, but with continuing development and population growth, these kinds of projects will be increasingly difficult to site. Finally, as regulators we must always be mindful of the

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