In some states, transmission projects have slowed to a halt as regulators attempt to substitute their own need determinations for those of RTOs. The federal framework encourages cooperation, but...
A New Solid South
Where Entergy leads, will Wal-Mart follow?
but is taking a wait-and-see approach before his company revives its own single-company RTO plan.
"Do we have an RTO that the FERC chairman would like to see? No. Is the Entergy decision a step in the right direction that would accommodate something less than a mandated RTO of the chairman's design? Hopefully so," he said.
Ratcliffe believes there should be different RTO models that reflect the regional differences across the country.
"What we were optimistic about was that Entergy had proposed something that was directionally appropriate but not as cumbersome as a full-fledged RTO," he noted.
"We have to wait and see … the details that FERC actually decided as it becomes written. What are the ongoing requirements that Entergy must comply with in order to get FERC approval?"
But even if Ratcliffe likes what he sees in Entergy, Southern probably will not attempt to resurrect the old SeTrans RTO in single-company format.
"I think SeTrans is not going to be resurrected," he explained. "But there might be something in between SeTrans rans and where we are now. We've always said that we were willing to explore those ideas."
Also, Ratcliffe does not believe an Entergy-like RTO would be required necessarily to jumpstart a viable wholesale energy market in the Southeast.
"We already have one," he declared. "I would argue that the wholesale markets in the Southeast are open." In fact, Southern Co. has a financial target to achieve $300 million in earnings by 2007 from its unregulated division in the Southeast. This would mean the company would enjoy 15 and 20 percent growth per year in its competitive business for those three years, he said.
To be clear, 80 percent of Southern's earnings still come from its regulated business, but now almost 20 percent of Southern's earnings come from its unregulated business. Ratcliffe says Southern's unregulated customer base is made up of co-ops, municipals, and other utilities. Some in the investment community have questioned how long Southern can maintain such growth levels without a more competitive market to support the expansion of its competitive business beyond 2007. Of course, Ratcliffe strongly believes the growth in his service territory and in the surrounding region is enough to support his unregulated business in 2007 and beyond.
But what's sauce for the goose is sauce for the gander, and some industrial and commercial customers in the South (the Louisiana region specifically) believe the Southerns of the world should not be the only ones to benefit from increased competition. These industrials have been voicing their opinion lately in response to an independent study conducted last August into a limited industrial retail choice plan.
The study was conducted on behalf of the Louisiana Public Service Commission and several other stakeholders in response to concern by many that the state has been losing jobs and manufacturing to high-energy costs. According to the U.S. Department of Energy, Louisiana is currently paying the highest industrial electricity rates in the Southeast. The study projects hundreds of millions in savings, under two different scenarios. And to see why that's so