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Vintage, Voltage or Votes

AEP rekindles debate over grid pricing, but should the outcome hinge on majority rule?

Fortnightly Magazine - December 2007

allocation only) for all grid facilities, whether new or legacy.

In opposing the MSAT proposal to expand postage-stamp pricing in MISO, advanced by a group of three stand-alone grid companies, IPL explained:

“The commission also must be cognizant of the specialized business model that is reflected in the petition … based on the construction [of] facilities without corresponding responsibility for generation, distribution or retail customer service. Thus, to the extent capital costs can be passed to customers beyond the footprint in which a local facility is being constructed, the business model is facilitated.”

These comments would suggest there is something wrong with the idea of a transmission-only utility, or that transmission can serve as a profit-making sector. And yet FERC’s policy direction so far has sided clearly with the majority. Call it rate-making by head count. By any measure, FERC so far has left scant room for a viable business model keyed only to the building of transmission lines.