By the OGJ Online Staff
HOUSTON, Mar. 15�Federal regulators Wednesday rejected Southern Co. Services Inc.'s proposed regional transmission organization (RTO) and provisionally approved GridSouth, the for-profit regional system proposed by Duke Energy Corp., Carolina Power & Light Co., and South Carolina Electric & Gas. Co.
In its order, the Federal Energy Regulatory Commission directed the organizations to file responses by July 13. It asked Southern Co. Services to submit a report on its progress in forming a Southeastern RTO and GridSouth on its success in expanding the scope of the proposed RTO.
FERC said it rejected the proposal by Southern Co. Services because the vast majority of total transmission load would not have been under the RTO's tariff, operation, or direction�a violation of the agency's RTO rules.
Southern Co. and its operating subsidiaries of Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric made up the RTO. Under the proposal submitted to FERC, individual operating companies of Southern Co. would have retained ownership of the transmission lines. Other utilities that agreed to participate could also retain ownership of their lines or could lease or sell those facilities to the RTO.
In December 1999, FERC issued Order 2000 which called on all transmission owners to join an RTO�umbrella organizations that bring all public utility transmission facilities in a region under common control. The order was intended to boost competition in the wholesale power markets by making it easier and less expensive to ship power across transmissions system.
Southern's proposal for a for-profit grid company (gridco) included only new wholesale transmission services with the benefits of rate incentives going to others rather than the RTO operator, FERC said, an approach inconsistent with the agency's RTO policy.
RTO rules require all transmission facilities to operate under the transco. In addition, FERC said, Southern Co. Services could not plan, design, and operate a regional grid efficiently if it controlled only a small part of the RTO load.
As an alternative to filing a revised RTO proposal, FERC asked Southern Co. Services consider joining neighboring utilities in a RTO in the Southeast.
In provisionally approving GridSouth, FERC said the transmission owners will retain only a passive interest, indicating the organization "has taken great strides in achieving true independence." In addition, GridSouth will have a nonstakeholder bid.
The commission said the GridSouth approach provides "a platform for attracting other entities in the Southeast region that would benefit from an RTO." It said expansion to include other utilities and public power entities would improve GridSouth's scope and configuration.
