FERC takes step to create single RTOs for US Northeast, Southeast

In a surprise move, federal regulators Wednesday ordered mediation talks to begin in a week on formation of single regional transmission organizations serving the US Northeast and Southeast. Independent generators praised the decision, but the Northeast ISOs and southeastern transmission system owners were taking a wait-and-see attitude.


By Kate Thomas
OGJ Online Staff

HOUSTON, July 11 � In a surprise move, federal regulators Wednesday ordered mediation talks to begin in a week on formation of single regional transmission organizations serving the US Northeast and Southeast.

Independent generators praised the decision, but the Northeast ISOs and southeastern transmission system owners were taking a wait-and-see attitude.

The US Federal Energy Regulatory Commission said the regions need to be served by one RTO each rather than the several transmissions managements systems in place and proposed by utility owners.

FERC ordered the New York Independent System Operator, PJM Interconnection LLC, PJM West, and ISO New England to conduct talks for 45 days under the supervision of a commission administrative law judge on creation of a single RTO for the Northeast.

Separately, FERC ordered Southwest Power Pool (SPP); Entergy Corp.; New Orleans, La.; GridSouth, and Southern Co., Atlanta, Ga., to meet for 45 days on forming an RTO for the Southeast. The agency said SPP may be better suited to join a Midwest RTO because of its location, but still wanted it to join the talks for the Southeast RTO.

FERC said it would encourage but not require GridFlorida, the Florida RTO, to participate in the settlement proceedings. In both instances, the administrative law judges will report the results to the commission within 10 days after the 45-day settlement discussions.

Commissioners said various RTO proposals in both regions are provisionally consistent with Order 2000 but do not meet its size requirements. The agency is frustrated with the slow pace of compliance with its order to create large-scale RTOs, which is believes are necessary to create an efficient bulk power market. The FERC has encouraged companies to band together to form RTOs to set rules and run the markets for wholesale power sales across state lines.

FERC moving 'aggressively'
"FERC is moving more aggressively," said Pat McMurray, a spokeswoman for Edison Electric Institute, a Washington trade group representing investor-owned utilities. She said EEI is waiting to see the full order to evaluate "what the commission is seeking to achieve."

Recently, a number of industry groups and individual companies have called on FERC to create a single RTO for the Northeast, complaining differences in rules among the existing ISO drives up transaction costs and makes it difficult to ship electricity across the "seams" dividing the organizations.

The Electric Power Supply Association (EPSA), representing merchant power companies, said FERC's action will go a "long way toward facilitating appropriate regional transmission organizations and, thereby, more efficient regional power markets."

Larger scale RTOs will diminish the lack of standardization and other seams issues that have plagued interregional coordination, EPSA said. The organization said it also appreciates FERC's advocacy of standardization of grid interconnection protocols, something the competitive power supply industry has been actively urging and helping to develop.

Representatives of the three Northeast ISOs were waiting to see the full order before commenting. Up to now, they have resisted forming a single unit, preferring collaboration to consolidation.

"We haven't had time to digest it," said Ken Klapp, spokesman for the New York ISO. The operator of the New York grid said its legal counsel and market experts will need time to consider the order's ramifications.

ISO New England is "disappointed" FERC did not accept its RTO filing, said spokeswoman Ellen Foley. "We believed our filing satisfied all criteria and characteristics of an RTO, including scope." She said the organization could not comment further without seeing the actual order.

Likewise, PJM, the grid operator for much of the mid-Atlantic, wanted to see the order before commenting, said a spokeswoman.

A spokeswoman for Entergy said the company could not comment until it had seen the full order. Entergy owns 15,500 miles of high-voltage transmission lines in parts of Texas, Louisiana, Mississippi, and Arkansas.

Southern Co. and several municipalities owning transmission in Georgia, Alabama, Mississippi, and South Carolina said in June they planned to form an RTO for the Southeast with assets totaling $6 billion. Duke Energy Corp., Charlotte, NC; Progress Energy Inc., Raleigh, NC; and SCANA Corp., Columbia, SC, formed GridSouth a year ago.

FERC Commissioner William Massey said he was disappointed the commission did not order a single RTO for the Midwest, where two organizations have been competing with each other. The agency has encouraged the 11 western states to form a single RTO, but that case is still pending.

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