RTOs make strange bedfellows, updated survey reports

HAUPPAUGE, N.Y., June 4, 2002 — In the world of regional transmission organization development, public power and investor-owned utilities are becoming new allies, an updated survey finds.

Former opponents now find each other often in the same strategic huddle. What is the driver behind this change? FERC’s Regional Transmission Organization (RTO) Development, according to an article that is a follow-up to a survey completed late last year written by Stephen A. Stolze and Matthew C. Cordaro, Ph.D., of R.J. Rudden Associates, Inc.

IOUs are now confronted with many of the issues that used to be specific to Public Power. Issues such as control, governance and tariffs now align the interests and concerns of both groups as does the advent of open and liquid markets. While not FERC jurisdictional entities, many Public Power entities are actively engaged in the RTO process and are seeking ways to comply with the spirit of FERC Order No. 2000.

Examples of this activity are apparent throughout the country. Even federal and cooperative entities such as TVA, BPA and Georgia Transmission Company are working together with IOUs to help create or cooperate with RTOs. A closer look at electric power industry restructuring and the concerns it creates for public power sheds more light on the drivers of the emerging potential for new alliances.

FERC analysis shows that the establishment of RTOs is expected to result in billion dollar annual savings on the cost of wholesale electric power. It is only natural for the purchasers of this power to be eager to extract their proportionate share of value for the benefit of their customers. In a recent update to his paper entitled, “RTO Formation and Development: What Do Stakeholders Really Want?,” Dr. Matt Cordaro stated, “It is clear that future directions in the RTO industry are taking shape more rapidly under Commissioner Pat Wood’s leadership.”

In this context, the recent decisions by the FERC on RTO filings are consistent with many of the stakeholder majority opinions, as noted in the results of the original survey conducted by Rudden that is the basis for the paper. The potential for new alignments is especially evident in the critical area of the preference for the independent, not-for-profit RTO/ISO structure over the for-profit Transco model.

A full version of this article and a copy of the associated survey can be found on Rudden’s web site, www.rjrudden.com, under the News Media button, in the Articles section.

R.J. Rudden Associates, Inc. is a strategic, economic and management consulting firm specializing in energy matters. Throughout its history, Rudden has assisted clients in such mission-critical areas as: economic and financial analysis; strategic, management and marketing services; industry restructuring support; litigation and regulatory support; technical analysis; and implementation support.

Serving more than 300 clients worldwide, Rudden’s energy industry professionals include experienced energy company senior executives, energy economists, senior policy experts and regulatory officials, engineers, renowned futurists, and internationally respected subject matter experts. Many are widely published and each is highly regarded for his or her unique insight and targeted approach to problem solving. Rudden’s clients encompass the full range of the energy value chain and cut across all market sectors, including energy producers, the financial community, the legal and regulatory community, new business ventures, and large energy consumers.

Rudden has offices in New York; Washington, D.C.; Houston; Atlanta; Augusta, Maine; and San Francisco. Additional information about the firm is available on Rudden’s web site at www.rjrudden.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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