Federal regulators propose standardized operations for RTOs

By the OGJ Online Staff

HOUSTON, Sept. 26, 2001 — The Federal Energy Regulatory Commission Wednesday said it will soon issue a rule to standardize market design and structure for regional transmission organizations.

The commission said it will issue the rule after a series of market operations workshops in October at FERC headquarters. The meetings will focus on issues such as congestion management, cost recovery, market monitoring, transmission planning, business and reliability standards, and the nature of transmission rights. A regional transmission organization (RTO) is aimed at facilitating equal access to transmission and cutting the number of transactions necessary to move power about the country.

The commission said it will seek a broad range of views in advance of publishing the rule, including the thoughts of state regulators and other industry representatives.

FERC said it will decide by early November which RTO proposal for the Midwest, Northeast, and Southeast will be approved. Mediation talks ordered July 12 have been completed in the Northeast and Southeast and the recommendations forwarded to the commission.

FERC also said that if public utilities such as municipal utilities and cooperatives don’t join an RTO, the commission will take a “hard look” at the transmission rates they charge to ensure the rates are just and reasonable. The commission also said it would recommend that mergers be prohibited for any utility that doesn’t join an RTO.

In other action Wednesday, the commission made a number of proposals, including:

— It proposed a new rule that would combine and revise current gas and electric standards and apply them uniformly to natural gas pipelines and electric transmission. The standards would broaden the definition of an affiliate. The commissioners said current standards fail to address the sharing of confidential shipper information and transportation information with all energy affiliates. Also, employees working in the transmission unit of a company must function independently from sales or marketing employees of energy affiliates.

— The commission invited the industry to submit comments on new ways to ensure sufficient reserve capacity in the electricity markets. There are different practices and mechanisms being used in the various markets and pros and cons associated with all the methods. State regulations don’t mandate generators maintain a certain amount of reserve capacity in competitive markets.

— Besides reserves, the commission also expressed concern about transmission constraints and the costs imposed on customers from those constraints. The commission said it will give infrastructure issues a high priority but did not take any direct action. “The commission expects to forward its findings to the Department of Energy for its national grid study and will hold four open meetings to identify energy infrastructure issues,” the commission said.

— In a separate order, the commission approved the establishment of the Western Electricity Coordinating Council (WECC) that will coordinate the regional transmission in the West. The new WECC will consolidate the Western Systems Coordinating Council, the Western Regional Transmission Association, and the Southwest Regional Transmission Association, which had overlapping functions.

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