Michigan group complains of competing Midwest RTOs

By the OGJ Online Staff

HOUSTON, Oct. 3, 2001 – A Michigan business group Wednesday called on federal lawmakers to take a stronger role in electric transmission issues, noting the development of competing regional transmission organizations to serve the Midwest.

The Association of Businesses Advocating Tariff Equity (ABATE) said its concern has been spurred by the development of the Alliance RTO, which today includes Consumers Energy Co., Dearborn, Mich., and the Midwest Independent System Operator, which Detroit Edison Co., a unit of DTE Energy Co., Detroit, just joined after leaving Alliance.

DTE Energy said it was opposed to the selection of a unit of the UK’s National Grid Group PLC as operations manager of the Alliance RTO. DTE Energy claimed National Grid is an active market participation in the region.

ABATE charged companies have been shifting their support for these two groups depending on their own financial interests. Customer groups are concerned that having two competing transmission organizations in the same region may mean higher electric rates and a reduction in reliability, the organization said. It asked federal regulators and lawmakers to ensure Michigan is served by only one RTO to limit barriers to competition.

Electric transmission has emerged as a controversial topic both in congress and at the Federal Energy Regulatory Commission. Some in industry want the federal government to take over siting authority from the states. They argue a streamlined transmission system, and faster approval of for new transmission facilities, is a critical component for competition, lower rates, and reliability.

But state regulators, environmental groups, and transmission owners have opposed the idea. The US Supreme Court heard arguments Wednesday morning challenging a FERC order requiring utilities to provide open access to existing transmission lines.

ABATE said the federal government needs to take a larger role in setting criteria for development and construction of new electric transmission facilities. Bringing lower rates and increased reliability to Michigan through competition will require years of vigilant action by regulators and lawmakers, said Michael Sarafolean, ABATE steering committee chairman and energy procurement manager for North Star Steel Co., a unit of Cargill, Inc, Minneapolis, Minn.

Generating companies from around the region should be able to send electricity through the transmission system easily and at low cost, he said.

In a letter to Rep. John Dingell (D-Mich.), senior member on the House Energy and Commerce Committee, Sarafolean said, “In the Midwest there should be only one, not two or more regional transmission operators.”

The existing line siting and approval process is captive to countless special interests with the result being that very few new high voltage transmission lines are being built, ABATE told Dingell. “Local and state jurisdiction over the siting and permitting of high voltage transmission lines that affect interstate power flows is negatively affecting interstate commerce and threatens reliable electrical service throughout the US,” the organization said.

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