New Mexico, Arizona utilities to form RTO

By the OGJ Online Staff

HOUSTON, Oct. 4, 2001 — Four utilities serving mostly Arizona and New Mexico Thursday said they will file an application with federal regulators to form a for-profit regional transmission organization.

Arizona Public Service Co., a unit of Pinnacle West Capital Corp., Phoenix, Ariz., Salt River Project, Phoenix, Ariz.; El Paso Electric Co., El Paso, Tex.; Public Service Co. of New Mexico, Albuquerque, NM; Tucson Electric Power Co., Tucson, Ariz.; and Texas-New Mexico Power Co., a unit of TNP Enterprises Inc., Forth Worth, Tex.; reported signing an initial memorandum of understanding to form an RTO.

The RTO, to be known as WestConnect, will be governed by a for-profit board and will be based on policies and procedures developed over the last 4 years for DesertSTAR, its predecessor, the companies said. WestConnect said it will file its complete governance package and tariff schedules with the Federal Energy Regulatory Commission later this month.

DesertSTAR was a proposed nonprofit RTO originally intended to coordinate wholesale generation and transmission transactions among southwestern utilities.

As proposed, WestConnect will be responsible for security, reservations, scheduling, transmission expansion planning, and congestion management for the regional transmission system. Additionally, the new board structure will focus on ensuring reliability, nondiscriminatory open-access, a robust wholesale market, and independent governance, the companies said.

“The group has decided that a for-profit governance structure is in the best interest of the utilities,” said APS Pres. Jack Davis. However, it was unclear how the companies’ transmission assets will be treated under the proposed structure, and who will run the transmission company.

The utilities reported they are developing a governance structure that will include new entrants to WestConnect and allow formation of a single western RTO, as envisioned by FERC. WestConnect members said they are working with members of other regional RTOs in the West and Pacific Northwest to expand the WestConnect service area.

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