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LG&E, KU File at FERC to Withdraw from MISO, Propose Roles for TVA, SPP

Louisville Gas & Electric Co. (LG&E) and Kentucky Utilities Co. (KU) have filed an application at FERC under which the two LG&E Energy subsidiaries will withdraw from membership in the Midwest Independent Transmission System Operator (MISO).

LG&E and KU at the same time want FERC to sign off on their plan to have the Tennessee Valley Authority (TVA) serve as a reliability coordinator for the companies and the Southwest Power Pool (SPP) to act as tariff administrator for their transmission system. SPP will serve as the companies' independent transmission organization (ITO).

In the Oct. 7 filing at FERC, LG&E and KU ask FERC to accept certain rates for filing under Federal Power Act (FPA) Section 205, including the removal and withdrawal of the companies from the agreement of transmission facilities owners to organize MISO, referred to as the "TO agreement."

Withdrawal from the MISO TO agreement is just and reasonable, the companies said. LG&E and KU noted that they are not contractually barred from withdrawal from MISO; their ITO/reliability coordinator proposal involves less costs, existing transmission customers will be protected under a depancaking maintenance plan including grandfathered agreement (GFA) customers, and MISO and its members will not be harmed by the withdrawal.

LG&E and KU said withdrawal from the TO agreement is reasonable "because continued Midwest ISO membership will mean higher costs for applicants' native load customers." The utilities note testimony attached to their filing that, among other things, finds that the LG&E/KU proposal is a reasonable means to fulfilling FERC Order 888's objectives because the benefits of membership in an RTO such as MISO -- lower power procurement costs and increased off-system sales and margins -- are, given the companies' existing low cost generation portfolio and history of self supply, small compared to the costs of membership.

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