Hoecker Proposes Joint State, FERC Oversight of RTOs
FERC Chairman James J. Hoecker last week proposed that state and
federal regulators work together to ensure that regional
transmission organizations (RTOs) result in healthy regional
Speaking to the annual convention of the National Association of
Regulatory Commissioners (NARUC) last week, he recommended the
creation of joint federal-state Regional Regulatory Organizations
(RROs) to ensure that the "planning and reliability policies [of
RTOs] are both workable and non-discriminatory" and that the "scope
of the RTO is appropriate."
An RRO, he told state regulators in San Diego, CA, "could devise
its own charter and procedures. I believe its members would spend
less time pointing fingers and filing suit and more time
collaborating on constructive solutions."
With "potentially massive generation shortfalls staring us in
the face in the next three to five years, RTOs are no longer a mere
policy option; they are a necessity." This makes the need for
federal-state cooperation over RTOs all that more important, he
Hoecker said he believed the bulk power industry "would have
fewer strategic uncertainties...if states and the FERC were working
in tandem to create value in the market, to open up new
opportunities, and to create sizeable regional markets designed
according to the physical realities of the electrical system and
the regional needs of bulk power producers and sellers."
While FERC has a "heightened responsibility to address the
legitimate concerns of the consumers," state regulators must make
sure that "the regional energy markets that serve and surround your
states perform well for everyone in the region and not just your
constituents," he noted.
Hoecker acknowledged FERC's responsibility for the situation in
the California bulk power market this summer. The California market
"proved brittle under stress. Ratepayers had no alternatives and no
warnings. Their only supplier, like [San Diego Gas and Electric],
had been given almost no flexibility at the state level and the
FERC had forged quite inadequate protections ..."
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