Southeast RTO Proposals Lack 'Regionality'

Amid the crush of proposals to join or create regional transmission organizations (RTOs) filed Monday, the owner and operator of an electric cooperative system in Alabama urged FERC to focus its attention on the RTO filings for the Southeast, saying they lack genuine regional participation.

With the "possible exception of systems in Florida, the dominant investor-owned systems in the Southeast have pursued unilateral, non-collaborative approaches" in forming RTOs, said Alabama Electric Cooperative (AEC). It especially singled out Southern Co.'s gridco proposal and the proposal of Duke Power, Carolina Power & Light, and South Carolina Electric and Gas.

"Of vital importance to AEC, Southern appears to be developing a Southern-area-only RTO, according affected entities some opportunities to ask questions and comment, but with no real collaborative participation in the development of the proposal," it told the Commission.

"Single-system dominated or company-sized RTOs clearly will inhibit, rather than promote, competitive markets for generation, but this discouraging trend toward the concentration of transmission control appears to be emerging in the Southeast. The Commission must take a firm position in requiring true regionality and real independence as the inviolate benchmarks for RTOs."

Order 2000 required "transmission-owning entities" to file Monday proposals to either join an RTO, describe the progress made towards joining one, or outline the obstacles that are preventing participation in an RTO.

AEC said it is actively pursuing the formation of a "genuinely independent and truly regional RTO" with three other Southeastern rural electric cooperative systems. But "no large investor-owned or public power system in the Southeast expressed any willingness to explore or discuss the cooperatives' 'Southeast RTO' proposal."

The proposals for the larger, well-known utilities --- such as Dayton Power & Light, Virginia Power, First Energy Corp., Detroit Edison and Tampa Electric --- seemed to be pretty straightforward, but the filings of the smaller utilities and cooperatives identified the roadblocks to joining RTOs and other problems.

For example, Maine Public Service Co. (MPS) informed FERC that RTO participation was not "economically feasible at this time" due to the "unique and electrically isolated nature of the region in which [it] owns transmission facilities." In addition, the "high costs of RTO participation that would have to be recovered from MPS's relatively small load and customer base, weigh against" it, the public utility said.

MPS reported it owns about 392 miles of transmission facilities and 1,730 miles of distribution facilities. None are directly interconnected with any portion of the U.S. transmission system. However, it told the Commission it is participating in RTO discussions taking place in Canada.

Sunflower Electric Power Corp., a generation and transmission cooperative serving Kansas, said it attended meetings held by the Southwest Power Pool (SPP) to develop its proposed RTO, and "actively participated" in the merger of MAPP's Regional Transmission Committee and the Midwest Independent System Operator (MIOS).

But Sunflower Electric told FERC it decided not to join either the SPP RTO or the MISO because it would incur "substantial economic penalties" if it transferred control of its transmission facilities to a tax-exempt entity. Both the SPP RTO and the MISO are tax-exempt groups.

Instead, Sunflower Electric said it has joined with other non-public utilities to investigate the formation of an RTO that initially has been named the Crescent Moon Regional Transmission Entity. "The Crescent Moon proposal at this time appears to offer the only opportunity for transfer of control to a potentially taxable contiguous entity."

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