Midwest ISO Approved; More Members Needed
FERC last week conditionally approved the formation of the
12-member Midwest independent system operator (ISO), but some
commissioners expressed disappointment that more
transmission-owning utilities from the region hadn't joined yet.
"I would have liked this order to send a much stronger signal
that all public utilities in the Midwest should join the ISO," said
Commissioner William Massey. He noted all the "major players in the
proceeding" - including the utilities that shaped the ISO, the
state commissions and customer groups - urged FERC to take this
position. "But we failed to take any forceful action on this point.
"Having all the Midwest utilities in the ISO would provide an
even more reliable system. It would create a larger market. It
would vastly improve the operational features of the ISO," Massey
remarked. "I'm concerned that this order will be considered the
high-water mark for this Commission's ISO policy," he said, adding
that it shouldn't be [EC98-24].
Even Chairman James Hoecker acknowledged that while the benefits
of the Midwest ISO will be "demonstrable" in many respects, "other
utilities need to join this organization." In this case, "we've got
something good that clearly could be better."
Unlike its predecessors, the Midwest ISO is unique in that it is
not related to a power pool or mandated by legislation. Rather, it
is the product of a "tremendous amount of volunteerism" by the
utility members, Hoecker noted. Currently, there are 10
investor-owned utilities and two non-public utilities that belong
to the ISO, which covers 13 states and three reliability regions.
The members include Allegheny Energy, Alliant, Ameren, CILCO,
Cinergy Corp., Commonwealth Edison, Duquesne Light, Hoosier Energy,
Illinois Power, LG&E Energy, Wabash Valley Power and Wisconsin
Electric. The transmission-owning members will turn over
operational control of their facilities to the regional ISO.
If the ISO had been in place in June, Massey said some companies
insist the price spikes might have been prevented in the Midwest
electricity market. "Participants have told us that [they believe]
having in place a properly formed large regional institution would
have made a difference this summer," he noted.
"For example, a properly formed ISO would have provided better
coordination, offered planning on a regional basis, had a security
coordinator that all users of the system could trust completely,
would have had critical re-dispatch authority over a broad region,
and would have created larger markets. The point is that we need to
pay attention and make connections with what is happening in the
real world and see how our policies can make a positive
FERC's acceptance of the Midwest ISO application was conditioned
on the regional group providing the Commission and the ISO's
participants with a detailed list of the operating procedures of
the ISO. In addition, FERC required the ISO to monitor the
competitive and reliability effects of allowing current
control-area operators to continue control-area functions.