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Hoecker Proposes Joint State, FERC Oversight of RTOs

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 electricity markets.

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 noted.

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 ..."

Susan Parker

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