An alleged agreement struck between the White House and Southeastern federal lawmakers that would delay the formation of regional transmission organizations (RTOs) and FERC’s standard market design (SMD) proposal could destroy efforts to bring the country’s power grid up to snuff, as well as undercut the ability of regions to address capacity shortages, the president of the Electric Power Supply Association (EPSA) warned Vice President Dick Cheney last week.

EPSA President Lynne Church said that her association is “deeply concerned” about news reports detailing the apparent deal that was cut between the Bush administration and senators from the Southeast to hold back RTO formation and the pending SMD plan. “We find these reports troubling, because the Administration has been strongly supportive of the interstate transmission system and well-functioning competitive wholesale electricity markets,” wrote Church in her Aug. 25 letter to Cheney.

Church said that the White House’s national energy policy (https://www.whitehouse.gov/energy/) correctly stated that a number of regions of the United States are experiencing capacity shortages as a result of wholesale market design problems and barriers to siting and building new power plants.

The EPSA official said that RTOs and the wholesale market design proposed by FERC will help to alleviate these problems, while congressional intervention would exacerbate them and place electricity customers in jeopardy. “If these restrictions on FERC rulemaking and RTO formation had been enacted into law, how would FERC have been able to respond to the blackout?” Church asked, referring to the historic Aug. 14 power outages that crippled much of the Midwest, Northeast and eastern Canada. “Encouraging Congress to tie FERC’s hands is exactly the wrong policy.”

Church further argued that halting RTO development “could cripple efforts to modernize the transmission grid, cost customers money and impair reliability.” In contrast, she cited a 2002 study done by ICF Consulting that found that the formation of RTOs could save consumers as much as $60 billion by 2021.

“This attempt to turn back the clock is both irresponsible and dangerous — the 60% of Americans who live in regions that are moving forward with competitive wholesale markets would have their regional markets put in jeopardy to benefit a few incumbent companies who don’t want to cede any aspects of that monopoly power,” Church said.

House and Senate conferees will meet this month to attempt to reconcile sweeping national energy bills passed by both chambers. The massive blackout that hit large swaths of the U.S. and eastern Canada is likely to put electricity-related issues front and center when those negotiations start.

Sen. Pete Domenici (R-NM) has backed a proposal in recent months that would prevent FERC from implementing a final rule in its pending SMD proceeding prior to July 1, 2005.

Meanwhile, the House Energy and Commerce Committee has scheduled two days of hearings on Sept. 3 and 4 to explore the reasons for the massive cascading blackout that hit eight states and two Canadian provinces.

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