Creating a stand-alone transmission company is easier said than done, and companies mulling such a move, should be prepared to face a slew of impediments and surprises along the way, according to several executives who appeared last week at the Energy Bar Association’s 55th annual meeting in Washington, D.C.

“I can’t begin to enumerate the number of obstacles that … exist when you want to form an independent transmission company,” said Joseph Welch, president of International Transmission Co. (ITC). “They are as many as there are people that you care to talk to,” he added. ITC is the newly-created transmission subsidiary of DTE Energy.

Welch said that the lack of comprehensive, national market standards is one of several roadblocks that companies can expect to face in the creation of an independent transco. “We need to get to universal market rules for the marketplace,” the ITC executive asserted. “We don’t need these to change RTO to RTO to RTO,” he said.

Confusion created by recent events in the energy industry, most notably in California, is also hindering the formation transmission companies, the ITC executive argued. Uncertainty over energy markets has created an environment where utility decision makers may be more inclined to sit on the sidelines, than pursue such endeavors as the creation of a transco.

“Be prepared to be surprised if you put one of these together,” Walter Woelfle, an executive with American Transmission Co. LLC, told audience members. Among other things, Woelfle said that the enormity of the real estate aspects of forming a transco should not be underestimated. American Transmission was formed by Alliant Energy East, Madison Gas & Electric, Wisconsin Electric, Wisconsin Public Power and Wisconsin Public Service Corp. The transmission assets of these utilities were transferred to American Transmission in January.

Challenges for transcos can also crop up from a regional perspective, according to Carolyn Cowan, director of transmission business development for Sierra Pacific Power Co. and Nevada Power Co. Cowan, who appeared on the panel for TransConnect, noted that the transco’s Northwest location means that TransConnect lacks geographic contiguity. “This makes many of the functions of TransConnect a little bit more difficult, including pricing,” Cowan said.

TransConnect is organized to own transmission assets currently held by Avista Utilities, Montana Power, Nevada Power, Portland General Electric, Puget Sound Energy and Sierra Pacific Power. The Federal Energy Regulatory Commission last week accepted TransConnect’s proposed governance structure (see Daily GPI, April 27).

Despite the headaches involved in creating a transco, several panel members also emphasized that independent transmission companies make sense on a number of business fronts. Among other things, conference participants pointed out that transcos offer the type of business structure that naturally draws capital. That ability to raise funds should help to spur new investment in the nation’s transmission infrastructure, panel members said.

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