The ability of FERC to successfully form regional transmission organizations (RTOs) throughout the country will in large measure be tied to how much cooperation and support federal regulators receive from their counterparts at the state level, a key FERC staff member told an audience of energy attorneys in Washington, DC, last Thursday.

“It’s clear to me and I think clear to the Commission that RTOs simply aren’t going to form without a whole lot of federal-state cooperation,” said Shelton Cannon, deputy director for FERC’s Office of Markets, Tariffs and Rates. He made his comments in an appearance before the Energy Bar Association’s (EBA) 56th annual meeting in Washington, DC.

Cannon took issue with the notion that a recent U.S. Supreme Court decision affirming FERC’s Order 888 was somehow a victory for FERC and a loss for states. The high court in March affirmed the landmark federal rule that ordered transmission-owning utilities to provide open access to all parties on their transmission facilities.

“I don’t think that’s really the way to view that case because regardless of how the Supreme Court had ruled in that case, the underlying issues would still confront us and still confront the states,” Cannon pointed out. “The simple fact of the matter is that states and the FERC are sort of jointly responsible for either the success or the failures of the RTOs.”

Cannon noted that what FERC does in terms of setting wholesale rates and the terms and conditions of transmission service have a “huge effect” on states. “By the same token, states hold the trump card in terms of siting generation, siting transmission, what they do in terms of retail rate recovery.”

“There’s really not much way that we can make RTOs a success without states being on our side and helping us to do this, and I don’t think that states are going to be very successful in terms of a lot of the regulatory objectives they have without us helping them,” the FERC official said.

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