The Federal Energy Regulatory Commission’s chief administrativelaw judge spent part of Wednesday in a telephone meeting with thegeneral manager of the nation’s largest municipal utility, tryingto bring successful closure to a two-year-old stalemate centered onCalifornia’s independent electric grid operator (Cal-ISO). Cal-ISOwould only confirm that they are in the midst of “very sensitive”negotiations, and a resolution wasn’t expected any time soon.

In response to a transmission access charge filing by theCal-ISO, FERC last week urged that a settlement be sought toresolve differences among many stakeholders, but particularly theCity of Los Angeles Department of Water and Power (LADWP), whichowns about a quarter of California’s transmission gridinfrastructure, but has refused to join the Cal-ISO until itsoftens its entry charges to make them fairer in the eyes of themunicipal utility’s leaders, particularly S. David Freeman, LADWPgeneral manager.

Earlier in the year, the Cal-ISO governing board establishedsome new ways to compute its transmission access charge, announcingthe changes as a means of “laying down the Welcome Mat” to LADWPand about two dozen other municipal electric utilities in the stateto join the ISO. LADWP’s Freeman immediately rejected the overture,and later, filed objections with FERC to the Cal-ISO filing relatedto the proposed changes.

At this point, FERC in its order last week noted that theCal-ISO proposed compromise “has not shown (yet) to be just andreasonable, and may be unjust, unreasonable, unduly discriminatoryor preferential, or otherwise unlawful.” LADWP’s Freeman said thefederal regulators supported at least two of the municipalutilities’ arguments: 1) That there should not a $72-million limiton the amounts of annual added transmission charges the threeinvestor-owned utilities are required to pay; and 2) that there maybe benefits from the municipals joining that ISO that have not beenfully quantified.

Part of the Cal-ISO compromise proposal is to have a 10-yeartransition period, during which it will vary how much givenparticipants are charged depending on when they join. LADWP hassuggested this be modified to provide half of the proposed highvoltage transmission charges over the 10-year transition and therest collected through the Cal-ISO proposed transmission accesscharges.

Freeman said Tuesday that he had not heard from the ISO sinceFERC took its action last week, but he characterized the currentsituation as the “ball being in their (ISO’s) court.”

“I don’t have any information on any specific discussions we’rehaving with LADWP right now….. It is a sensitive issue and we areworking diligently to resolve all the multitude of issues involvedso we can encourage full participation by all the utilities inCalifornia in the ISO.

“I think their failure to react, pick up the phone, leads me toquestion whether they (Cal-ISO’s leaders) are gaining anyindependence from the investor-owned utilities and their customerswho tend to dominate their thinking,” Freeman said.

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