FERC took initial steps last Wednesday to set up a “specific division” within its Office of External Affairs (OEA) that would reach out to and work closely with states on pressing natural gas and electric regulatory issues. The initial focus of the FERC-state partnerships will be on regional transmission organizations (RTOs), which are considered the most urgent matter facing regulators now.

“We want to move as quickly as we can” to establish the FERC-state partnerships, but the Commission does not have a “definite timeline” for when they will be up and running, said Commissioner William Massey.

At FERC’s regular meeting, staff recommended that the Commission select “at least several people” from either inside or outside of the Commission to carry out the “full-time efforts” of the proposed OEA division, which would be to communicate and coordinate with states on energy issues. Individual staff members of the division would be responsible for states in specific regions, the boundaries of which would be determined according to either: 1) the location of FERC regional offices; 2) RTO regions; 3) North American Electric Reliability Council (NERC) reliability regions; or 4) National Association of Regulatory Utility Commissioners (NARUC) regional organizations.

FERC staff indicated that it was leaning towards the NARUC option. “I think that…we are in agreement that the best solution at this point…appears to be the NARUC regional organizations,” said Daniel Larcamp, director of the Office of Markets, Tariffs and Rates.

But given that the RTO issue is a “very pressing matter” and that implementation of an expanded OEA will “take some time,” he suggested that any FERC-state panels addressing RTOs be limited to the “states that have been participants in the regulatory RTO efforts.” For example, if the Commission should create a Midwest FERC-state panel on RTOs, “we believe that that panel should reflect membership from the states that have been involved in the MISO [Midwest ISO] and Alliance cases.”

In order to avoid violating ex-parte rules, staff said it planned to draft an order that would permit off-the-record communications between the Commission and states or parties to RTO proceedings, provided transcripts of the communications were placed into the public record.

Massey, who has been involved in grid regionalization for seven years, expressed concern that FERC-state partnerships on RTOs could drag the issue out even further. “It’s my opinion we’ve had a lot of process on RTO development, and we’re going to have more process. But all good things have to come to [an] end at some point, and I hope the end is near.”

Commissioner Nora Brownell, who is credited with the FERC-state partnership idea, agreed with Massey to a point. “…[W]e cannot prolong this agony forever. But rather than putting it as the end is near, perhaps the beginning of RTOs will be at hand.”

The success of the partnerships is up to FERC and the states, she said. “In order for these to work, I think it will be critical that we and the state commissioners stay focused on very specific issues, as we did [during] RTO week. Secondly, while we all have day jobs, it’s going to be important for the state commissioners themselves to participate. These are not…issues that can be delegated to staff.”

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