The transmission market has become one of the most politicizedissues of the day, and while the United States needs moregeneration, there remains no clear vision of how to make the entiresystem work more efficiently, according to panelists who spoke atPowerMart 2000 in Houston yesterday.

“Ten years ago, the issue was where to site new transmission.But it wasn’t at center stage as it is today,” said Sheila Hollis,chair of the energy and environment group for Duane Morris &Heckscher LLP in Washington, D.C. The power market currently is”hanging in the balance until after the elections,” and thepolitics surrounding it at FERC are “ferocious.”

FERC’s landmark Order 2000, which seeks to have regionalelectric transmission organizations (RTOs) up and running in everyregion of the nation by the end of 2001, set a deadline for RTOfilings of Oct. 16. Hollis said it will be at least two weeksbefore FERC even makes sense of what it’s received, simply becauseof the “tens of thousands of pages” of paperwork filed with theagency.

Under the RTO concept, transmission-owning utilities would turnover the operation and control of their transmission facilities toeither independent system operators (ISOs), transcos, combinedISO-transco entities or “anything else” that meets the 11 minimum”characteristics and functions” for RTOs that the Commission hasspelled out (see Daily GPI, Feb. 25).

Hollis said she thought one of the biggest issues for the powermarket today was in establishing a clear vision of what it wants interms of capacity and transmission. Just to have “more, more, more”she said, was not that easy.

Co-panelist Joseph S. Graves of PHB Hagler Bailly Inc. inWashington, D.C., said that even though transmission is the”smallest” of the delivered cost functions, it was the mostcomplex. Graves pointed out that transmission accounts for onlyabout 11% of the delivered costs, with production taking 64% anddistribution another 25%.

“One of the most important ways in which transmission affectsthe wholesale power markets is by prohibiting otherwise economicmarket transactions,” said Graves. Because the issues of securityand safety are paramount transmission issues — immovable, he said— the transmission operators couldn’t control flows as ideally asthey’d like to.

Another issue is how the existing transmission grid is evolving.Today’s transmission grid was designed to transfer power fromcertain generation stations to their historically related load,said Graves. However, the new generators prefer strongerinterconnections between systems. This also affects the flow.

“The future is somewhat unclear,” said Graves, echoing Hollis’theme. “One vision involves creating a new model for transmissionas an attractive separate business.” Included in Graves’ vision onthe future of transmission is that it has to attract sufficientinvestment, offer incentives for efficient operation andmaintenance, provide a role for merchant transmission, balancegeneration and transmission investments, and maintain reliabilityin the system in the context of competitive markets.

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