FERC last Wednesday signaled its intention to conditionally approve choices made by former Alliance regional transmission organization (RTO) members to make their RTO homes in either the PJM Interconnection or the Midwest Independent Transmission System Operator (MISO).

The move follows on the heels of an extended examination by FERC of the reliability and coordination implications of former Alliance members joining either PJM or MISO. Concerns had been raised over the fact that several electric utilities based in the Midwest and surrounded by MISO companies were picking PJM as their RTO of choice. Those decisions raised some eyebrows, given that it appeared the more natural fit would have been for power companies based in the heartland to join MISO.

But at the Commission’s agenda meeting, FERC Chairman Pat Wood said that the Commission’s inclination was to conditionally sign off on the RTO selections made by the former Alliance Companies members.

Wood underscored the point that such a decision is tied to the creation of a bigger “virtual RTO” between MISO, PJM and the Southwest Power Pool (SPP). Those three entities have announced plans to create a common wholesale electricity market. SPP is in the process of merging with MISO.

Recognizing that the creation of such a virtual RTO is the “real endgame,” Wood said that he and the other three FERC commissioners “all feel comfortable considering approving, on a conditional basis, the choices of the former Alliance Companies as to their RTO selections.” At the same time, Wood said that such conditional approval of those choices “should drive people to a common market sooner, and with greater efficiency than we have seen to date.”

Wood said that FERC will work on an order detailing the conditions it plans to impose related to the agency’s approving the RTO choices. “I think certainly the biggest one in my mind is a plan to eliminate the rate pancaking seen between the MISO and the PJM region,” he said. “Certainly, one of the other conditions would be that NERC [the North American Electric Reliability Council] has to have complete and unconditional sign-off at every stage of the process, but that kind of states the obvious.”

Former Alliance members Illinois Power, Commonwealth Edison Co., Dominion, American Electric Power and Dayton Power & Light have all decided to make PJM their RTO home, while FirstEnergy Corp., NIPSCO and Ameren have selected MISO as their RTO choice.

Prior to Wednesday’s action, the agency heard from several company representatives who explained their utilities’ reasoning for choosing either MISO or PJM as an RTO.

Elizabeth Moler, former chairperson of FERC and currently an executive with Exelon, and Illinois Power’s Kathy Patton, were both grilled by FERC staff on why ComEd and Illinois Power opted for PJM over MISO. Exelon is the parent company of ComEd.

For her part, Moler pointed out that Exelon has more retail customers than any other utility in the U.S. through ComEd and Pennsylvania-based PECO. “We have a commitment both to the federal regulators and state regulators and to our customers. We believe having both companies in a single RTO will enhance reliability and will make our operation more efficient.”

Moler also stressed the fact that ComEd and AEP are electrically contigous. But a FERC staff member said that in looking at Exelon’s connections elsewhere, those connections appeared to be stronger with MISO in places such as Wisconsin and Michigan.

“They are pretty strong, but they are overwhelmingly stronger if you look at the numbers — both the electrical interconnections and the actual flows — from ComEd to AEP and ComEd to IP [Illinois Power] than they are any place else,” Moler retorted. “I can say that categorically.”

Patton was asked to elaborate on whether Illinois Power has strong electrical connections to Ameren. “We don’t really do that much business with Ameren,” she responded. Patton said that compared to ComEd and AEP, the Ameren power flows “just are not significant really from us serving our native load or for exports for generators off of our system.”

Patton said she was concerned about Illinois Power “being left behind in MISO and ComEd and AEP going to PJM.” Such a scenario, she said, would result in Illinois Power becoming “almost stranded at that point because we have to rely on going through Ameren to get anywhere.”

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