Feeling someone in Washington, DC, is finally listening to them, the 18-state Western Governors Association and its allies applauded the Senate’s adoption of an amendment last Thursday to the proposed energy bill that the governors believe will ensure a “regional role” in the development and enforcement of electricity grid reliability standards. Arizona’s Gov. Jane Dee Hull, chairperson of the Denver-based western governors’ group, called the action “good news for consumers and the industry.”

One of the coalition members promoting an amendment by Wyoming’s Sen. Craig Thomas, the North American Electric Reliability Council (NERC) issued a written statement Friday, saying the Thomas amendment (to S 517) would “ensure that a new North American electric reliability organization and its affiliated regional reliability entities will operate efficiently and fairly.”

NERC’s president/CEO Michehl Gent said the Senate’s adoption of this language in the proposed energy bill will allow the creation of “an industry-led, self-regulatory reliability organization” that will have the power to set and enforce mandatory standards across North America.”With the adoption of this language, we are encouraged that they [Congress] will finish the job in this session.”

The western governors view the amendment as a means of the region — not the Federal Energy Regulatory Commission–maintaining the western transmission grid. They argued to the Senate that “no evidence” exists that FERC should, or could, do the job.

In announcing its coalition effort earlier, the governors group said it feared Congress would give FERC a “blank check” in regulating regional transmission reliability. As part of its lobbying effort, the Western Governors Association and six other regional and national groups last Wednesday urged the U.S. Senate to adopt Sen. Thomas’ amendment to ensure the “development and enforcement” of standards that are flexible enough to meet both national and distinct regional needs.

Specifically, the coalition cited a half-dozen flaws in the proposed Senate bill’s language, including: no defined process for setting and enforcing reliability, no deference to unique regional power grid needs, and denial of a state role in setting and enforcing reliability standards. Joining the governors’ group and NERC were: the National Association of Regulatory Utility Commissioners, the Western Interconnection Coordination Forum, American Public Power Association, National Rural Electric Cooperative Associations, and Canadian Electricity Association.

The governors in their letter to Sen. Thomas said the amendment “accommodates the international nature of our electric grids, and builds on more than 30 years of success in maintaining system reliability.” Made up of 18 states and three U.S. island territories, the Western Governors Association earlier this week released a financing report advocating two models for funding proposed electric transmission grid upgrades as part of the transition to regional transmission organizations (RTOs).

While making a longer list of recommendations that states should follow to prepare for the advent of RTOs, a “Transmission Finance Committee” of the state governors’ group identified what it called “two distinct models through which expansion of the transmission infrastructure of the West could be financed.” One is the “total system cost” model and a second one is the “market-driven” model. The committee report acknowledged that in some cases a combination of the models might be appropriate.

In the total system cost approach all of the participants share proportionally in the financing of grid upgrades and expansions; and in the market-driven approach, the new market entrants–new low-cost generators seeking a higher priced market–mostly pay for the upgrades and expansions.

The latest report from the western governors dates back to last May when the association’s transmission roundtable posed three questions:

The governors created a transmission working group that is addressing the first question, and its financing committee that attacked the second, coming up with the latest report, “Financing Electricity Transmission Expansion in the West.” To address the third question, the governors are separately trying to develop a “protocol” that would help increase collaboration among states and other permitting agencies “to improve the timeliness and quality of reviews of interstate transmission proposals.”

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