FERC meeting: SE RTO

Judge McCartney presented her report on the SE RTO mediation to FERC last Wed. Her recommendation was for the Grid model: Transco on top/Independent Market Admin. (IMA) in the RTO (model presented by GridSouth, Grid Florida and Entergy) rather than Southern's model (Gridco on top, transmission owners and ind. transcos under). The Commissioners did not make a decision, but stated that they planned to address the SE RTO at the next Commission meeting on Nov 7 (after they have received comments on RTO week).

The judge discussed the biggest obstacles to public power agreeing to the Grid model: Southern gave them 100% transmission recovery on Day 1 and the Grids had a phase-in (pursuant to the Commission's previous orders in GridFlorida). I think that many of the publics also liked the fact that Southern gave them full grandfathering of current contracts.

Chair Wood had questions about the split of responsibilities between the transmission-owning transco on top and the IMA and about the fiduciary duties of the transco board. The judge stated that most publics wanted a non-profit ISO on top. When Massey stated that most states wanted the traditional non-profit ISO, Wood said: "that would put the cabosh on this model," then asked why the publics don't like the operating agreements with the RTO. There was discussion about concerns that the transco would favor transmission solutions over gen. Massey pointed out that the NE ISOs simply don't want their models changed, so that should not keep the Commission from approving the transco-type model.

Breathitt stated that cost/benefit analyses were important, especially for this region of low cost power.

Brownell stated that the Commission needed to act quickly because the market was already putting capital into transcos.