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Subject:RTO Orders - Grid South, SE Trans, SPP and Entergy
Date:Fri, 13 Jul 2001 15:37:15 -0700 (PDT)

----- Forwarded by Maureen McVicker/NA/Enron on 07/13/2001 05:36 PM -----

Donna Fulton
07/13/2001 02:47 PM

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Subject:=09RTO Orders - Grid South, SE Trans, SPP and Entergy

The Southeast RTO orders are out and have followed through with what we exp=
ected from the discussion at the FERC meeting.

The SPP and Entergy RTO proposals have been rejected because they fail to s=
atisfy the scope and configuration requirements of Order No. 2000. The Com=
mission notes that the required discussions between SPP and Entergy and it=
s neighboring RTO/TOs has led to no increase in the original scope and conf=
iguration. The filings by SPP and Entergy were brief, indicating only a la=
ck of interest by other RTOs or utilities in joining to enlarge scope; they=
failed to specify any details of the talks, what changes could be made or =
what could be fixed to accomodate combination with other RTOs. The order s=
tates that the Commission favors the development of large, regional transmi=
ssion organizations reflecting natural markets. The Commission indicates t=
hat they favor four RTOs - NE, SE, MW and West. Therefore the order requir=
es the participants in SPP and Entergy to participate in settlement discuss=
ions as set out in the mediation order. Note that these meetings will star=
t next Tuesday, July 17 before a FERC ALJ.

The Southern Company RTO is also found by the FERC to fail the scope charac=
teristics of Order No. 2000. The order finds that Southern's approach to f=
ocus on MOUs and seams issues with its neighbors is inadequate. The order =
states, "We reiterate: the Commission's goal is to have a single RTO in the=
Southeast, and to have that single RTO operational as soon as possible." =
The Commission recognizes that start-up costs in forming a larger RTO may b=
e more, but that over the longer term, large RTOs will foster market develo=
pment, will provide increased reliability and will result in lower wholesal=
e electricity prices. The order therefore directs the parties to the media=
tion as stated above.

The Grid South participants are also directed to the mediation which is sta=
rting on next Tuesday. It is a lengthier order with more details on other =
aspects of RTOs, including Independent Board requirement, congestion managm=
ent, interconnection procedures, planning process and CBM. Therefore, I am=
attaching a summary of the order. One of the important findings of the or=
der is that GridSouth is not sufficiently independent; the Applicant TOs ar=
e making policy decisions that should be made by an independent board. The=
refore, the order requires GridSouth to install an independent board and fi=
le a compliance filing within 90 days.

If anyone wants copies of the orders, let me know.