FERC Blessing Keeps Grid West on Schedule

By Published On: July 8, 2005

Grid West, the latest effort to create a transmission provider serving the U.S. Northwest, got the preliminary blessing of federal regulators last week, clearing the way for discussions aimed at seating a developmental board by the end of September. But serious questions remain, and there is no assurance yet that Grid West will be any more successful than were RTO West and other efforts to develop a Northwest transmission system over the past decade. At stake is managing the transmission system that delivers electricity from the Northwest’s big dams and coal-fired power plants to California. The Federal Energy Regulatory Commission’s Grid West declaratory order appears to be the favorable response that independent power producers and state regulators had sought to the proposal put forward by the Northwest’s transmission line owners—the Bonneville Power Administration, PacifiCorp, and Idaho Power. However, commissioner Nora Mead Brownell raised questions in a concurring opinion which pointed out that the proposed bylaws “contain several provisions that have the potential to limit the effectiveness” of Grid West’s trustees and put up “a high hurdle to the [board] moving forward on issues of critical concern to the region.” Claiming they hadn’t had time to study the order posted on FERC’s Web site July 5, independent power representatives declined official comment but said that the commission’s action appears to provide what transmission owners need to go ahead with creating an independent transmission provider. The Grid West proposal calls for creation of a FERC-regulated utility that would offer transmission services satisfying the open-access requirements of Order 888. The resulting entity would not be a regional transmission organization under commission Order 2000, nor would it be an independent system operator—although some have called it “ISO-Lite.” In essence, the commission agreed with the Oregon Public Utility Commission, which had urged approval of the Grid West proposal, noting that it “may not conform perfectly with what FERC envisioned” but “it does meet your goals in a way that is adapted to the structure, history and culture of our regional electricity industry.” In other action, the commission dismissed Public Service New Mexico from its investigation into alleged misconduct by power companies during the energy crisis. PS New Mexico?s parent company, PNM Resources, announced FERC?s dismissal July 7. PNM stated that the commission?s order also accepted the utility’s payment of $1 million to settle FERC staff charges that the utility’s wholesale trading services should have been provided pursuant to its transmission tariff on file at FERC. PS New Mexico maintained that it provided these services according to its market-based rate tariff, which also is on file at FERC. In addition to the payment, the utility agreed not to continue to offer the questioned trading services without first filing an amendment to its transmission tariff. PNM said the order dismissing its subsidiary clears the company in the remaining investigation by federal regulators into possible trading practices and partnerships allegedly designed to manipulate the wholesale energy market during the 2000-01 energy crisis. Charges that the utility had engaged in market gaming during the crisis had been dismissed previously, PNM said, adding that earlier federal actions had cleared PS New Mexico of so-called anomalous bidding practices for wholesale California energy prices during the same period.

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