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<br /> non from a regulated state to an Mike Tyndall, Southern Utilities in the Midwest - close
<br /> unregulated state." spokesman, said, "Low cost and to the disastrous outage of Aug. 14
<br /> high reliability. That's something — say that immediate steps must be
<br /> Deregulation Failure we have in the southeast and do not taken to streamline contra
<br /> Many state regulators, however, want to jeopardize." Southern transmission as well as to upgrade
<br /> have largely resisted change. "The owns more than 26,000 miles of its performance.
<br /> consensus is that deregulation was transmission. Bottom line, he said, Gary Neale, the chairman of
<br /> a failure," said Hyman of R.J. "regional grids with adequate gen- NiSource, said "We have to clarify
<br /> Rudden. "Regulators won't take eradon located close to the load is what we are doing with these trans-
<br /> the initiative. They need to step up more reliable and secure. That's mission grids. We're trying tc
<br /> to the plate and I don't think they just the way physics works. do something it wasn't designed
<br /> are going to." to do."
<br /> For any number of reasons, 1 "We need to see generation in
<br /> state regulators - particularly in ' You'll see the Microsotts, load centers, and not such a heavy
<br /> �i regions of the country where elec- Si ells, Bechteis and others reliance on the grid. Physics says
<br /> tric power is relatively inexpensive looking at buying a utility you cannot get 100 percent reliabil-
<br /> - have grown increasingly at odds ity by building up the grid."
<br /> About 2,500 utilities in
<br /> with federal regulators intent on the U.S. buy electricity MidAmerican Energy Holdings
<br /> upgrading the national transmis- Co., the Des Moines, Iowa energy
<br /> sion grid while nourishing a robust There is room for company that has been snapping tic
<br /> wholesale energy market. consolidation. - with the backing of billionaire
<br /> In 1992, a federal law first —Todd Raba,Sr.Vice President Warren Buffett— energy assets in a
<br /> through open wholesale electricity MidAmericen Energy Co. down market, supports formation
<br /> markets to competition. Four of transmission organizations. It is
<br /> years later, the Federal Energy planning to join TRANSLink ISO
<br /> Regulatory Commission (FERC) "Electricity is inherently local," in the Midwest.
<br /> opened the transmission grid to Tyndall said. "States should regu- To expect the grid to support
<br /> competing power generators. In late all aspects of local rates. The open wholesale markets it mu ,e
<br /> 1999, the FERC started pushing outage hasn't changed our views." upgraded, said MidAmerican
<br /> utilities to band together in region- Duke has similar views. utive Todd Raba. "You need tc
<br /> al transmission organizations to Scott Henry, Duke Power's invest to be able to accomplish
<br /> coordinate their transmission lines. director of regulatory policy, said, that."
<br /> Largely as a result of state level "Duke believes vertical integration Public power entities, however
<br /> opposition,formation of RTOs has can co-exist with wholesale mar- caution that care must be taken in
<br /> been slow to evolve. kets." overhauling the transmission grid.
<br /> Now FERC wants to make for- Duke supports voluntary RTOs Glenn English, chief executive
<br /> mation of the RTOs a requirement. — as a compromise position, Henry officer of the National Rural
<br /> However, it is not clear how many said. As a vertically integrated util- Electric Cooperative Association,it'
<br /> RTOs will evolve. FERC initially ity in several states, Duke must Washington, D.C., said that he ha;
<br /> wanted five. Now, the agency work well with state and federal heard estimates that it may take
<br /> seems content to push for 10. regulators. "If state and federal poi- $100 billion to fix the grid - but he
<br /> Utilities and state regulatory icy conflict, we get caught in the is hopeful the job can get down fa
<br /> commissioners in regions with rela- middle," Henry said. half that sum.
<br /> tively low-cost power may resist That is very much the concern The NRECA has more than 900
<br /> efforts to loosen utility control of Stan Wise, the new president of members in 47 states serving 3E
<br /> over transmission assets. the National Association of million customers.
<br /> Macias of Calpine said it is Regulatory Utility Commissioners If transmission rates must be
<br /> understandable that huge vertically and a state regulator in Georgia. raised to spur investment, he said
<br /> integrated utilities like Southern Speaking as a Southern regula- regulators should take care that thi
<br /> Co. are "opposed to having any- tor, Wise said utilities in his region new rates only apply to newly built
<br /> body playing in their sandbox." fear that in the rush to fix the crier- transmission "and make sure that
<br /> However, "you cannot have gy system there may be a "push the money doesn't go overseas or tt
<br /> some parties decide which power toward breakup of vertically inte- CEO bonuses." -
<br /> plants get built and also who has grated companies."
<br /> access to grids," he said. "The "The individual states will ask Bottlenecks
<br /> solution is to separate transmission the question of their utilities, 'what "Many people are going to Ir
<br /> from generation." protections do we have?'" Wise trying to make a lot of money in the
<br /> Southern is not so sure. said. name of upgrading transmission,"
<br /> 14 I 4th Quarter 2003
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