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been unenthusiastic about constructing transmission facilities needed to alleviate <br />congestion, due to factors such as retail rate freezes, license plate transmission rates and, in <br />some instances, the desire to protect their own generation from ~vt~olesale competition. <br />(One way to foster construction of new transmission facilities would be to encourage other <br />utilities serving load in the region, including public power systems, to jointly participate in <br />new transmission construction projects.) <br />RTO planning regimes can place too much reliance on transmission owners' own <br />individual transmission plans, and make artificial distinctions between transmission <br />facilities needed for "reliability" and facilities needed for "economic" reasons. RTO <br />planning horizons are often too short to support construction of needed "back bone" <br />transmission projects. Some RTOs, such as PJM, have recognized the shortcomings of their <br />planning regimes, and are mo~~ing to modify them. <br />The costs for the development and operation of RTOs have substantially increased. In <br />2005, RTU participants paid just over $1 billion in RTO operational and administrative <br />costs. Personnel, administrative, hardware and software costs appear to run out of control, <br />without sufficient appreciation of the impact of these costs on electric consumers. In <br />addition, RTO customers, including APPA members, must ramp up their own internal <br />operations, adding staff, hardware and software, simply to cope with these new markets, <br />protocols and requirements. <br />1 Independent RTO boards lack direct accountability to the industry participants in the <br />RTO's region and to the electric consumers the RTU ultimately serves. The Boards also <br />rely too heavily on the recommendations and advice of RTO staff. , <br />1 While one of the primary goals of RTO markets is to promote investment in new and more <br />efficient generation and transmission facilities, this has generally not occurred. <br />The goals of federal electricity policies should be to promote effective competition in <br />wholesale electricity markets supplemented by effective regulation as necessar}S for the <br />benefit of consumers and the well-being of our economy, and to do so in ways that recognize <br />regional diversity in those markets. FERC has the ability to use its existing and new <br />authorities (pro~rided in the Energy Policy Act of 2005) to improve electricity markets. FERC <br />can, among other things: allow market-based rate sales only by sellers that cannot exercise <br />market power; ensure transparent market information; remedy market power abuses in a <br />timely manner; address RTOs' cost and accountability problems; and promote joint <br />ownership of transmission in both RTO and non-RTO regions to he]p strengthen regional ~, <br />transmission systems. Congress sltould also consider joint ownership when allocating federal E` <br />resources to help enhance the bulk transmission system or to rebuild transmission lines. 1 ~ <br />www.APPAnet.org <br />