5.3. ERMUSR 03-08-2005 - Laserfiche WebLink

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market manipulation within the limits of the Federal Power Act, that authority is not enough to prevent unscrupulous business behavior as long as it shows a profit. Congress should grant FERC clear authority to prohibit all forms of market manipulation, to eliminate barriers to civil litigation and to impose meaningful penalties for violation of market rules. Direct FERC to Adopt RTO Accountability. RTOs were originally formed to benefit consumers by adopting policies promoting non-discriminatory transmission service, regional long-term planning and timely investments in transmission facilities. Instead, they have increasingly resorted to questionable pricing practices to deal with transmission congestion rather than adopting policies designed to lower costs and to improve service. At the same time, there is a growing concern that RTOs are resisting any questioning of the economic theories underpinning these actions. Other problems with the RTOs include: spiraling RTO costs, unaccountable governance, lack of understanding of end- user needs and less than satisfactory service options. Congress should direct FERC to adopt measures that assure that RTOs and independent transmission operators are accountable to customers, achieve excellent customer satisfaction, and control costs in ways that ensure that clearly identifiable benefits will be achieved for customers. Transmission Rights. Load-serving entities such as municipal utilities have traditionally secured long-term transmission rights in order to maintain service delivery, provide accurate cost of service forecasts, and construct new generation. At present it appears that these rights are not being strictly honored, jeopardizing the ability of municipal utilities to meet their obligation to serve their customers. In fact, the Midwest Independent System Operator (MISO) has already employed a transmission capacity allocation system that fails to provide needed long-term transmission rights. Congress should urge FERC and MISO to provide long-term transmission rights to load-serving entities. Transmission-Only Companies. The creation of stand-alone transmission companies, open to participation by all sectors of the electric utility industry, would provide another impetus for the construction of needed transmission facilities. Such a company, whose only function would be the building, operating and maintaining of transmission facilities, could only grow its business by investing in transmission, making it an ideal vehicle to promote the expansion of transmission capacity. FERC should adopt policies which encourage the formation ofstand-alone, multi-ownership transmission companies. Minnesota Municipal Utilities Association February 2005