Saturday, November 03, 2001
Federal regulators must approve plan
Electric utilities seeking alignment

Nine companies, including American Electric Power, want to cooperate as a new market approaches.

By LOIS CALIRI
THE ROANOKE TIMES

American Electric Power, Dominion Virginia Power and seven other utilities signed an agreement Thursday outlining who will manage and control their transmission lines in the upcoming competitive market. The nine utilities want to establish an independent, for-profit entity, called Alliance Transco, pending federal approval.

Wholesale customers and retail customers who choose to buy electricity from competitive providers would have a larger pool of suppliers, said Craig Baker, senior vice president of regulation and public policy at AEP. In addition, Alliance Transco is attractive for investors who would like to invest in electric-delivery companies. He also said the alliance would be motivated to build new transmission lines, which would reduce the constraints on the nation's transmission system that resulted from the burgeoning, competitive, wholesale market.

AEP and the other utilities in the alliance who are retaining ownership of their lines could benefit financially because more providers could use their transmission lines to move their electricity.

The new transmission structure is designed to create a more efficient network that can better support the exploding market for wholesale electricity, said Glenn Ross, director of transmission policy at Dominion.

A robust wholesale market is one of the key elements to promote retail competition and ensure the lights stay on when Virginians begin shopping for electricity after deregulation occurs Jan. 1.

Alliance Transco would manage transmission lines in 11 states stretching from Missouri to North Carolina. If properly structured, the alliance would provide reliable transmission service to power generators and marketers, said Ken Schrad, spokesman for the State Corporation Commission.

The entity would make sure generators of electricity in and out of the alliance would have equal access to the transmission lines owned by the nine companies. The alliance would also simplify how utilities pay to move their electricity across the lines.

Today, if Dominion wants to buy power from Michigan, it pays a tariff each time the electricity moves over separate transmission lines that are owned by different utilities. Under the new proposal, Dominion would pay a single fee that would be regulated by federal authorities.

The nine utilities are asking federal regulators to approve an England-based company, National Grid Group, to manage the alliance. Federal regulators require an independent group to operate the transmission lines because they do not want any one utility to exert too much influence over how the lines are operated.

If approved, National Grid's subsidiary in the United States, National Grid USA, has agreed to invest up to $1 billion in start-up costs. The investment secures a stake in the alliance for National Grid. National Grid's investment money can be used to build new lines and to buy lines from companies in the alliance, said Glenn Ross, director of transmission policy for Dominion.

Before the plan can go into effect, regulators at the Federal Energy Regulatory Commission still must grant two approvals. FERC first has to determine that National Grid meets independent criteria. Secondly, it has to approve the alliance's business plan.

Lois Caliri can be reached at 981- 3117 or loisc@roanoke.com.

Let any elected or appointed official know what you think and how you feel by CLICKING HERE.