The US Federal Energy Regulatory Commission Wednesday extended the Dec. 15 deadline for utilities to join regional transmission grids and said it will set new deadlines for each of four general regions.
Earlier this year federal regulators ordered controversial mediation talks to form four regional transmission organizations (RTO) in the Southeast, Northeast, West, and Midwest. Under the FERC proposal, utilities would combine their transmission systems to provide open access, cheaper transmission rates, and more reliable systems.
The commission dropped the Dec. 15 deadline after week long meetings in which state utility regulators complained FERC left them out of the process and raised questions about the expense of forming RTOs.
Commissioners agreed to prepare a cost-benefit analysis of RTOs consumers and states, after some market participants reached opposite financial conclusions about RTOs. In an analysis, the New York Independent System Operator estimated consolidating the three existing ISOs in the region could boost electric bills $90 million/year. But Mirant Corp. concluded a single Northeast RTO could save consumers $440 million/year.
FERC said it would move on two parallels tracks to complete development of RTOs. Issues of geographic scope and governance of RTOs will be addressed in pending dockets after consulting with state commissioners, FERC said. Outcome of the mediation talks pointed to governance as a particularly thorny issues.
Commissioners will address separately issues including transmission tariffs and market design for public utilities, including RTOs. Federal regulators said this will help resolve business and process issues. FERC also said it will identify areas they need to be standardized.
“As the first matter of business, we intend to ask state commissioners to provide their advice to the commission about the makeup of regional markets,” FERC said in its order. It will specifically seek input on the allocation of wholesale market activities, noting three subregional organizations are functioning under a larger umbrella organization in the West.
FERC said it will issue a notice of proposed rulemaking on terms and conditions of interconnection agreements and procedures in January. A second notice for pricing these services will be published in April.
“Interconnection rules are a critical piece of open access transmission services and RTOs initially will be required to follow the same interconnection policies that we set forth for other public utilities in the new rules,” FERC said. “These rules will help support appropriately sited generation and appropriately priced infrastructure for new generation.”
The agency said quick resolution of the pricing issue early in the process “will allow for swifter consensus on broader RTO issues.”