FERC Says Grid Monitors Cost Power Consumers About $2/Year

Dow Jones & Company, Inc. - Oct 6

WASHINGTON -(Dow Jones)- The Federal Energy Regulatory Commission Wednesday said creating a Regional Transmission Organization, or RTO, costs electricity consumers only $2 a year.

FERC has been encouraging utilities to join the independent grid monitors as a way to improve reliability. Although RTOs now cover two-thirds of the country, several state energy regulators have objected to FERC's RTO plan and have suggested that the cost of forming the organizations is too high.

To weigh in on RTO costs with its own analysis, FERC, at Wednesday's agenda meeting, released a study on cost ranges for developing the organizations. Based on the study, creating an RTO should cost between $50 million and $70 million .

That investment translates into costing an average residential customer about 20 cents per month or $2 a year, FERC staff said. And even that cost to consumers would be offset by the benefits RTOs provide, said FERC staff.

"Today's staff report should allay many concerns regarding the costs of creating and operating a new RTO from the ground up," said FERC Chairman Patrick Wood III. "These costs can be minimized and we've learned from experience the real and tangible benefits that RTOs provide for customers."

FERC Commissioner Nora Mead Brownell noted that she's heard some objections to RTO's from state regulators in the Southwest who have claimed `some astronomical costs" are associated with RTOs.

Some regulators and utilities have been "throwing around costs that are not substantiated" and the study was designed as a first step to deal with a "lack of fact-based analysis" on RTOs," she said, noting that the misinformation is a disservice to the public.

FERC staff based its analysis on audits and data from existing RTOs, including PJM Interconnection, Midwest Independent Transmission System Operator, Electric Reliability Council of Texas, and Southwest Power Pool.

-By Maya Jackson Randall , Dow Jones Newswires; 202-862-9263; Maya.Jackson- Randall@dowjones.com

Dow Jones Newswires 10-06-04 1307ET