SeTrans' death
recognizes
grid reality

FERC would never agree to the governance that the large grid owners in the South's nascent regional grid manager would require.
     Craig Goodman, NEMA president was disappointed and called the end of Setrans a setback to competitive market development.
     The RTO had been expected to run the grid in eight states from South Carolina to Louisiana.
     Where the South is headed -- continuing today's paradigm for the foreseeable future -- it may not have much use for an RTO.
     Without uniform, consistent transmission rules, the investment community will not commit capital to improve the grid, said Goodman.
     Without uniformity and federal rulemaking, each state has gone off in a disjointed, piecemeal, sometimes even contradictory way, he added.
     Goodman forecast that the problem of making a market that works will persist until leadership is found at the top starting with Congress.
     Lack of federal action persists even though courts have established that FERC has the power it needs, Goodman noted
     Jack Hawks, EPSA vice president, shares Goodman's disappointment over SeTrans especially since the sponsors had gathered the critical mass of IOUs and public-power utilities.
     Developers have spent a lot of money in the Southeast on the assumption that a competitive wholesale spot market would develop, Hawks said.
     Some plans to build have been cut back because of the impasse and the demise of SeTrans will worsen that situation, he said.
     Competitive generators will have to rely on competitive bids by utilities to find a market for merchant generation, Hawks added.
     Hawks challenged state regulator assertions that voice worries about the role of an RTO interfering with regulator jurisdiction over native-load protection.
     Hawks finds every objective study -- even the most conservative -- has found consumer benefits in developing competition.
     Competition opponents argue that the region has cheap power but that FERC's rules would saddle ratepayers with the cost of new grids to benefit users in other states.
     Powerful southern Republican senators, Richard Shelby of Alabama and Trent Lott of Mississippi, inserted a provision in the stalled energy bill that would have delayed the FERC grid plan until 2007.
     Without naming names, said David Cruthirds, an independent Southeast regulatory attorney and consultant, some SeTrans sponsors had urged on the senators to block FERC action in the energy bill.
     SeTrans sponsors include the Southern Co, Entergy, Cleco Power, Dalton (Ga) Utilities, Georgia Transmission, JEA (formerly Jacksonville Electric Authority), Municipal Electric Authority of Georgia, Sam Rayburn G&T Electric Co-op and the City of Tallahassee.
     Utilities are not likely to give up control willingly of their transmission assets where they can avoid it despite what they may say publicly, he said.
     Cruthirds, formerly of Dynegy, sees SeTrans similar to the energy bill.
     As it moved along it picked up lots of baggage so that while support grew, fewer liked the current product.
     Stakeholders serving on the advisory board were concerned that the RTO was not as independent as needed.
     "Remarks from SeTrans stakeholders revealed tremendous frustration with the failure of SeTrans' primary sponsors to incorporate reasonable suggestions on SeTrans' formation, structure and governance.
     "SeTrans likely would have been an improvement over the current situation," said Cruthirds, but it's unlikely SeTrans would have become the scene of "a robust wholesale market where all generators are created equal."
     State regulators' opposition to FERC efforts to promote wholesale markets in the Southeast Cruthirds traces directly to large integrated utilities in the region "that have undermined the move toward competition [while] publicly proclaiming support for competition, pouring millions of dollars and concentrated efforts behind the scenes into lobbying efforts designed to protect and enhance their monopoly control of wholesale and retail powers in the region," he charged.
     Utilities have whispered and shouted California and Enron until southern regulators "are scared to death by FERC's efforts to aid consumers by removing the unhealthy influence of the utilities over regional power markets, he added.
     Or at least they pretend to be frightened.
     While SeTrans seems dead, the move to end discrimination in grid service "will continue unabated," he vowed.
     Even though SeTrans was not perfect, getting any RTO approved would have been viewed as progress.
     The industry now finds itself exactly where market advocates and opponents agree is the worst place -- half regulated and half unregulated and immobilized by regulatory uncertainty, Cruthirds said.
     (Story originally published in Restructuring Today 12/4/03)