States' Energy Regulators Seek Creation of Regional Power Transmission Body
By Russell Ray, Tulsa World, Okla. -- April 24
Several new power plants built in Oklahoma have nowhere to ship their electricity because of gridlock on Oklahoma's transmission system.
A major step in establishing an RTO for seven states, including Oklahoma,
will occur next week in Oklahoma City, where energy regulators from those states
will meet to begin work on an overhaul of the region's electricity market.
"This means more to Oklahoma than any other state," said Denise
Bode, chairman of the Oklahoma Corporation Commission. "We have $1 billion
worth of new transmission that needs to be built in Oklahoma to maximize the new
generation we have in the state."
The plan calls for linking the transmission systems of local utilities and
creating a regional network capable of moving power supplies long distances to
other regions. That's important because utilities such as AEP-PSO plan to buy
increasing amounts of power on the wholesale market.
The plan essentially brings federal and state governments together in the
management and oversight of power lines and transmission. Other RTOs will be
established nationwide.
The plan, also known as "standard market design," was developed by
the Federal Energy Regulatory Commission.
The proposal has been criticized by some southern states, including
Louisiana, Mississippi and Georgia. They claim FERC's plan ignores state
interests and could lead to higher rates for consumers.
But the need for restructuring has been amplified by the Aug. 14 blackout in
the Northeast and Southern Ontario -- the largest in North American history --
and by the rising demand for power.
"We are an electricity-hungry economy. We need more reliable electricity
than we've ever had in the past," Bode said. "We're building the
generation, but we haven't built all the infrastructure we need."
But who will pay the multibillion-dollar cost of upgrading the region's
transmission system? Everyone, Bode said.
"By sharing the costs as broadly as possible, it will help us build the
transmission the most inexpensive way possible," she said. "There will
be beneficiaries throughout the region and the country."
Oklahoma ratepayers should not have to pay the whole cost, because the
improvements will almost certainly benefit customers in other states and
regions, Bode said.
The Southwest Power Pool, which has long overseen transmission in Oklahoma
and seven neighboring states, is seeking RTO status. But certain conditions
required by FERC must be met, including the appointment of an independent RTO
board.
SPP members will meet Tuesday in Oklahoma City to name a new board and
finalize the remaining FERC requirements.
"This should be the last thing needed to make SPP a Regional
Transmission Organization," said Matt Skinner, a spokesman for the state
Corporation Commission.
Another key component in gaining RTO status is the formation of a Regional
State Committee, which will be composed of regulators in each of the eight
states. The group will play a powerful role in the operations of the new RTO,
Bode said.
"Our application is different than any other Regional Transmission
Organization because it has more authority granted to the Regional State
Committee and it has a broader sense of cooperation between the board, the
industry and the states," she said. "We're the model for the rest of
the country."
The committee, which was incorporated recently, will meet for the first time
Monday in Oklahoma City. Bode is a member.
The new RTO will oversee transmission in Oklahoma, Kansas and portions of
five other states, including Texas, Arkansas, Missouri, New Mexico and
Louisiana.
Such drastic change is needed to improve the efficiency of electric
transmission, said SPP spokeswoman Stacy Duckett.
"The grid is highly interconnected and state boundaries are essentially
irrelevant when it comes to the wholesale transmission grid," Duckett
explained. "You can't plan it on a state-by-state basis. You have to look
at the big picture if you want to maximize efficiency."
Regulators say a more efficient grid would lead to lower rates for consumers,
although electric rates in Oklahoma are already among the lowest in the nation.
Today's transmission systems were built by local utilities to meet the
demands of customers within their service territories. That system doesn't
accommodate the rash of new power plants built in recent years.
The changes are designed to ensure that those plants are treated fairly by
the utilities that own and operate most of the nation's transmission lines.
In Oklahoma, a handful of newly constructed power plants are operating well
below capacity because the state's power lines are congested with power from
older, less efficient plants.
For example, regulators say two Tulsa area power plants capable of producing
enough electricity for 200,000 homes have been operating at about one-third of
their capacities since their construction because the transmission system does
not have the capacity to carry the extra load.
The plants near Jenks and Coweta are fueled with natural gas and equipped
with some of the latest low-emission pollution technology.
The new system will hopefully lead to improvements that will allow those
plants to sell and produce more power, Bode said.
"Tulsa will be particularly positively impacted by this because you have
a significant amount of new electric generation in your area," she said.
Oklahoma has more than 4,000 megawatts of excess generating capacity due
largely to a boom in power plant construction in 2000, when several states,
including Oklahoma, were planning to deregulate electricity.
Electric deregulation promised to increase demand by opening markets to
competition. But efforts to deregulate electricity stopped after deregulation
was blamed for the energy crisis in California.
A slump in the national economy following the terrorist attacks of Sept. 11,
2001, also contributed the halt in electric deregulation.
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(c) 2004, Tulsa World, Okla. Distributed by Knight Ridder/Tribune
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