Fortnightly Magazine - February 15 1997

Perhaps the only political prediction bound to come true this year is that the words ôelectric restructuringö will reverberate in nearly every stateÆs legislative chamber.

So says Matthew Brown, director of the energy project at the National Conference of State Legislatures.

But other factors support BrownÆs prediction. Public Utilities FortnightlyÆs informal survey of most states turned up similar results. Legislators know that the Clinton Administration and the U.S. Congress plan to introduce a federal bill this year.

With its membership opened, NEPOOL sets a transmission tariff, but still must develop competitive markets. In 1993, after a series of attempts going back as far as 1971, the New England Power Pool failed to reach agreement among its members for a regional transmission arrangement. But destiny then took over (em with help from the newly enacted Energy Policy Act (em to lead pool members back to the bargaining table. Finally, on Sept. 30, 1996, NEPOOL announced that its executive committee had agreed in principle on restructuring the pool.

Flow-based pricing ends

subsidies inherent in grid-wide,

postage-stamp rates.

I

n Order 888, the Federal Energy Regulatory Commission suggested 11 principles for forming an independent system operator, or ISO. In its third principle, the FERC offered this guidance on transmission pricing:

An ISO should provide open access to the transmission system and all services under its control at non-pancaked rates pursuant to a single, unbundled, grid-wide tariff that applies to all eligible users in a non-discriminatory manner.

Electric Competition Moves On

The recent months have brought a flurry of activity in a number of states:

ARIZONA: The Arizona Corporation Commission approved rules opening Arizona's electric industry to competition over a four-year period starting in 1999. The rules allow retail customers to retain standard electric service, or to choose competitive services.

Beginning Jan. 1, 1999, utilities must make available 20 percent of its peak 1995 demand to all customers, including small business and residential.