Public Power & RTOs: How To Avoid Making Swiss Cheese

 

Several issues need to be addressed before municipals and co-ops participate significantly in regional transmission organizations.

On the last day of the Clinton administration, the U.S. Department of Agriculture issued a controversial regulation halving the maximum hole size allowed in Grade A Swiss Cheese. The Libertarian Party attacked the USDA as "Monterey Jack-booted thugs," but domestic cheesemakers argued that cheese with big holes crumbles during mechanical slicing. When it comes to regional transmission organizations (RTOs) and the Federal Energy Regulatory Commission's (FERC's) attempt to "slice and dice" transmission functions, holes may cause similar problems. So it's important to understand the impediments to RTO participation by consumer-owned utilities, be they governmental or cooperative.

Although FERC's Order 2000 anticipated and discussed some of these impediments, it focused on threshold legal issues like tax and mortgage requirements that limit the private use of consumer-owned facilities. Such threshold issues have to be addressed carefully during RTO formation, and we start with them. However, they generally have proved to be solvable where all relevant utilities, both consumer-owned and investor-owned, genuinely want solutions. Indeed, the Midwest RTO (MISO) and the four operating Independent System Operators (ISOs) in California, the Mid-Atlantic states, New England, and New York include as participants quite a few consumer-owned transmission-owning systems.