Commission Watch

PUCs could face rate shock if feds push plans for an RTO signup bonus.

State PUCs will surely weigh in on the latest move by the Federal Energy Regulatory Commission (FERC) to work its will on the nation's electric transmission grid. In this case, the item in question concerns a policy statement proposed by FERC that would reward electric utilities for investing in new transmission upgrades and-more importantly-for joining up with a regional transmission organization (RTO).

Certainly, no one suggests that state regulators oppose grid expansion. But if past decisions offer any guide, one can expect that state PUCs will question any new policy that ties incentives for grid expansion to a surrender of rate-making jurisdiction to federal agencies.

In short, the evidence indicates that state PUCs fear a new round of rate hikes if FERC should get its way on grid restructuring.

Meanwhile, recent PUC actions continue to cast doubt on the benefits that might follow from reform of wholesale markets-even though some states still attempt to sound optimistic in the face of paltry progress .

Illinois, an advocate for choice, still complains of lackluster growth in competition and in the number of customers opting for supply choice. Michigan, another booster, reports a modicum of progress, though the numbers seem not too much different than those seen in Illinois. And Pennsylvania, the poster child for electric utility reform, has been forced to fall back and assign customers to suppliers on a random basis, at least in the Philadelphia area, under a regulatory settlement that called for compulsory assignment if not enough individual customers elected competitive suppliers.