Western Utilities Seek RTO Approval from FERC

Business Editors/Energy Writers  
PORTLAND, Ore.--(BUSINESS WIRE)--March 29, 2002--A coalition of 
western electric utilities has asked the U.S. Federal Energy 
Regulatory Commission to find that the RTO West proposal submitted 
today meets FERC's minimum characteristics and functions for formation 
of a regional transmission organization.  
Under the RTO West proposal, the region's electric transmission 
lines would function as a common carrier of wholesale electricity and 
enable one-stop shopping for wholesale transmission services 
throughout the Northwest geographic area.  
"RTO West is designed to enhance reliability and create a more 
stable environment for investment in the generation and transmission 
resources needed to meet growing demand," Wayman Robinett of Puget 
Sound Energy, Chairman of RTO West, said. "Having a single control 
area for the region also would make the interstate market more 
efficient."  
The coalition developing the proposal comprises Avista 
Corporation, Bonneville Power Administration, British Columbia Hydro 
and Power Authority, Idaho Power Company, NorthWestern Energy 
(formerly The Montana Power Company), Nevada Power Company, 
PacifiCorp, Portland General Electric Company, Puget Sound Energy and 
Sierra Pacific Power Company.  
The utilities are asking FERC to review a plan developed by the 
utilities in a collaborative process over the past two years with 
regional stakeholders, including transmission owners, electric 
utilities without transmission, consumers, generators, marketers, 
regulators and elected officials.  
"Our goal is that Northwest consumers will benefit from the 
formation of RTO West," BPA administrator Steve Wright said. "While 
this isn't the final step in the process, the time is right to present 
our regional progress to date to FERC."  
During the FERC process, the Filing Utilities will be submitting 
additional information and examining issues that remain to be 
resolved. Some of the investor-owned utilities also require state 
approvals before the RTO can begin operations, anticipated about 2005.  
Recognizing Canadian sovereignty, regulatory approvals are 
required in Canada for BC Hydro to participate.  
An initial independent analysis indicates that the benefits of RTO 
West for the region exceed the operational costs. The independent 
study estimates that formation of RTO West would produce annual 
savings of about $300 million for the region.  
Operation of RTO West would likely cost $125 million to $140 
million annually, including the amortized start-up costs. This figure 
is based on benchmarking data from other RTOs across the country.  
Recognizing fundamental differences between the West and other 
regions of the country, RTO West's structure differs from other RTOs 
being formed in the United States.  
RTO West would reflect the region's large geographic spread and 
dispersal of loads and generation. RTO West's structure also reflects 
that hydroelectric power provides a significant amount of the 
generation in the region, in contrast to the rest of the country.  
RTO West, an independent non-profit corporation, would have its 
own board and management independent of energy market participants. 
Independent governance is designed to ensure that buyers or sellers of 
electricity do not control transmission, assuring them of open access 
to all sources of generation.  
Through a new pricing structure, RTO West would eliminate 
pancaking of rates. Currently, customers pay an additional 
transmission fee when electricity moves from one system to another. 
Under RTO West, the system would be analogous to motorists paying one 
fee to their home state for a license plate that allows them to drive 
their car anywhere within the country.  
To avoid cost shifting among utilities, the utility customer pays 
RTO West a single access fee based on the cost of the facilities of 
the transmission owner. For example, a customer served from Bonneville 
Power Administration facilities will pay the BPA Company Rate. This 
prevents customers of one utility with historically low transmission 
rates from experiencing a sudden rate increase or cost shift.  
RTO West is designed to help remedy congestion by giving 
transmission owners and developers of generation the appropriate 
economic signals, leading to the construction of new transmission 
facilities and placement of generation resources or demand-side 
alternatives in the most beneficial locations.  
The filing can be reviewed at the RTO West web site: 
www.rtowest.org 
 
 
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