MidAmerican gets OK on power lines in Iowa, Illinois

SALT LAKE CITY, UTAH - MidAmerican Energy Holdings Co., which is seeking permission to acquire Utah Power and other PacifiCorp operations, has received federal approval to establish a separate organization to oversee and manage access by outside companies to its power lines in Iowa and Illinois.

Yet MidAmerican Energy, part of billionaire Warren Buffett's business empire, said its initiative in those states in no way signals that PacifiCorp will abandon its plans to participate in "Grid West," a seven-company nonprofit consortium that hopes to oversee the operation of most transmission lines in the West.

"We made it clear [to the federal regulators] that we are not about to imperil the establishment of Grid West," said Jim Averweg, vice president of engineering at MidAmerican.

The Federal Energy Regulatory Commission, as part of its effort to promote deregulation of the nation's electricity markets, is encouraging the nation's power companies to find ways to jointly manage their transmission lines.

The idea of setting up regional entities to oversee the operation of lines owned by any number of different companies is simple.

In order for a deregulated electricity market to develop on the wholesale level, producers and buyers of electricity need to be able to move power unencumbered across thousands of miles of high- voltage lines.

Without a single oversight organization, electricity would end up flowing over lines operated by several different companies before it reaches its final destination. If each company charges its own transmission fees, the cost of that power could jump slightly every time it moves from one company's line to another.

Under Grid West, each company would keep the ownership of its transmission lines but the cost of moving electricity would be set for the whole system.

"Grid West still is in the formation stage, but we still support its goals," said Dave Kvamme, spokesman for PacifiCorp.

Some utilities, particularly in the Southeast and Northwest, have been reluctant to join such regional transmission groups. State officials in those regions argue that regional organizations are too expensive and dilute state authority over regulated utilities.

In lieu of joining an existing regional transmission organization, MidAmerican said it will hire an outside entity to respond to any request for service on its power grid.