WASHINGTON -- - Mississippi criticizes FERC grid connection rules

WASHINGTON -- In a fresh attack on the Federal Energy Regulatory Commission, Mississippi utility regulators said recently that FERC did not have authority to open the U.S. power grid to small generating plants.

Regulators and lawmakers in Mississippi and other Southern states have already challenged a FERC proposal to set broad new rules for regional electricity markets and transmission as an intrusion on states' rights.

The Mississippi Public Service Commission filed documents with FERC, flatly rejecting federal regulators' July proposal to give small generators more leeway to connect to transmission lines owned by utilities.

The plan is "patently flawed" and "unlawfully infringes upon the jurisdiction of the states," the state regulators said.

The proposal is also opposed by large utilities such as Atlanta-based Southern Co. Inc. and New Orleans-based Entergy Corp., which have spent tens of millions of dollars building transmission lines.

FERC is still waiting for industry comment on its proposal to open the power grid to small generators producing less than 20 megawatts of electricity.

The scathing criticism from Mississippi state regulators comes as Republican Sen. Trent Lott of Mississippi continues trying to block FERC's proposed market rules.

FERC wants utilities to sew their grids together and follow standardized rules to change what it sees as a tilted playing field favoring incumbent utilities. Lott and other Southern senators want to add language to a broad energy bill to block or significantly weaken the FERC's ability to pursue its rules.

The issue is one of a handful of remaining policies yet to be finalized by energy bill writers this month. Lott contends the FERC measure could stick their states' utilities and their customers with paying for new transmission lines that ship their cheap power to other states.

Merchant power plant developers have flocked to the Southeast because of abundant supplies of natural gas and water and favorable terms given to build gas-fired power plants which have seen the lion's share of new building. Separately, in a letter released by FERC recently, Entergy Chief Executive Wayne Leonard dismissed as "absurd" a study by rival merchant plant builder Calpine Corp. showing that new gas-fired plants could replace 5,700 megawatts of Entergy's older plants. Leonard said the study "grossly overstate the magnitude of the potential fuel savings" because it was based on incremental fuel costs rather than realistic scenarios.

Calpine has challenged Entergy's bidding process and accused it of favoring its own subsidiaries to the detriment of merchant competitors. The case is pending before a FERC judge.