FERC Urged To Give States More Say

FERC, which proposed a set of market rules last summer, faces bitter opposition from Southern and Western states which fear the authority of their state regulators will be usurped. Some lawmakers such as Alabama's Republican Sen. Richard Shelby have privately threatened to block or delay the FERC rules.

The proposed rules would combine US regional transmission networks, launch real-time trading and create market monitors to detect unfair trades, beginning in 2004 in some regions. The plan aims to avoid a repetition of the California energy crisis of 2000-01, when wholesale power prices rocketed amid blackouts and billions of dollars in state economic losses.

However, the plan has drawn fire from Southern and Western states which already enjoy cheap electricity and fear the new market rules would mean higher costs for consumers.

The Edison Electric Institute, an industry lobbying group representing the largest U.S. utilities, said FERC must do much more to address opposition to its plan.

The FERC must give states a greater advisory role to determine which transmission projects get built, the Edison trade group told FERC in a filing. The proposed rules would give that authority to regional planning groups.

"The commission has no legal or policy basis upon which to limit state participation," the trade group said.

States currently have have significant authority over resource adequacy and transmission planning, and the FERC must accommodate their concerns, it added.

Edison Electric Institute also said it agreed with the FERC's decision to delay issuing a final version of its rules until July to allow time to prepare another analysis in April.

The trade group said it had "deep concerns" about a current provision in the FERC's standard market design rules that would give utilities that currently own transmission lines only last-resort authority to expand their grids.

"Given the critical need for cost-effective transmission infrastructure, this is no time for the commission to relegate transmission owners to last-resort status," institute executive Jim Falma said in a statement.

The trade group also urged the FERC to make public power agencies and municipal utilities subject to any new market rules.