The Tennessee Valley Authority (TVA), the nation's biggest public power producer, said it had agreed to connect its 30,000 megawatts of generation with a network that spans 20 Midwest and Southwest states and one Canadian province.

Southeast utilities Southern Co and Entergy Corp. also agreed to join the grid formed by the combination of the Midwest Independent Transmission System Operator Inc. (ISO) and Southwest Power Pool Inc (SPP), expected to close this summer, the TVA also said, in a statement.

Together, the four groups own or operate 150,000 miles of transmission lines and provide power for an area covering 1 million square miles.

Federal regulators applauded the move as an important step in their drive to create so-called regional transmission organizations (RTOs).

Federal Energy Regulatory Commission (FERC) Chairman Pat Wood said the move is important because ``TVA is the linchpin for the eastern interconnection.''

FERC has painted transmission bottlenecks as a main culprit in power shortages like the one seen in California last winter, which spurred blackouts and the bankruptcy of a major utility.

With Wood at the helm, FERC has pushed through rules that compel utilities to join RTOs or lose their rights to compete in deregulated wholesale power markets.

FERC contends that an interwoven electricity grid will reduce bottlenecks in moving power to high-demand areas and benefit consumers with lower electricity bills.

States in the Midwest and Northeast with higher power supply expenses have been mostly eager to meet the FERC's vision for RTOs.

The Southeast has been a stubborn participant in the RTO process because of low-cost power from coal-powered plants and utility bills heavily regulated by state commissions.