posted on Thursday, June 08, 2006 4:02 PM
by
Andrea Kells
Kentucky PSC Allows Utilities to Leave Midwest ISO
The Kentucky PSC has cleared the way for Louisville Gas & Electric (LG&E) and Kentucky Utilities (KU) to withdraw from Midwest ISO (MISO), [Kentucky PSC order], granting its approval of the utilities' request on May 31. FERC approved the withdrawal earlier this year [LG&E and KU Ask to Leave MISO; MISO Defections ― Do They Signal a Sea Change at FERC on RTO Membership?]. The utilities plan to move ahead with an alternative transition management plan, dubbed the "transmission owner reliability coordination option," under which they will contract for services rather than join another transmission group. The Tennessee Valley Authority is lined up to act as the utilities' reliability coordinator, while the Southwest Power Pool will administer their open access transmission tariffs, effectively acting as the independent transmission coordinator.
The Kentucky PSC based its decision on several cost-benefit analyses submitted by both the MISO and the utilities; the PSC determined that the utilities' analysis' assumptions and inputs were more reasonable. The PSC also determined that the utilities should not be required to hold harmless any retail customers from additional costs incurred after their exit from MISO, and agreed with the utilities that their participation in MISO had decreased the PSC's regulatory authority.
PSC Chairman Mark David Goss dissented from the decision. He argued that Kentucky should cooperate with what he characterized as "inevitable electricity policy" ― regulation of electric power on a regional basis, reflecting the growing presence of MISO and PJM. He also warned against the potential loss of the utilities' market based rate authority, and the impact this might have on sales revenues. His concerns indicate where battle lines may be drawn in future cases involving utilities' attempts to exit ISOs and RTOs.