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Sparks Fly as Agencies Spar Over Power System by Deirdre Gregg, Business Journal staff writer Puget Sound Business Journal, December 17, 2004

Electricity delivery in the Northwest could become more efficient and affordable if a single entity coordinates transmission, say supporters of a controversial new organization.

Nine Northwest utilities on Dec. 10 took the first step toward forming Grid West, an organization that would serve as a regional transmission manager.

"You could liken the transmission system to an interstate highway system," said Ed Mosey, spokesperson for the Bonneville Power Administration. "As (electricity) moves through that system now, every time you hit a stretch owned by another utility, you pay a toll."

Under Grid West, utilities could send electricity over power lines without trade being hindered by such charges, Mosey said.

But some of the region's public utilities have concerns about the Dec. 10 vote, and about Grid West itself, which they view as a risky, potentially costly and unnecessary restructuring of the electricity system. Snohomish County Public Utility District even filed a lawsuit, trying unsuccessfully to stop the Dec. 10 vote.

"We calculated that net costs of Grid West would be $122 million annually for Northwest consumers," said Neil Neroutsos, a spokesperson for the Snohomish County PUD.

Grid West is one of many regional transmission managers that are forming across the country. Mosey said the Federal Energy Regulatory Commission supports such organizations because it believes they can offer efficiency and savings.

In the Northwest, the suppliers of electricity -- the utilities -- are also owners of the transmission system -- the pathway by which electricity travels to customers.

"FERC doesn't like the fact that you are constantly having to monitor suppliers to make sure they're not using their transmission systems to benefit their supply side -- i.e., keeping someone else off the highway to benefit their traffic," Mosey said. "Having a single independent operator means that wouldn't happen."

Grid West consultant Kurt Conger said the transmission grid in the Northwest is now owned by a conglomeration of utilities. Having so many different owners working separately creates bottlenecks.

Under Grid West, "these utilities would have their power scheduling and transmission service coordinated by a single entity, much like an air traffic controller," he said.

Supporters say Grid West would keep costs down, ensure that all power producers have fair access to the transmission system, improve reliability, handle necessary upgrades and prevent market manipulation.

Mosey and others noted that with the Dec. 10 vote, members only adopted a set of bylaws. A final decision on whether to launch Grid West won't be made until 2007, Mosey said. The organization will now appoint an independent board, do a cost-benefit analysis and determine logistics. The process will only move ahead if the cost-benefit analysis shows it makes sense, he said.

Steps like the cost-benefit analysis and technical work should have been taken before the organization adopted bylaws, said Lon Peters, an economic consultant who represents public utilities.

Further, building an institution like Grid West is diverting resources from steps that could be taken now to improve the transmission system, Peters said.

For example, several transmission providers are working on a Web site that works similar to the travel Web sites Expedia.com or Travelocity, he said.

Transmission providers with available capacity could post their availability on the Web site. A power supplier could visit the site and book a path for delivering electricity to its customers, Peters said.

"We could have that up and running and fully functioning within a year or two, but instead we're going to spend more time building this institution," he said.

Opponents of Grid West also argue that other regional transmission organizations have not been effective, and that creating Grid West might ultimately drive rates up.

Earlier this month, Snohomish County PUD sued BPA, seeking an injunction to prevent the Dec. 10 vote, and other public utility commissioners expressed support for the lawsuit. The lawsuit failed to stop the vote.

However, the 9th U.S. Circuit Court of Appeals ordered BPA to respond by Dec. 17 to questions raised in SnoPUD's filing.