Buoyed by Supreme Court ruling, FERC takes next step.(Federal Energy Regulatory Commission)(Brief Article)

Fresh from a Supreme Court ruling on March 4 that affirmed the government's right to regulate the nation's power grid, the Federal Energy Regulatory Commission (FERC) lost little time outlining its latest plan to require a standard design for wholesale electricity markets and a standardized transmission service under a new open access transmission tariff.

The high-court decision, which affirmed an appeals court ruling that FERC had the authority to implement its 1996 rule requiring investor-owned utilities to open their power lines on an equal basis to competitors, dealt a blow to state utility regulators who had argued that FERC usurped their authority. The case was brought by state regulatory agencies from New York, Florida, Idaho, New Jersey, North Carolina, Virginia, Washington, Vermont, Wyoming, and the National Association of Regulatory Utility Commissioners.

Contrary Challenge

The court ruling simultaneously denied a contrary challenge from a unit of the collapsed Enron Corp. that asserted FERC did not go far enough and should expand its authority to retail and wholesale markets.

"The court has gone 99% of the way toward saying FERC has authority over all uses of the grid," Lynn Church, executive director of the Electric Power Supply Association (EPSA), told the Wall Street Journal.

While FERC said it intends to create consistent, mandatory rules for the nation's electricity markets, observers cautioned that the clash between state governments and large utilities has not been put to rest by the Supreme Court ruling.

Under FERC's latest proposal, utilities will be encouraged to surrender control of their high-voltage transmission lines to independent regional transmission organizations (RTOs), but even those that refuse to sign on to the program will be required to observe the rules set up by FERC. Those rules would strip a great deal of control from utilities, some of which have been accused of hogging transmission capacity for their own customers.