A 600-plus page Federal Energy Regulatory Commission Standard Market Design (SMD) proposal released before Congress’ August recess was rejected via resolution by
Southern governors during their recent Southern Governors
Conference.
FERC’s proposal, intended to have the most significant impact on electricity delivery since 1996, calls for the nation’s five independent grid operators to operate daily wholesale markets, tap the cheapest sources of electricity, and move energy in a non-discriminatory way. Transmission bottlenecks will be paid for
by power delivery fees that reflect cost to purchasers, which creates the logjams.
The plan is open to public comment for 75 days.
But, the 10 Southern governors unanimously voted during their
conference against this proposal saying it could raise power costs in the South while giving residents few, if any, benefits.
“There are 10 governors here, and all of us supported the resolution because it is not to the advantage of the South to socialize electricity costs,'' said Kentucky Governor Paul Patton. Patton also compared FERC's proposal to a farmer wanting distant customers to pay for a road so vegetables could be taken to market.
The complex, 600-page plan is intended to ease the flow of wholesale electric power across the nation's patchwork power grid. It would do that in part by taking control of transmission lines from local utilities and giving it to new regional operators. Regional operators would control the flow of electricity under uniform rules that allow power to easily move from areas of abundance to places where it is scarce.
An initial review of the FERC proposal by Governor Patton’s administration concludes that rates in Kentucky, which are the lowest in the nation, would inevitably rise as Kentucky is forced into a regional electricity market that includes other states with higher rates. Initial projections say that it would cost Kentucky billions of dollars over the next 10 years.
The proposal would also burden small entities like electric cooperatives, but the proposal contemplates waivers like those held under FERC Order No. 888.
