Central Illinois Light Company;
Docket No. ER01-731-000
Cinergy Corp.; Hoosier Energy R.E.C., Inc.;
Southern Illinois Power Cooperative;
Southern Indiana Gas & Electric Company;
and Wabash Valley Power Association, Inc.

On December 20, 2000, six Midwest ISO transmission owners ("Petitioners") requested authorization from the Federal Energy Regulatory Commission ("Commission") for withdrawal from the Midwest Independent System Operator, Inc. ("Midwest ISO") in the event that the Commission permits Illinois Power Company, Commonwealth Edison Company and/or Ameren (collectively the "Separating Companies") to withdraw from the Midwest ISO. The Petitioners also seek recovery of the costs they have incurred as a result of their withdrawals. By Order dated December 27, 2000, the Commission ordered that interventions and protests related to the request be filed no later than January 11, 2001. In accordance with that Order, and pursuant to Rules 211 and 214 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission, 18 C.F.R. §§ 385.211 and 385.214, the National Association of State Utility Consumer Advocates ("NASUCA") hereby files this Motion to Intervene and Protest of Notice of Withdrawal of Certain Remaining Midwest ISO Members.

The Petitioners’ filing clearly indicates the extent of the consequences – including the dispute over incurred costs which will erupt – which will result from any move by the Commission to allow member utilities to simply walk away from commitments they made to join FERC-approved transmission organizations. For the reasons set forth below, NASUCA respectfully urges the Commission to deny the Petitioners’ request.

Communications and correspondence concerning this matter should be directed to

Robert G. Mork
Deputy Consumer Counselor for Federal Affairs
Indiana Office of Utility Consumer Counselor
100 N. Senate Ave., Room N501
Indianapolis, IN 46204-2215
Telephone: (317) 233-3234
Fax: (317) 232-5923
Email: rmork@ucclan.state.in.us

The National Association of State Utility Consumer Advocates is a national organization comprised of 41 offices of ratepayer advocates in 39 states and the District of Columbia. Each NASUCA member office is designated by state law to represent public utility ratepayers before state utility commissions, federal agencies, and state and federal courts. NASUCA assists in the exchange of ideas and information among its members and takes positions on a wide variety of issues affecting utility rates before federal agencies, the courts, and the United Sates Congress. In particular, NASUCA and its member offices have been actively involved for several years in the debate over how best to structure ownership and control of the electric transmission grid so as to facilitate development of a robust competitive generation market. NASUCA and its member offices have participated in this debate before FERC, state utility commissions, state legislatures, the United States Congress and the courts.

NASUCA and its members have an interest in participating in this proceeding, where the Commission may determine when and how a transmission owner may move from one regional transmission organization to another. A decision in this case may set a precedent for other proposals from transmission owning utilities. Relevant NASUCA resolutions are attached. Pursuant to Rule 214 of the Commission's Rules of Practice and Procedure, 18 C.F.R. § 385.214 and 16 U.S.C. § 825g(a), NASUCA should be permitted to intervene, with full rights to participate as a party.

The Petitioners’ notice of withdrawal graphically illustrates the potential consequences if the Commission permits its RTO process to turn into a race to the bottom, where utilities are not expected to honor their commitments. As NASUCA has argued with respect to the Illinois Power filing in docket number ER01-123-000, the Commission should deny such filings. Considering the meager justifications offered by the Petitioners, the Commission should regard their filing not as a serious attempt to withdraw, but as a harbinger of the chaos which will certainly ensue if the Commission fails to hold transmission owners to the obligations they have undertaken.

In the Midwest ISO, years of hard work in reaching consensus amongst utility, industry, consumer and other groups led to the formation of an organization which was accepted by the Commission and a broad coalition of stakeholder groups as a positive and constructive organization.

Unfortunately, the Commission’s lack of response to clear refusals by other utilities to meet the requirements of Order 2000 has encouraged the Separating Companies to hope that they could get a better deal by simply bailing out of the Midwest ISO. Therefore, Illinois Power (followed by Exelon and Ameren) announced to the world that it was withdrawing from the Midwest ISO and issued "notice" to the Commission that it was doing so as a matter of right. Illinois Power justified its action on the pretext that the merger of its corporate parent constituted a change in control of its transmission assets – and despite the fact that Dynegy asserted Illinois Power’s membership in the Midwest ISO as a reason why the merger should be approved. Illinova and Dynegy Section 203 Application at 30, 36.

In the absence of prompt reaction from the Commission, other utilities followed suit. Exelon, Commonwealth Edison’s parent corporation, also alleged that merger activity permitted Commonwealth Edison to withdraw from the Midwest ISO, even though it too had relied on Commonwealth Edison’s Midwest ISO membership in its merger proceedings. Answer filed to Motions for Rehearing and/or Other Actions in the Exelon merger proceeding. Ameren also notified the Midwest ISO that it planned to leave, but without even the pretexts relied upon by Dynegy and Exelon.

The present filing is only the latest episode in what the Commission has allowed to transpire. In their filing, the Petitioners make no effort to justify their departure under Section 203 of the Federal Power Act, and their liberal interpretation of the Midwest ISO Agreement fails to provide a sufficient basis for granting their withdrawal. At best, the filing raises some issues as to whether the departures of the Separating Companies may compromise the Midwest ISO’s scope and configuration under Order 2000 – an issue more properly addressed in the Midwest ISO’s Order 2000 filings. The Petitioners’ filing makes no serious attempt to show that the proposed withdrawals are in the public interest, nor does it make any attempt to address the competitive effects, the rate effects, or the effect on regulation of the withdrawal. The Petitioners’ filing makes no pretense of any factual showings as to financial or competitive effects.

At best, Petitioner’s filing is premature and lacking in the necessary showings, and it should be rejected. NASUCA urges the Commission to deny the Petitioners’ filing or, in the alternative, to set the matter for evidentiary hearing.

In its order conditionally approving the Midwest ISO, the Commission stated that "any withdrawal from the ISO Agreement by a public utility Transmission Owner after the ISO begins operations will require a Section 203 filing to transfer control ... back to the Transmission Owner." Midwest Independent Transmission System Operator, Inc., 84 FERC ¶ 61,231. The Commission’s express order (over the opposition of Illinois Power and other transmission owners) that any withdrawal from the Midwest ISO must be subject to Commission approval indicates an intent on the Commission’s part to conduct a substantive review of the appropriateness of each requested withdrawal.

The Commission is required by statute to approve any change in ownership or control of jurisdictional facilities, and may grant approval only upon a finding that "the proposed disposition, consolidation, acquisition, or control will be consistent with the public interest...." Section 203 of the Federal Power Act, 16 U.S.C. § 824b(a). As the Petitioners’ request would involve a change in control of their transmission facilities, the Commission is required to review this matter under the Section 203 standard.

In considering the procedures and substantive standards it should use in reviewing this request, and in then conducting its review, the Commission must also keep in mind the implications of this request for the entire electric utility industry. In reviewing applications it has received for the establishment of various Regional Transmission Organizations (RTOs), the Commission has been properly concerned about ensuring that transmission owners, in developing these applications, are not able to control the governance or pricing of transmission organizations, or to manipulate the size and scope of such organizations in ways which might serve to perpetuate, rather than ameliorate, the residual market power of the transmission owners.

The Commission must be wary of making it overly easy for transmission owners to flit from one RTO to another, to avoid creating a situation where neighboring RTOs start a race to the bottom by competing to offer the most incentives to transmission owners to join. If the Commission starts down that road, the ultimate winners of the RTO competition will be transmission owners and the RTO that grants transmission owners the greatest amount of "incentives" and allows those transmission owners to retain as much market power as possible. The ultimate losers will be consumers, the end use purchasers of transmission and generation. Furthermore, NASUCA is concerned that such a competition will weaken existing RTOs with respect to independence, pricing and governance unless requests for withdrawals from RTOs are carefully scrutinized. The Commission can avoid that pitfall by conducting a substantive review of this request and by granting approval only if it finds the request to be consistent with the public interest.

Customers should not be subjected to costs created by the attempts of transmission owners to game the system, and this is not the appropriate time to consider such costs. How these costs will be recouped will be a major issue that the Commission will be forced to deal with in the future if it fails to require transmission owners to honor their commitments now. Additionally, requiring withdrawing transmission owners to be liable for their own costs will serve as an additional disincentive to utilities jumping from RTO to RTO, searching for the most favorable deal.

WHEREFORE, NASUCA respectfully requests that the Commission deny the Petitioners’ request, or at minimum set it for hearing, and for all other just and appropriate relief.

Respectfully submitted,

_________________________________

Robert G. Mork

Deputy Consumer Counsel for Federal Affairs

Indiana Office of Utility Consumer Counselor

100 N. Senate Avenue, Room N501

Indianapolis, IN 46204-2215

(317) 233-3234 – Phone

(317) 232-5923– Facsimile

CERTIFICATE OF SERVICE

I hereby certify that a copy of the of the Motion to Intervene and Protest of Notice of Withdrawal of Certain Midwest ISO Members has been served upon the official service list provided on the Federal Energy Regulatory Commission web page, this 11th day of January, 2001.

_________________________________

Robert G. Mork

Deputy Consumer Counsel for Federal Affairs