ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, February 13, 1996 TAG: 9602140005
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
SUCH AN ARRANGEMENT, they say, should ultimately benefit retail customers, too.
American Electric Power Co. Inc. said Monday that it has joined with five other utilities to design a transmission pool agreement that could help increase competition within the electric power industry.
The utilities hope to file their plans for an independent organization, the Midwest Independent System Operator, with the Federal Energy Regulatory Commission late this year, AEP said.
Forming the organization can help boost wholesale competition by lowering costs for electricity moved over longer distances, explained Pat Hemlepp, an AEP spokesman. Wholesale power is what the utilities sell to each other for resale to their retail power consumers.
Currently, when a utility sells power to a wholesale customer outside its region, the customer must pay a separate fee each time the power crosses into a different utility's service area. In the transmission pool's region, the customer would pay just one access charge, Hemlepp explained.
Congress and FERC have moved in recent years to deregulate and bring competition to the electricity business. Competition requires the owners of transmission lines to give other power companies access at a fair cost. AEP said the Midwest group believes the pool would help ensure access and provide uniform pricing and efficient planning.
AEP, based in Columbus, Ohio, is the parent company of the former Appalachian Power Company of Roanoke and other subsidiaries.
As long as the proposed transmission pool doesn't create barriers to certain markets, it could be in consumers' interest, said Mark Hooper, research director for the Consumer Federation of America. "On the wholesale side, it's pretty clear that if you get an agreement that lets more people sell more electricity, [consumers] will be better off," he said.
Management of the independent system operator would likely report directly to a board of directors that would represent diverse interests, possibly including customer groups, Hemlepp said.
The way the pool will be organized hasn't been determined. The utilities will form groups to study that and other issues, including pricing and dispute resolution, AEP said.
Other participating utilities are Centerior Energy Corp., Cingergy Corp., Detroit Edison Co., Northern Indiana Public Service Co., and Wisconsin Electric Power Co. These companies and AEP own 38,830 miles of transmission lines covering 106,350 square miles in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia, West Virginia and Wisconsin.
They have invited other utilities in the Mid-Atlantic and Midwest to participate in the pool.
In October, AEP Chairman E. Linn Draper proposed a similar type of pool to manage regional transmission systems if retail distribution of electricity becomes a reality in the power business as expected. Hemlepp said the same pool might manage the system for both wholesale and retail power transactions.
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