PSCs Request Rehearing and Motion for Stay with FERC
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August 1, 2001 For More Information, Please Contact:
Chrys Wilson, Manager
Office of External Relations
(410) 767-8047


Maryland Public Service Commission,
District Of Columbia Public Service Commission,
Virginia State Corporation Commission
Join Forces In Request For Rehearing
And A Motion For Stay With The
Federal Energy Regulatory Commission

Baltimore, MD -- On July 12, 2001, the Federal Energy Regulatory Commission ("FERC" or "Commission") instituted a monumental change in electric transmission policy. The Commission ordered that the three independent system operators (ISOs) in the Northeastern United States form one Regional Transmission Organization (RTO).

Maryland Public Service Commission Chairman Catherine I. Riley expressed grave concern at this risky policy change stating "to abruptly change course when there's no crisis, adds a huge new variable of instability" to electric restructuring. Riley says "surely FERC should have learned from California that uncertainty and poorly defined or untested market rules can lead to disastrous consequences." This change creates uncertainty for a presently stable and reliable market at PJM. It calls into question the business rules that govern how electricity is moved, priced and monitored through the PJM Interconnection -hailed by many to be the best of its kind in the world.

Consequently, the Maryland Public Service Commission, the District of Columbia Public Service Commission ("DCPSC") and the Virginia State Corporation Commission ("VASCC") have filed a Motion for Stay and Request for Rehearing of the FERC Order. These Commissions have also requested that FERC institute a notice and comment proceeding on the issues set forth in the Request for Rehearing providing the opportunity for State Commissions' input.

FERC has given the state regulators, power generators, energy retailers and power grid operators just 45 days to create a framework for a so-called Northeastern RTO.

The Commissions urge FERC to maintain the existing RTO boundaries, at least for the time being, to allow all stakeholders to focus their efforts on improving current markets, while increasing their efforts to coordinate with adjoining regions. The State Commissions argue that FERC goals would be better served by resolving the business rules applicable to all energy markets than by weakening the beneficial relationship between the PJM Interconnection and the regulatory organizations responsible for overseeing retail choice within their boundaries.

Riley states, "failure to reconsider this dangerous path means that FERC is assuming unto itself all responsibility for any disruption in the reliable delivery of electricity at just and reasonable prices in the PJM market area."

District of Columbia -- The District of Columbia Public Service Commission (DCPSC) joined the Maryland Public Service Commission in its filing before FERC to stay and reconsider the July 12th Order requiring that the three ISOs form one Northeast RTO to manage and operate electric transmission in the region. The FERC Order halts the DCPSC's ongoing work pursuant to its mandate as set forth by the Retail Electric Competition and Consumer Protection Act of 1999 to address concerns that are unique to the District in ensuring that its retail customers enjoy the benefits of reliable, reasonably priced electric service and rates as retail choice and related market rules are developed and implemented in the District.

In a statement presented today by DCPSC Chairman, Angel M. Cartagena, Jr., remarked, "District residents and businesses will be hurt by a shot-gun wedding between PJM and the New York and New England ISOs. I am terribly disappointed at FERC's reversal, from its position that the RTO process should be voluntary, without explanation or forewarning to State Commissions. This 'about-face' is arbitrary and I believe it is appropriate and necessary for the District to challenge FERC's decision."

The FERC Order fails to establish appropriate guidelines that address reliable, efficient and non-discriminatory wholesale power markets and their impact on retail customers in the District. In addition to anticipated delays in the development of competitive wholesale markets in the Mid-Atlantic region and interruptions in the development of the competitive retail market in the District, the DCPSC efforts, in collaboration with Maryland and other stakeholders, that have been well underway to address issues such as market monitoring and reliability assurance will cease as the focus shifts to a single RTO. This major priority shift in FERC policy to create a specific RTO configuration adds uncertainty and risk for the marketers and suppliers in their decision to participate in the Northeast market and places additional burdens of costs and risks for the District in the transition.


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