Six Pacific Northwest utilities intend to form a stand-alone transmission company to which they propose to transfer control of their power line assets, either through sale or lease.
The transmission company would manage high-voltage power lines and substations that have a book value of USdollars1.8 billion and are scattered across six U.S. states. Regionally, the transmission system would be second in size to the 15,000-circuit-mile network controlled by Bonneville Power Administration (BPA), which ferries electricity from government-owned hydroelectric dams to interconnected utilities.
Consortium members expect to sign an agreement to develop a final transmission company compact. The participants are Avista Corp., Spokane, Washington; Montana Power Co., Butte, Montana; Portland General Electric Co., Portland, Oregon; Puget Sound Energy Inc., Bellevue, Washington; and Nevada Power Co., Las Vegas, Nevada, and Sierra Pacific Power Co., Reno, Nevada, both units of Sierra Pacific Resources in Reno.
The Federal Energy Regulatory Commission (FERC) is pushing utilities to form independent transmission groups like this one, which will give power marketers equal access to high-voltage power lines. The goal is to prevent utilities that own the lines from giving preferential access to affiliates, impeding development of competitive power markets. The plan also aims to lower costs by winnowing tolls, eliminating the problem of "rate pancaking," which occurs when electricity moves long distances.
The proposed Northwest transmission company would join a larger grid-management organization that would control power flows and ensure regional-grid reliability. The larger nonprofit organization, tentatively called the Northwest Independent System Operator, would operate the systems owned by the proposed transmission company, BPA or other power line owners.
The group hasn't yet worked out how a half-dozen transmission systems with differing debts and rates can be merged without creating cost shifts-an issue that has impeded expansion of other independent system operators.