Another paper from the DOE Reliability Task Force just arrived. I have then pdf file if you want it — should be posted shortly on the SEAB website.
http://vm1.hqadmin.doe.gov:80/seab/elec_rep.html

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 650-328-5670
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Issues of Federalism in Transmission System Reliability
A Position paper of the
Electric System Reliability Task Force
Secretary of Energy Advisory Board
July 9, 1998
Introduction

Our federal system shares institutional responsibility for ensuring North American grid reliability; this paper addresses the role of state and regional authorities. Our focus is issues of siting and non-federal price regulation that have significant reliability implications. We address both constraints and opportunities. We also acknowledge an important threshold issue: whether the grid itself retains natural monopoly features that justify a continuing government role in regulating the prices of grid services.

If, as some believe, grid construction and maintenance lack compelling natural monopoly characteristics, regulated systems of cost recovery may not long endure at state or other levels. Acknowledging this viewpoint, the Task Force nonetheless believes that this sector’s monopoly aspects remain robust enough to justify improving rather than dismantling price regulation. And we are concerned that state and federal regulation is not doing enough to promote and shape sound investments in grid reliability.1 We also support an increased role for regional institutions that can help states resolve issues that transcend their individual boundaries.

Our paper is organized in four sections below. In section I, we begin with a critical review of state and local responsibility for transmission siting and evaluation of transmission alternatives. In section II, we then explore state roles in cost recovery and incentives for transmission enhancements, including but not limited to new transmission. The third section addresses states’ participation in existing regional reliability organizations. The final section is a summary of the papers recommendations.