Citation:
Abstract:
The debate on the issue of pricing transmission services, indeed transmission policy ingeneral, is characterized by a massive cognitive dissonance. FERC issues a lengthy series of
significant questions about just about everything a federal regulator would ever want to know about
transmission, except for how they relate to the other set of regulators who have so much to say
about the grid. Other than a passing reference, that question did not get asked at all. Thus we are
involved in a debate where most of the discussion takes place in a forum that is responsible for
significantly less than half the revenue that's derived from transmission. Moreover, the regulators
that are responsible for the bulk of transmission revenues set them as part of bundled retail rates
and rarely, if ever, think about transmission in discrete terms. Accordingly, we not only have
cognitive dissonance as to the forum and the substance, but we have decision-makers making critical
decisions who simply do not think about what their peers may be doing, except to the extent that
state regulators worry about FERC preemption of their authority, and FERC fears that state
regulators are actually monopolists who intend to impede all competition. Beyond that, there is
not much dialogue. Given this state of affairs, it seems unlikely that coherent transmission policies
will emerge in the absence of a more formal system of cooperation.