California Seeks to Keep Control of Power Grid

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California electricity officials submitted a plan Friday to retain control of the state's power transmission grid even as federal regulators appeared to be backing off from an order pressuring the state to join a transmission organization spanning several Western states.

The California Independent System Operator, which runs the transmission grid for about 75% of the state, told the Federal Energy Regulatory Commission that its current operations comply with the agency's efforts to create multi-state transmission organizations to improve the flow of electricity around the country.

Cal-ISO was joined in its filing, made under protest, by Southern California Edison and San Diego Gas & Electric. Pacific Gas & Electric, which is operating under bankruptcy-law protection, filed separately, saying that it supported the formation of a Western regional transmission organization "as the best approach to achieving market efficiencies and increasing reliability."

FERC had directed Cal-ISO to submit a plan for joining a Western regional transmission group as a condition for implementing a federal plan to help control electricity prices in California during periods when power is scarce. The price-stabilization measures were first used Wednesday and Thursday during power emergencies, and Cal-ISO officials said it is still too early to tell whether the measures reduced prices or affected supply.

Michael Kahn, chairman of Cal-ISO's five-member board of governors, said it is illegal for FERC to require the filing as a condition for providing measures to control market prices in California, which the federal agency has found to be unjust and unreasonable.

"We believe it would be inappropriate for FERC to compel a Western-wide RTO [regional transmission organization] until a number of issues are settled," Kahn said, ticking off a list of problems in the state's electricity industry, including PG&E;'s bankruptcy and the proposed purchase of Southern California Edison's transmission grid by the state.

There was no public reaction from FERC to the ISO's filing, but a commission official privately agreed that it would be unadvisable to attempt to meld California into a Western-wide grid while the state is in the midst of a power crisis.

"This may not be the right time," the official said. "The rest of the members [other Western states] would not favor the California ISO joining now."

Currently, the prevailing sentiment of FERC's governing board is that California should be part of a Western grid--not a stand-alone entity. There is also concern that the ISO may not be sufficiently independent, because its board is appointed by the governor.

Linking FERC's California price control plan to the transmission grid filing--an action that state officials found demeaning--has also been criticized in Congress and within the agency.

Even FERC Chairman Curt Hebert, the main advocate of compelling California to file, seemed to be backtracking earlier this week. Hebert said at a news conference that he would not automatically suspend the price control plan if the ISO failed to submit a filing. "I will wait to decide," he said.

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Rivera Brooks reported from Los Angeles, and Alonso-Zaldivar reported from Washington.

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