FERC to Encourage Utilities to Sell Lines

U.S. regulators said Wednesday that they planned to change a policy that aimed to encourage electric utilities to sell their high-voltage transmission systems, saying the original policy led to too few divestitures.

In January 2003, the Federal Energy Regulatory Commission said it would allow transmission companies that are independent of utilities to charge higher rates for the use of their systems.

The agency, which regulates the rates, said the higher return would make owning the transmission lines more attractive and independent companies would be willing to pay utilities more to buy them.

The change proposed Wednesday would allow the higher rates even when a utility retains a stake in the transmission company, FERC Chairman Pat Wood said during a meeting in Washington.

The utility’s ownership would be limited to 5% of voting control and 49% of economic interest.

The commission and Congress have offered incentives to utilities to sell their high-voltage systems, saying independent transmission companies will be more likely to invest in the electricity grid and allow power shipments by non-utility generators.

Only a handful of utilities have sold transmission systems, mostly in states such as Michigan, where state regulators have insisted on divestiture.

“If we think transmission companies are a good thing, larger, more regional transmission companies are probably an even better thing,” Commissioner Joseph Kelliher said during the meeting. “The policy that we’ve established in the past does make it difficult for them to expand.”

The Energy Department has estimated that $56 billion must be spent on new transmission lines this decade. U.S. officials and congressional leaders have pointed to the August 2003 blackout that left 50 million customers in the Northeast without power as evidence of the urgency of making improvements to the electricity grid.