A coalition of 29 municipal- and public-owned power systems will be among the first groups making use of a Federal Energy Regulatory Commission order requiring Utah Power & Light to make excess transmission line capacity available for delivery of non-UP&L generated electricity.
The "open access" requirement included in the FERC order allowing UP&L's merger with Pacific Power & Light worries many industry observers. For years, private investor-owned power companies have fought "open access," fearing they will find themselves competing for their own customers as transmission lines are opened to outside producers offering reduced-rate power.Officials from the merged companies, however, do not view acceptance of the FERC mandate as opening the flood gates to industrywide "open access."
John Serfustini, a spokesman for UP&L, said the order affects only excess capacity and has time limitations. He said UP&L has traditionally sold access to its excess transmission capacity. "Our people took a look at it when FERC made it a part of the conditions for merger and determined that it is something we can live with."
Serfustini said those seeking access will have to possess firm contracts, will have to specify how much power is involved, where the power will be picked up and delivered, and the time limitations involved.
A minor cost effect is expected since FERC will have some say in the rate charged for transmitting the power. PacifiCorp officials, the parent company of the merged utilities, estimate anticipated savings from the merger will be reduced by about $1 million annually. Officials say that loss is more than offset by the $50 million in operating savings the two companies expect to share this year and the $160 million savings anticipated over the next five years.
Officials also say that since the order involves firm contracts and wholesale suppliers, not users, the effect will be further reduced.
Serfustini said it is not likely the order will have any major effect on future mergers. He said merging has been the trend for years in the power industry, noting that UP&L itself is the product of more than 100 small mergers. He said that trend is not likely to change.
"It (merging) is a process that has never stopped but has slowed for various reasons," Serfustini said. "This one (UP&L and PP&L) is big and that is what is attracting the attention."
Serfustini acknowledged that the merged company's monopoly on transmission lines in the merger area prompted the FERC concern over "open access." He said the company does not share that concern.
"We saw the merger as a way that we could effect greater efficiency within our system," Serfustini said. "Others may have seen it as a monopoly effect."
The ruling will have a beneficial effect for the 29 power systems that will use it to bring 100 megawatts of power from Idaho to Utah. The ruling reduces the transmission cost, which means the power supplied by Idaho Power Co. will be about half what the cities have been paying for excess power from UP&L.