Midwest ISO approves grid expansion plan

WASHINGTON -- The Midwest region's power grid operator has approved a $1.32 billion expansion plan that could pay for itself in lower power costs once it is finished, the nonprofit group said recently.

The Midwest Independent Transmission System Operator Inc., or ISO, which operates an 111,000-mile (178,599-km) system spanning 15 states and parts of Canada, said the new projects approved by its board of directors could save between $300 million and $1.6 billion a year in line congestion costs.

Under the plan, the Midwest ISO's transmission-owning members, which include Alliant Energy Corp., Xcel Energy Inc. and Cinergy Corp., would build about 3,500 miles (5,632 km) of new lines, with construction started by 2007.

The Midwest ISO could not predict when the projects would be finished, a spokeswoman said.

The Federal Energy Regulatory Commission in 2001 approved the Midwest ISO as the first U.S. regional transmission organization, or RTO.

The FERC's grid-building plan envisions several U.S. RTOs, which will create super-regional energy markets and hopefully boost available supplies.

Several such regional grids are in the works in the Midwest, Northeast and New England regions. The plan has hit stiff opposition in the Pacific Northwest and Southeast, where state officials see it as an imposition on their turf.

The Midwest ISO has also released a new grid tariff and posted an initial plan for allocating financial transmission rights on its grid.

The transmission rights are financial instruments that allow market participants to hedge their exposure to transmission congestion costs.

Financial transmission rights are a key to the Midwest ISO's plan to have a day-ahead and real-time electricity market up and running on March 31, 2004. The ISO said it would file its financial transmission rights plan with FERC next January.

Reuters