The Alliance Companies and The National Grid Group plc have signed a definitive Participation Agreement outlining how National Grid will manage the Alliance Transco, including investment of $1 billion in start-up and transmission acquisition costs. The agreement was filed Thursday with the Federal Energy Regulatory Commission (FERC). Pending two key FERC approvals, the definitive agreement provides that a wholly owned subsidiary of National Grid will serve as the Managing Member of the Alliance Transco.
“We believe that National Grid’s commitment to invest $1 billion and FERC’s five conditional approvals demonstrate the viability of the Alliance Transco,” said Stan Szwed, chairman of the Alliance Management Committee and FirstEnergy Corp. vice president responsible for transmission.
“FERC approval of the Alliance Transco will send a positive signal to other potential investors and support the development of the competitive electricity marketplace,” said Szwed. “The successful negotiation and execution of the Participation Agreement is a critical milestone in the Alliance Companies’ nearly four-year effort to establish the nation’s first independent for-profit transco.”
Completion of the transactions outlined in the Participation Agreement is subject to issuance by FERC of orders determining that National Grid is qualified as a non-market participant to be Managing Member and approving the Alliance Companies’ business plan, filed August 27, 2001. With these two approvals, National Grid will assume responsibility for the start-up and operation of the Alliance Transco.
Other agreements filed with the definitive Participation Agreement would be signed at the time of closing and outline the terms of National Grid’s participation in the Alliance Transco and its commitment to invest in and manage the transmission company in accordance with FERC Order 2000.
The filing includes a description of the mechanism by which National Grid would make a $1-billion investment in Alliance Transco for acquisition of transmission assets and start-up costs; the commitment by National Grid to continue development of the inter-RTO coordination agreement and the Alliance/Midwest ISO settlement that calls for, among other things, a single pricing structure across both regional transmission organizations; and the following:
- An LLC Agreement describing the business structure under which Alliance Transco would serve as a regional transmission organization that owns transmission facilities, provides transmission services and exercises functional control over transmission facilities of non-divesting transmission owners in the Alliance region;
- An Operation Agreement outlining how Alliance Transco would provide transmission services and exercise functional control over the transmission facilities of non-divesting transmission owners; and
- A Master Agreement outlining how a non-divesting transmission owner could divest its transmission assets to the Alliance Transco LLC in the future.
With 51,400 miles of transmission lines in 11 states stretching from Missouri to Virginia, a combined service area of 182,000 square miles serving approximately 35 million customers, the Alliance Transco would help ensure independent operation of, and non-discriminatory access to, the regional power grid, and safe, reliable operations.
The Alliance Transco would be a regulated, for-profit transmission company focused on providing superior customer service and reliable transmission service to power generators, marketers and load-serving entities in the region; investing in top-rate management, operators and facilities; and establishing appropriate pricing to support the competitive electricity marketplace.
FERC has substantially approved the Alliance Transco through a series of orders, including conditional approvals on December 20, 1999; May 18, 2000; January 24, 2001; May 8, 2001; and July 12, 2001.
Alliance Companies include:
- Ameren Corporation
- AEP
- Commonwealth Edison
- Consumers Energy/Michigan Electric Transmission Company
- Dayton Power & Light
- Dominion Virginia Power
- FirstEnergy
- Illinois Power
- Northern Indiana Public Service Company - a subsidiary of NiSource Inc.
American Electric Power
David Hagelin
(614) 223-1938