FERC Filings

MOTION TO INTERVENE AND PROTEST OF ELECTRIC POWER SUPPLY ASSOCIATION-Desert STAR, Inc.-Docket No. RT01-44-000

A. The DSTAR Governance Structure Does Not Meet Order No. 2000’s Independence Criteria.

DSTAR is exceptional in that it has already created the corporate entity – Desert STAR, Inc. – that is intended to be the RTO. Thc Commission, however, has not been asked to approve the governance structure of Desert STAR, Inc. under the RTO principles of Order No. 2000. In particular, the Commission has not been asked to review the By-Laws and other corporate documents of Desert Star, Inc., under the independence standard of Order No. 2000. This is, of course, a requirement of Order No. 2000. The fact that the RTO corporate entity has already been formed does not exempt it from scrutiny.

EPSA is particularly concerned about this issue because the By-Laws as they currently exist may not give Desert STAR, Inc. the independence it must have to qualify as an RTO. The By-Laws give significant authority to an Advisory Committee composed of market participants, including the authority to elect the members of the Board of Directors. The Advisory Committee is composed of members of eight classes of market participants, the definitions of which are ambiguous and not mutually exclusive, allowing groups of market participants to game the DSTAR class structure by populating multiple classes and controlling both the Advisory Committee and the ex officio seats on the DSTAR Governing Board.

Given the extensive authority of the Advisory Committee, EPSA is concerned that the structure and voting procedures of the Advisory Committee might result in undue influence by individual groups of market participants. As stated in Order No. 2000:

“When there are stakeholder committees that advise or share authority with a non-stakeholder board, it is important that there be balanced representation on the stakeholder committees so no one class dominates its recommendations or its decisions.” 4

“With regard to the second-tier [advisory groups or committees comprised of stakeholders], the Commission has required that no one constituency in any group or committee be allowed to dominate the recommendation or decision-making process over the objection of the other classes, and that no one class holds veto power over the will of the remaining classes.” 5

The current DSTAR Bylaws do not meet these requirements:

The independence of Desert STAR, Inc. must be evaluated from the point of view of the functions it will have as RTO. A structure that may have been satisfactory when the only function of the corporate entity was to participate in the stakeholder process may not be satisfactory when the entity is responsible for running the DSTAR transmission system. The DSTAR filing contains no analysis of Desert STAR, Inc. under the independence requirements of Order No. 2000. Future RTO filings must do so.4See Order No. 2000 at 31,074.

5Id. at 31,232.