The Federal Energy Regulatory Commission (FERC) on Tuesday gave preliminary approval to a new power grid organization in the U.S. Southwest, bringing to three the total number of agency-approved transmission groups.

The FERC said Southwest Power Pool Inc.'s plan to form a regional grid group of eight states "will facilitate the exchange of electric power and enhance reliability".

SPP went forward with plans to form a stand-alone grid group in October 2003 after calling off a planned merger with the Midwest Independent Transmission System Operator earlier that year.

Arkansas-based SPP has 48 members, including investor-owned utilities, cooperatives and independent power producers. Its members serve over 4 million customers in Arkansas, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma and Texas.

A SPP spokeswoman said the group was reviewing FERC's order and was pleased with the decision.

As a condition for approval, FERC said SPP should modify its governance structure, obtain authority to assert day-to-day control over grid members, and put an independent market monitor in place.

SPP members include units of utilities American Electric Power Co Inc. , Entergy Corp. and Exelon Corp. , as well as Calpine Corp. , Duke Energy Corp. , Dynegy Inc. , the Southwest Power Administration and others.

FERC is working to stitch together the nation's patchwork system of regional power grids to reduce wholesale electricity prices, strengthen the reliability of the grid, and build capacity to meet rising demand.

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