A group of large industrial plants say that if the Federal Energy Regulatory Commission (FERC) won’t force American Electric Power Co. (AEP) to join a 27-state Midwestern regional transmission grid, the agency may see its plan for a U.S. network of regional markets collapse.

Three years ago FERC approved a merger of AEP and Central and South West Corp. on the condition that AEP join a regional transmission organization to lessen its marketing power. However, the state of Virginia passed a law last month that bars its two utilities, including a unit of AEP, from joining any regional grid until after June 2004.

The Electricity Consumers Resource Council said in documents filed with FERC that the agency must order AEP to join at least one or more regional grids “to avoid disintegration of the commission’s regional transmission organizations initiative.” They also said the Virginia’s legislature’s action may be unconstitutional because it’s a protectionist action aimed at giving state consumers “favored access” to natural resources.

The FERC is developing a set of broad rules for regional power markets to ease congestion, create real-time trading, and monitor questionable price spikes. The proposed rules are already opposed by lawmakers in the South and Pacific Northwest, who see them raising electricity rates.