FERC Proposes Significant Changes to Open Access Transmission Regulations and Tariff

Originally published May 24, 2006

On May 18, 2006, the Federal Energy Regulatory Commission ("FERC") issued a 539-page Notice of Proposed Rulemaking ("NOPR") that proposes changes to the regulations and pro forma open access transmission tariff ("OATT") originally adopted in Order Nos. 888 and 889. This NOPR seeks to correct "deficiencies" in the OATT that have become apparent since Order Nos. 888 and 889 were adopted. Significant proposed reforms include:

1. 1. Greater consistency and transparency in available transfer capability ("ATC") calculations. FERC proposes to have public utilities, working through the North American Electric Reliability Council ("NERC") and the North American Energy Standards Board ("NAESB"), develop standards for ATC calculation components, data inputs and modeling assumptions, and data exchange between transmission providers within six months of a final rule. FERC would increase the transparency of ATC calculations by requiring each transmission provider’s OATT to include its specific ATC calculation methodology. Transmission providers also would be required to post relevant data and models on the open access same-time information system ("OASIS").
2. 2. Coordinated, open and transparent planning. FERC concludes that transmission providers have a disincentive to remedy transmission congestion on a nondiscriminatory basis, and that the current OATT does not adequately address this issue. The NOPR proposes to require transmission providers to participate in coordinated, open and transparent planning, and to use a planning process that meets eight planning principles set forth in the NOPR. Each transmission provider would be required to describe its planning process in its tariff.
3. 3. Transmission pricing reforms. These include changes in the pricing of imbalances to ensure a relationship to the cost of correcting the imbalance, and removal of the price cap for capacity reassignments. A transmission customer may negotiate a release rate with its assignee, but rates for capacity reassigned by the transmission provider or its affiliates may not be negotiated.

In addition, FERC seeks comments on whether to require a "conditional firm" service that would be subject to only limited curtailment. FERC also proposes to limit rollover rights to contracts with minimum terms of five years, and to extend the date by which rollover rights must be exercised to one year prior to expiration of the service agreement. The NOPR proposes an hourly firm point-to-point service and seeks to clarify the types of agreements that may be designated as network resources, the process for verifying whether agreements meet the requirements in the OATT, and the requirement for transmission providers to designate or undesignate network resources on OASIS.

The NOPR does retain certain "core elements" of the current Order No. 888 regime, including the requirement for service comparability, protection of native load, State jurisdiction over bundled retail load and functional unbundling to address undue discrimination, and reciprocity.

James M. Bushee, Jacob Dweck, Paul F. Forshay, Daniel E. Frank, Keith R. McCrea, Richard P. Noland, Peter H. Rodgers, Andrew K. Soto, Paul B. Turner, Thomas H. Warren.

© 2006 Sutherland Asbill & Brennan LLP. All Rights Reserved.

This article is for informational purposes and is not intended to constitute legal advice.