FERC Proposes Changes to Open Access Transmission Policies

On May 19, the Federal Energy Regulatory Commission (FERC) issued a notice of proposed rulemaking (NOPR) proposing certain changes to the open access rules promulgated under Order No. 888 and the pro forma open access transmission tariff (OATT). The proposal represents FERC’s first comprehensive review of the existing pro forma OATT since its development 10 years ago. The NOPR was published in the Federal Register on June 6, 2006.

The NOPR proposes to revise portions of the pro forma OATT to address the following key issues.

• Transmission Planning. The NOPR would require that transmission providers participate in open, coordinated, and transparent transmission planning processes at both the local and the regional level.
• Rollover Rights. The NOPR would alter FERC’s current rollover right policies by: (1) granting rollover rights only to existing firm transmission customers taking service for a minimum of five years, and (2) requiring customers eligible for rollover rights to exercise such rights no later than one year prior to the termination of the existing service.
• Point-to-Point Service. With respect to point-to-point service, the NOPR would:
  • Require that redispatch service be offered in the initial response to all long-term firm point-to-point requests that cannot otherwise be fully accommodated because of limitations on ATC.
  • Establish for redispatch service on a cost-of-service basis as is done for network service, apparently without reference to opportunity costs.
  • Require that hourly firm point-to-point service be offered.
  • Allowing firm transmission rights to be reassigned at negotiated rates, except by affiliates of the transmission provider.
• Network Transmission Service. With respect to network service, the NOPR would:
  • Introduce an economic test as a limitation on secondary service.
  • Tighten the criteria for designation of new network resources.
  • Codify rules requiring the grant of credits for customer-owned transmission facilities.
• ATC Calculations. The NOPR would require transmission providers to insert into their OATTs more detail on how they calculate ATC, and provides guidance on how to explain certain ATC components, including Total Transmission Capability, Transmission Reliability Margin, Capacity Benefit Margin, and Existing Transmission Commitments. The NOPR would also require stakeholders to work with NERC to develop uniform standards for ATC calculations within six months of the final rule.

The NOPR seeks comments on these proposed changes to its open access rules, as well as potential alternatives. The NOPR also includes a series of additional proposals, including changes to the OASIS posting requirements, the establishment of certain metrics under which a transmission provider’s compliance with OATT standards would be judged, and modifications to the pricing policies regarding imbalance energy. Finally, the NOPR contains new proposals regarding the penalties that would be imposed on transmission providers for violations of the OATT, including operational penalties and, in certain instances, revocation of a transmission provider’s market-based rate authority.