Comparability: Lost in the Clouds

In the consolidated case involving American Electric Power Service Corp., the Federal Energy Regulatory Commission (FERC) reiterated its new rule on comparability, instructing the parties to address the "different uses that a transmission owner makes of its transmission system" and to offer comparable use to others, without impediments, at

a comparable cost. But what, exactly, are those "different uses"? How should they be classified?

To answer these questions, let's first turn to the story of the two balloonists lost in the clouds. When they found a patch of blue sky they called down to Earth: "Where are we?" Up came the answer: "You're in a balloon."

Back in the gondola, the pilot remarked, "That fellow down below must be a lawyer." "Why?" asked his passenger.

"Because his answer was impeccably correct but utterly useless."

Owners vs. Renters

The FERC could have classified transmission uses by function. But it didn't do that. Instead, in its transmission access NOPR (see sidebar), the FERC employed a geographic or topological classification. It found that utilities use their transmission systems in two basic ways:

1) to provide point-to-point transmission service that supports coordination sales

2) to provide network transmission service that supports the economic dispatch of [utility] generation units and purchased power resources.

For you lawyers out there, yes, the FERC has correctly stated one of several possible classifications. The more important question, however, is whether this choice of how the uses are stated will help the FERC compare transmission uses between owners and renters, so as to mitigate the owners' market power.