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FERC Creates Companion to NOPR

Fortnightly Magazine - September 15 1995

The Federal Energy Regulatory Commission (FERC) has issued a companion order to its open-access Notice of Proposed Rulemaking (Docket No. ER93-540-003). The new order offers guidelines for presiding judges and participants in pending open-access cases that concern public utilities' offers of nondiscriminatory services. It also addresses how the FERC will proceed with other public utility filings that propose to provide open-access services under general tariffs filed prior to a final rule.

Any open-access tariff on file at the time a final rule is issued will be subject to the substantive requirements of the final rule. But the proposed "Stage One" procedures are not intended to apply to public utilities with open-access tariffs on file. (Under Stage One, the FERC would put generic tariffs into effect for any utility owning/controlling interstate facilities and providing network transmission services, firm and nonfirm point-to-point transmission services, and ancillary services needed to effect network and point-to-point service.)

The FERC addressed four categories of open-access tariff cases:

1) Bulk Power Sales. Utilities can file tariffs to mitigate transmission market power and qualify for generation sales at market-based rates. Under Option A, the tariffs and rates will be effective without hearing or refunds, subject to the final rule if pro forma tariffs are filed with the NOPR's Stage One embedded-cost rates or other postage stamp embedded cost rates, no customer raises material issues, and the rates are just. Under Option B, transmission tariffs that differ from pro forma tariffs may be set for hearing, and market-based generation rates would be effective subject to refund.

2) Merger Approval. Utilities can file tariffs to mitigate market power and support merger/acquisition approval. Option A tracks 1A above. Under Option B, transmission tariffs that differ from pro forma tariffs may be set for hearing, and the merger/acquisition will not be approved until transmission market power is mitigated.

3) Other Tariffs. Utilities can also file tariffs without seeking market-based rates or merger/acquisition approval. Option A tracks 1A and 2A. Under Option B, as with 1B or 2B, tariffs that deviate from pro forma tariffs or Stage One rates may be set for hearing.

4) Pending cases. Utilities presently litigating terms and conditions of comparability will have the option of revising their proposed tariffs to conform with the pro forma tariffs.

The FERC clarified that any tariffs accepted for filing without hearing under the above options would remain subject to the final rule. But tariffs would not be modified later under a "cookie cutter" approach. The FERC would modify accepted tariffs only to ensure consistency with substantive requirements in the final rule.

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