Lately I'm reading up on the new Telecommunications Act. Last week I printed a copy from the Internet and stuffed it in my briefcase. Each night on the train I give it a go and skim a few sections...
FERC's Mega-NOPR: The IOUs Respond
It comes as no surprise that regulated investor-owned utilities (IOUs) hold divergent views on the restructuring of the electric industry. Size, generation cost, transmission access, customer loyalty, and the friendliness of state regulators all factor into their individual visions of restructuring. Just how far these conceptions vary becomes obvious from the comments filed by the IOUs to the Notice of Proposed Rulemaking (NOPR) issued by the Federal Energy Regulatory Commission (FERC) on open-access transmission and stranded investment.1
In all, 83 entities (including individual companies and groups of affiliates filing a single document) submitted comments on the NOPR. These 83 comments represent most of the 137 public utilities the FERC estimates will be subject to its rulemaking.2
In general, well over half of the IOU commenters expressly state that they favor the Mega-NOPR's overall thrust. That is, they support concept of nondiscriminatory access to transmission lines. Some utilities want conditions on open access: e.g., fairness to transmission owners and existing customers (Allegheny Power), voluntary implementation (Ohio Edison), or compressive enforcement (all transmission owners should be open, says Oklahoma Gas & Electric). And some challenge the method of implementation. Nevertheless, no IOU commenter has gone on record in the rulemaking to oppose the idea of open access. These comments, therefore, seem to reflect an acceptance by IOUs that open access is an inevitable component of increased competition.
Can the FERC Mandate
Twenty-one of the commenters, with varying degrees of enthusiasm, either expressly support the FERC's legal authority or praise the FERC's efforts to require all utilities to file open-access tariffs. Among these, CINergy, Consumers Power, San Diego Gas & Electric, Sierra Pacific, and UtiliCorp all gave strong endorsements to FERC's legal analysis of its authority to issue an open-access rule.
On the other hand, 14 commenters assert that the FERC has insufficient authority under sections 205 and 206 to mandate universal filing of open access tariffs (em including Allegheny Power System, Baltimore Gas & Electric, Consolidated Edison, Ohio Edison, and Virginia Electric Power.
A number of commenters say nothing about the FERC's legal authority, or expressly state that they do not address the issue. This could mean that they do not challenge the authority, or that they are preserving the argument. Southern California Edison (SCE), for example, says that it will probably not challenge the FERC's authority under section 206, but calls the FERC's legal analysis
"inadequate and vulnerable" to legal challenge. SCE recommends that the FERC use the pro forma tariffs as "default" tariffs in complaint cases under section 211. Public Service Electric & Gas (PSE&G) also advises FERC to proceed under section 211 rather than under "questionable" section 206 authority. Public Service Co. of Colorado, perhaps reflecting the sentiments of other commenters, says it has already filed open-access tariffs, leaving the FERC's authority to compel filing "somewhat academic."
How Much Stranded-Cost Recovery is Acceptable?
The IOU commenters offer a more uniform opinion whether the FERC is correct in finding that full stranded-cost recovery should be allowed as an integral part of requiring open access. About 51 clearly agree with allowing