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FERC's Mega-NOPR: The IOUs Respond

Fortnightly Magazine - March 1 1996

its section 206 authority to require amendments to all existing coordination agreements to eliminate bundled transactions. Two IOUs specifically favored broader modification of existing contracts: Portland General Electric urges the FERC to require utilities to use their open-access tariffs for all existing wholesale sales and purchases, as well as service to native load. Texas-New Mexico Power suggests that all wholesale customers be allowed to convert their existing contracts to the terms of the pro forma tariffs.

Market Dominance. The NOPR also inquires whether open-access tariffs would reduce the need for market dominance tests for sales from existing generating units at market prices. Of the 41 commenters on this issue, most take the position that open-access tariffs would eliminate generation market power, making it possible to drop or at least relax market dominance tests, subject to challenge in individual cases. Nine commenters express reservations about dropping a market dominance test, stating that open-access alone will not necessarily eliminate generation market power. Minnesota Power & Light urges the FERC to retain its

current policies on testing market dominance. Northern Indiana Public Service Co. notes that other barriers to entry to the market justify continued testing for market power.

Ancillary Services. As for the FERC's proposal to require transmitting utilities to offer six categories of ancillary services along with transmission, many commenters generally agree with the concept, but suggest a technical conference or a separate rulemaking to deal with the issue. A common argument is that the transmitting utility should not have a one-sided obligation (em with no obligation on the part of the customer to take (em to provide services otherwise available in the marketplace. Another common observation is that ancillary services that must be provided by the transmitting utility, such as

reactive power, should be allowed to be bundled with the transmission rate.

Reassigned Rights. Almost all commenters agree that the price for reassigned transmission rights should be capped at the rate originally paid, as long as the transmitting utility's rate remains regulated. United Illuminating feels that reassigned rights should be capped at the higher of the price paid or the holder's opportunity costs. Baltimore Gas & Electric feels that transmission rights should not be reassigned at all.

The variety of IOU comments on the NOPR suggests that the era of a unified industry position on important issues may be at an end. Before issuing its final rule, the FERC will, of course, have to sift through the comments of municipal systems, cooperatives, consumers, independent generators, and marketers as well (em no doubt a daunting task. t

Brian R. Gish is an attorney who specializes in energy and utility law in the Washington, DC, area. His e-mail address is EnergyLaw@aol.com

Can FERC Legally Mandate Open Access?

All Those in Favor...

Arizona Pub. Service

Central Illinois Light

CINergy

Consumers Power

Duquesne Light

Entergy

IPALCO

Kansas City P & L

Montaup Electric

New England Power

Oklahoma G & E

Orange & Rockland

Pacific G & E

PSC of New Mexico

San Diego G & E

Sierra Pacific

Texas-New Mexico

Tucson Electric

United Illuminating

UtiliCorp United