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Transmission Tariffs: Still Pro Forma? Locational Pricing and the Federal Power Act

Fortnightly Magazine - May 1 1996

the guaranteed recovery of stranded costs, however, creates strange bedfellows indeed. But perhaps the jargon that surrounds TCCs will sufficiently mask their true effect: economic efficiency bought with the political necessity of stranded-cost recovery. And perhaps the FERC may be persuaded simul-taneously to embrace market value for transmission rights

and cost recovery for stranded generation. t

Stephen Teichler is a partner at the law firm of Metzger, Hollis, Gordon & Alprin, Washington, DC, specializing in domestic and international energy law. He last appeared in PUBLIC UTILITIES FORTNIGHTLY as co-author (with Sheila Hollis) of "Collision or Coexistence: The FERC, the CPUC, and Electric Restructuring," Oct. 1, 1995, p. 19.

1 See, Inquiry Concerning the Commission's Pricing Policy for Trans. Servs. Provided by Pub. Utils. Under the Federal Power Act (Policy Statement), Dkt. No. RM93-19-000, III F.E.R.C. Reg. Preambles, (pp 31,005 (1994).

2 Re Proposed Policies Governing Restructuring California's Electric Services industry and Reforming Regulations, Decision 95-05-045, R.94-04-032, I.94-04-032, May 24, 1995, 161 PUR4th 217 (Cal.P.U.C.).

3 Re Proposed Policies Governing Restructuring California's Electric Services Industry and Reforming Regulations, Decision 95-12-063, Dec. 20, 1995, modified by Decision 96-01-009, Jan. 10, 1996, 166 PUR4th 1 (Cal.P.U.C.).

4 Final Policy Decision at 9, 166 PUR4th at 12.

5 Supplemental Comments of the Supporting PJM Companies for Technical Conference on Comparability For Power Pools, FERC Docket Nos. RM95-8-000, RM94-7-001.

6 The PJM explains that the uneven distribution of generating units with lower operating costs (predominately in western PJM or to the west of PJM) periodically causes an economic gradient of increasing marginal prices from West to East.

7 FPC v. Hope Natural Gas Co., 320 U.S. 591, 602 (1994).

8 Farmers Union Central Exch., Inc. v. FERC, 734 F.2d 1486 (D.C.Cir.1984).

9 Id., at 1502-1503, quoting Pub. Serv. Comm'n v. FERC, 587 F.2d 542, 559 (D.C.Cir.1978).

10 See, e.g., Statement of Policy and Requests for Comments, Alternatives to Trad. Cost-of-Service Ratemakings for Nat. Gas Pipelines, et al., Dkt. Nos. RM95-6-000, RM96-7-000, Jan. 31, 1996 (FERC).

11 Notice of Inquiry, note 1, supra, III F.E.R.C. Reg. Preambles, at 31,143.

12 Id., at 31,148.

13 See, e.g., Pennsylvania Elec. Co., 58 F.E.R.C. (CCH) (pp 61,278 (1992).

14 See, Pennsylvania Elec. Co., 11 F.3d 207 (D.C.Cir.1993).

17

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