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Why My Tariff is Different Than Yours: Comparing Nonprice Terms in Utility Filings Against FERC's Pro Forma Tariffs

Fortnightly Magazine - May 1 1996

Comparing Nonprice Terms in Utility

Filings Against FERC's Pro Forma Tariffs

AS ONE MIGHT EXPECT, THE VARIATIONS REFLECT THE HISTORIC TENSION BETWEEN NATIVE LOAD AND WHOLESALE TRANSACTIONS.

With the passage of the Energy Policy Act of 1992 (EPAct), and the issuance in March 1995 of the Notice of Proposed Rulemaking (NOPR) on open-access transmission1 by the Federal Energy Regulatory Commission (FERC), the debate in transmission policy has shifted to the terms and conditions of transmission service. Later, in June and September 1995, the FERC moved to encourage electric utilities to file open-access transmission tariffs based on the NOPR's pro forma tariffs, promising more streamlined filing requirements and approval of market-based rates with no refund liability. Since then (as of this writing), over 30 utilities have filed, bringing the total number of open-access tariffs to 54.

Certain provisions in the

pro forma tariffs have not at- tracted a warm reception from transmission-owning electric utilities. Thus, the differences in

nonrate terms and conditions between individual tariffs may reflect what utilities believe tariffs should and should not include

(see table below). These variations also reflect a historic tension between transmitting utilities that want to use their transmission system to serve native load and conduct their own wholesale power transactions, and transmission customers that need access for their own wholesale power transactions.

Drawing from FERC orders issued in the last half of 1995 and early 1996, this article offers a

representative account of the differences in nonrate terms and conditions that the FERC will have to resolve when it issues its final open-access rule. It also identifies terms and conditions in the pro forma tariffs that will remain subject to change.

Pro Forma Terms and Conditions

The pro forma tariffs in the Mega-NOPR concern firm and nonfirm point-to-point transmission and network transmission service.

Firm Point-to-Point

Transmission. The minimum

term of service is one hour, with no maximum term. Transmission service enjoys the same curtailment status as native-load and network customers, giving it priority over nonfirm service. Service is provided to particular delivery and receipt points (hence the name point-to-point), but transmission customers can request nonfirm transmission service over other receipt and delivery points, as long as such service is available and does not exceed the firm capacity reservation. If transmission capacity is constrained or unavailable, transmitting utilities must attempt to add or modify facilities or redispatch their system to accommodate a service request; transmission customers must compensate the transmitting utility for these efforts. Transmission customers must also give two years' notice before terminating service, or bear all outstanding charges related to the construction of new facilities.

Currently, transmission capacity can be sold or transferred to another wholesale customer, designated agent, or electric utility, but the customer cannot sell the service for more than what the provider charges. The FERC has requested comments on whether this policy should be changed.

Nonfirm Point-to-Point

Transmission. On a first-come, first-served basis, nonfirm point-to-point service is available for periods ranging from one hour

to 30 days. Purchasers may, however, reserve sequential service (such as monthly service) so that the total reservation

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