Order 888, Between the Lines

Fortnightly Magazine - July 1 1996
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It's as significant for what it does not do as for what it does.

Order 888 marks a significant, yet limited, step in deregulating the U.S. electricity supply industry. Most important, for utility shareholders, the Federal Energy Regulatory Commission (FERC) has now apparently established a right to recover costs prudently incurred under the old regulatory compact (if not contract) that may become stranded by the Order. But (em and this is an important but (em the FERC is not going to hand out the money easily. The Commission warns that the level of stranded assets from wholesale access "may be small relative to that of retail stranded costs," which the FERC leaves to the state public utility commissions (PUCs) to determine.

In essence, the FERC has got out from under the problem of stranded assets.

The title of the Order, Promoting Wholesale Competition Through Open Access Nondiscriminatory Transmission Services by Public Utilities, both describes and delimits its scope. It's as significant for what it does not do as for what it does. The Order tidies up a significant part of the regulatory mechanics of opening transmission systems, including a requirement for reassignment of capacity, rules for curtailment, and the like.

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