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Frontlines

Fortnightly Magazine - October 15 1996

the pipeline's market power?) or venture into the gray market and bundle capacity with the commodity.

Without a viable secondary market, the war against market power becomes a war against the customer. In fact, the FERC appears ready to fault the customer as the cause of the problem and indict him for market abuses, as shown by the infamous footnote 44 in Docket RM96-14-000:

"If the Commission had information showing that a [gas] shipper making a sale for resale used a bundled sale to exceed the maximum rate for interstate transportation, the Commission has the statutory authority to take action against that shipper."

On September 20, the FERC held its first technical conference on its proposal to design a single, pro forma capacity reservation tariff (CRT) for electric transmission, which would assign network service on a reservations basis, rather than according to load. See, Capacity Reservation Open Access Transmission Tariffs, FERC Dkt. RM96-11-000, Apr. 24, 1996, 61 Fed.Reg. 21847 (May 10, 1996) (Notice of Proposed Rulemaking).

To its credit, the FERC proposed the CRT to help form a secondary market for tradable rights in electric transmission capacity. But critics allege that operational concerns make it impractical to allow owners of transmission capacity to resell their rights.

At the technical conference, the Edison Electric Institute released a final report of a study it procured from KEMA-ECC, Inc. The report points out the difficulties in taking capacity rights awarded on a real-time basis (available transfer capability), for a particular set of receipt and delivery points, and then reselling those rights in a different context: "This will constitute a major change in the current operating environment."

The KEMA-ECC report falls back on the old theory of command and control: "It is our assumption that the U.S. electric industry must effectively unbundle transmission and system dispatch from ... sales of generation and that codes of conduct will be established." (emphasis in original).

As someone once said, "There you go again."

Editor

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