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FERC's Massey Previews Fall Electric Agenda

Fortnightly Magazine - November 15 1997

Commissioner William L. Massey said four issues would dominate the fall electric agenda of the Federal Energy Regulatory Commission: Orders 888 and 889 implementation, mergers, independent system operators and reliability.

Speaking on Sept. 11 at the PowerMart Power '97 conference and expo in Houston, Massey said the FERC hoped to issue a major order this fall on elements of California restructuring to ease implementation of the ISO and power exchange by Jan. 1, 1998.

Implementation issues for Orders 888 and 889 concern reviewing and acting on open-access tariffs, working through standards of conduct to ensure actual separation of a utility's transmission and wholesale merchant functions, and refining FERC's OASIS policy.

Massey said many OASIS users had identified "serious problems" with Phase I of the project, which became operational Jan. 3. Those problems include poor quality data, lack of standardized business practices, inconsistent interpretations of pro forma tariffs and lack of incentives to improve the system. Massey called the situation "bad news." He said FERC would "insist on a good OASIS system," which is necessary to ensure that Orders 888 and 889 are successful. Elimination of market power over transmission access information is essential, he added.

Massey said FERC had delayed a proposed rule making detailing merger filing requirements until December. He said FERC was still processing applications. He added that the Commission needed to develop more precise filing requirements for applicants.

Regarding ISOs, Massey said he was encouraged by emergence of a two-tier form of governance in New England and the Pacific Northwest. Under that ISO structure, the stakeholder group reports to an independent non-stakeholder board. The board retains final decision-making authority. Yet Massey was disappointed by efforts to define minimum operational responsibilities of an effective ISO. It is a "critical piece of the puzzle" that the ISO is ensured day-to-day and hour-to-hour authority, he said.

"The combination of strong governance with weak operating authority may be dangerous," Massey said.

A report by the Department of Energy's Task Force on Electric System Reliability in early September had advised the FERC to review existing reliability policies. The task force also suggested that federal legislation was needed to clarify the authority of the FERC and other agencies that oversee reliability. Massey said it was unlikely any energy legislation would pass this session, and that FERC has little interest in writing reliability rules.

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