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News Analysis

Fortnightly Magazine - April 1 1998

spare and considers an outage to be a major contingency.

STABILIZERS. Similarly, the West Coast system plans for all large generators to have power-system stabilizers, while the East Coast plans a reliable system without this requirement. That is why most of the NERC's and the regional councils' criteria are broadly specified, leaving the individual utilities and ISOs the latitude to customize the criteria to their specific systems.

Source: Ronald Liberty, Director, Electric Div., N.Y. Public Service Commission, comments filed Jan. 30, 1998, in FERC Docket pl98-3-000, see 63 Fed.Reg. 6559, Feb. 9, 1998.

Updating Transmission Tariffs

FERC Suggested Three Options,

But the Industry Proposed a Fourth

WHAT process should the FERC follow to incorporate reliability rules into open-access transmission tariffs?

1. WAIT FOR COMPLAINTS? Transmission providers follow rules set by the reliability organization to which they belong. FERC does not specifically approve reliability rules, but entertains complaints filed under Federal Power Act sec. 206. Early proponents: Little professed support, but filed comments hint at acceptance from MAPP, New York Power Pool and Transmission Access Study Group. Advantages: Low cost; rules already largely set; accommodates regional differences; FERC comfortable in role of hearing complaints. Drawbacks: Regional councils lack proscriptions against discrimination; many regions lack ISOs to ensure nondiscriminatory interpretation and enforcement.

2. PIECEMEAL APPROVAL? Each utility belonging to a reliability group files rules as amendments to its open-access transmission tariff, subject to FERC approval. Early proponents: ELCON professes support in comments, but appears to prefer a legislative solution that restructures NERC as a self-regulating reliability organization with statutory FERC oversight. Advantages: FERC jurisdiction is clear; process worked under Order 888, can recognize regional differences; makes reliability rules part of formal tariffs subject to FERC review; avoids control over process by NERC. Drawbacks: Administratively burdensome; FERC must review substantive rules.

3. NERC LEADS, FERC DEFERS? The reliability organization (NERC, regional councils or successor) sets rules, then files request for declaratory order from FERC accepting rules. Utilities then incorporate rules in their transmission tariffs. Industry expects that FERC will give deference to stakeholder collaborative, avoid de novo review. Early proponents: EEI, The Southern Company, and TAPS (only if complaint process available). Advantages: Speed; borrows on rules already in place; industry participants set rules; FERC reviews due process only (no de novo review). Drawbacks: Alleged NERC bias against transmission-dependent players; appellate-style review of rules may prove insufficient, ignore bias in the interpretation.

4. A NEW NOPR? Not proposed by FERC, but suggested by many. FERC would file notice of proposed rulemaking to establish industry-wide reliability tariff. Early proponents: Electric Clearinghouse Inc.; NRECA; Coalition for a Competitive Electric Market. Advantages: Open process; avoids alleged NERC bias favoring transmission owners; single docket saves resources for participants; clear statement of FERC jurisdiction. Drawbacks: Slow; costly; strains FERC resources; makes FERC a policy maker, undermines NERC restructuring efforts.

Source: Industry comments and testimony, filed in FERC Docket No. pl98-3-000, see 63 Fed.Reg. 6559, Feb. 9, 1998.


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