[BETA] Fortnightly

Editor's Note: It was an awkward spot. Power marketers wanted the Federal Energy Regulatory Commission to block the "tagging" rules imposed by the North American Reliability Council. Could the FERC do that? Having stalled for more than six months, with no sign of action, the Commission surprised the federal energy bar when, on April 7, with no mention on the agenda (there could be no agenda, since there was no meeting), it surreptitiously released its opinion. Also caught unawares, the Fortnightly asked Jeffrey Watkiss, an attorney in the case, to explain what it all means.

ON APRIL 7, 1998, THE FEDERAL ENERGY REGULATORY Commission unexpectedly issued its order in what has become known as the "tagging case," which the Coalition Against Private Tariffs (CAPT) had filed with the FERC last August. At first glance, the order appears simply to dismiss CAPT's complaint. The group had asked the FERC to order the North American Electric Reliability Council and its utility members to cease and desist from a policy that would make access to electric transmission (under tariffs filed at the FERC) conditional upon a requirement that the transmission applicant provide a complete "tag" for its power transaction. Order Dismissing Filing and Rejecting Without Prejudice Proposed Revisions to Open-Access Tariff, 83 F.E.R.C. ¶61,015 (1998).

In the same order, however, the FERC also rejected the proposal of investor-owned electric utility Western Resources Inc. to adopt a new operating practice for the Southwest Power Pool (Docket No. er98-900-000). The new practice would have assigned a new lowest tier of curtailment priority to power transactions that are not properly tagged. Read as a whole, the April 7th order sets precedent for two propositions:

1. A transmission provider can lawfully deny a transmission service application on the ground that an applicant did not provide the information called for by a NERC tag, but only insofar as the tag requires the applicant to provide the same information that is required by the transmission provider's FERC-approved transmission tariff; and

2. A transmission provider that chooses to provide transmission service to an applicant although the applicant has not provided all of the information required by the tariff (and the tag) cannot thereafter assign a curtailment priority to that customer that is not expressly provided for in the transmission provider's FERC-approved tariff.

The order is crafted to avert any assertion of FERC jurisdiction over the activities of NERC. Because of this craftsmanship, it is not immediately apparent that the Order, in fact, granted precisely the relief that CAPT had sought. To appreciate the magnitude of CAPT's success, understanding the context and genesis of tagging is important.

How NERC Imposes Its Tagging Rules

When CAPT filed its motion with the FERC on Sept. 11, 1997, tagging had just recently been introduced by NERC as a component of what was called the interim Transmission Information System (iTIS). That system in turn was part of a larger NERC initiative to identify, "tag" and prioritize power transactions so that transmission system security coordinators could curtail the tagged transactions to provide transmission line loading relief.

As tagging