The electric utility industry offers up a wealth of ideas on how the Federal Energy Regulatory Commission might reform its policy, adopted under FERC Order 679 in 2006, of granting financial...
it as such, while giving a different reason. Even so, Prairieland raises more questions than it answers.
For instance, why was the FERC so adamant about asserting its jurisdiction in People's and avoiding it in Prairieland? Perhaps because in People's the transmitting utility and the retailer were working together, whereas in Prairieland they were diametrically opposed. Another question arises: Why did the FERC dismiss PEI's request so lightly? Perhaps it figured that U of I would receive direct access in 1999 under the restructuring law passed recently in Illinois, and did not wish to force the issue. Or perhaps the FERC would simply rather focus its attention elsewhere. Or, more likely, the FERC recognized that the transaction met the letter of the sham transaction provision, but arguably not the spirit.
Although PEI is an instrumentality of the state and would control a distribution system used to serve the retail customer, it appears to have been formed for the sole purpose of bypassing ComEd. Addressing the substance of this transaction would require the FERC to answer novel and difficult legal questions. For whatever reason, it may have preferred to avoid doing that. In the process, however, the FERC added an additional procedural requirement to Section 211 applications, that being the inclusion of a power sales agreement to prove that the applicant is an electric utility.
Alas, attorneys working in this area now are forced to wait until this issue comes before the commission again, only to hope for a decision on the substance of a transaction, rather than on the form of the application itself. As a regulatory body charged with interpreting the statutes it administers, the FERC should have seized the opportunity to further define this new and dynamic area of the law. Instead, it chose to drop the ball.
Jonathan Norling is a staff attorney for the Pacific Northwest National Laboratory, Portland, Ore. Prior to joining the Laboratory in 1998, Norling worked as an associate for Duncan, Weinberg, Genzer & Pembroke P.C. He can be reached at email@example.com.
1 Section 211 of the FPA allows "any electric utility, Federal Power marketing agency, or any other person generating electric energy for sale or resale" to apply to FERC for an order requiring a transmitting utility to provide transmission services to the applicant. 16 U.S.C. § 824j(a). Section 212(h) prohibits FERC from ordering wheeling directly to an end-user and prohibits transactions designed to circumvent the ban on mandatory retail wheeling. 16 U.S.C. § 824k(h).
2 On Dec. 1, 1998, Washington Water Power requested withdrawal of its pleadings in Docket Nos. TX97-2-000 and TX97-3-000. Also in December 1998, the Chicago Housing Authority sent a letter to FERC stating that it had reached a settlement of its case pending in Docket No. TX98-1-000.
3 Docket No. TX98-4-000, Dec. 28, 1998, 85 F.E.R.C. ¶ 61,446.
4 85 F.E.R.C. ¶ 61,446, slip op. at 5. Section 3(22) of the FPA defines an electric utility as "any person or state agency (including any municipality) which sells electric energy." 16 U.S.C. § 796(22).
5 Opinion No. 426, Sept.