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News Analysis

The transmission industry may have to wait even longer for a final decision on challenges to Order 2000 if FERC gets its way.
Fortnightly Magazine - January 1 2002

on the conclusion of Order No. 2000 that a properly structured proposal for passive ownership is acceptable if properly designed." .

So when, exactly, are companies permitted to appeal Order 2000? Eric Christensen, associate general counsel for Snohomish PUD, said, "Frankly, FERC counsel backpedaled on what was in Order 2000 to make it not appear ripe." He noted, "We have got to be able to raise these issues somewhere." Otherwise, FERC could effectively insulate the order from review of any kind.

The Court Extracts a Concession from FERC

Although the D.C. Circuit court may ultimately sidestep the challenges made to Order 2000 on the ripeness grounds, the court seems to have handed the challengers one victory already: a concession from FERC that the challengers can raise these types of issues in their individual RTO proceedings, should the same claims be dismissed on ripeness grounds from the pending appeal of Order 2000.

In an exchange with Dennis Lane, FERC solicitor, the court asked, "There's no question about the ripeness with respect to that Section 205, is there?" Lane responded, "Well, I believe that there is." The court pressed, "When could they raise it? If they don't raise it now, when could they raise it?" Lane answered, "They would raise it when they had-they had put in their revenue requirements and there was a case, and then they-and the RTO put in a-its own [Section] 205 filing."

The court also quizzed Lane about whether a TO could decline to join an RTO, and then challenge parts of Order 2000 if the commission declined to grant market-based rates to the TO because it was not part of an RTO. "They would be able to challenge at that point?" the court asked. "Certainly," Lane responded. Later, in a colloquy with Elias Farrah, counsel to New York transmission owners, the court said, "Well, we just got a commitment by [FERC] counsel there's not going to be collateral estoppel. All right? That's what I was trying to clarify. And he said you could raise these things."

The court's statement is not necessarily an iron-clad guarantee that challenges to Order 2000 will be heard in the individual RTO proceedings. FERC could certainly challenge the extent of its concession, or the weight it should be given in other proceedings. Indeed, at argument, Farrah did not seem entirely convinced he had a concession he could take to the bank: "Well, I'm not sure that a statement by counsel here is going to protect us in that regard," he said. The court, however, invited Farrah to come back and remind the court of FERC's concession, should it become a problem down the road in an RTO proceeding.

Christensen says his interpretation of Lane's concession is that FERC must allow challengers to raise their arguments in the individual RTO proceedings, or that FERC will be held to have acted arbitrarily and capriciously by the D.C. Circuit. Even so, Christensen says he is not sure where that leaves Snohomish. "The real question is, what happens if everyone in the Pacific Northwest concludes that an