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Commission Watch

FERC looks ahead to the new year as it wraps up loose ends from 2002.
Fortnightly Magazine - February 1 2003

of Commissioner Brownell, a former Pennsylvania state commissioner, FERC on Dec. 19 certified the PJM Interconnection LLC as an RTO. It marked the second RTO approval by FERC. "We've been dancing around seams issues since I was a state commissioner," Brownell noted. But she has an ally in Chairman Wood, who said a "joint integrated market between MISO and PJM will be one of our top agenda items in 2003."

But FERC said that its concerns regarding seams problems among PJM, New York, and New England have been reduced because:

  • FERC approved filing of a new SMD for ISO New England (ISO-NE), which will enable ISO-NE to use PJM's software and will track PJM's market rules;
  • ISO-NE has stated that one of the purposes of the filing was to reduce seams problems with New York as well.
  • Although FERC believes that more coordination with New York is needed, it is encouraged by a new standards organization, the Wholesale Electric Quadrant of the North American Energy Standards Board (WEQ), which aims to develop business practice standards and communication protocols that will apply across markets. Docket Nos. RT01-2-001 and RT01-2-002, Dec. 19, 2002 (FERC).

    FERC granted rehearing in part of its Sept. 18 order providing guidance on the proposal to form RTO West. FERC accepted part of the proposed RTO West transmission operating agreement (TOA) but continued to reject section 25.18, which provides that the TOA terms always will govern in event of a conflict between the TOA and terms of the RTO West tariff.

    Massey dissented in part over the provision in the RTO West order that says FERC will not revisit its prior market design approval upon issuance of the SMD final rule. Docket No. RT01-35-009, Dec. 20, 2002 (FERC).

    In a separate order, FERC again reviewed whether the proposal to form the WestConnect RTO LLC filed by Arizona Public Service, El Paso Electric, Public Service Co. of New Mexico and Tucson Electric Power could satisfy FERC's RTO requirements.



    California Refund Liability

    "Hell yes," responded FERC Chairman Pat Wood when asked if he would like the ongoing El Paso Electric case settled. Wood said he found the oral arguments "helpful" and that he would "leave it at that." FERC staff is investigating possible misconduct by El Paso and subsidiaries of Enron Corp. El Paso announced Dec. 5 that it had reached a settlement with FERC staff, whereby the company would refund $14 million in revenue made on wholesale power transactions and would refrain from making sales pursuant to its market-based rate authority between Dec. 1, 2002, and Dec. 31, 2004. However, the settlement, if approved, would not be binding on other parties to the case, including California and other market participants.

    On Dec. 26, Wood determined that the California parties (i.e., Caifornia PUC, the state attorney general, California Electricity Oversight Board, PG&E, and Southern California Edison) had shown "extraordinary circumstances" in their appeal, requiring the full commission to review the Dec. 12, 2002 California refund liability case by ALJ Birchman. That case found that refunds of electricity to the state from October