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Where Is Super-FERC?

Sweeping revisions to Order 888 are needed before true wholesale competition can take place.

Fortnightly Magazine - June 2006

forma [OATT] or making structural changes in the industry.” But without substantial standardization and reform, how will market participants in non-RTO regions know they are getting a fair deal?

Penalties, Penalties, and More Penalties

EEI, in its initial comments to the NOI, has proposed three steps that FERC could take on an industry-wide basis that would increase the transparency of transmission operations to allay any concerns that transmission customers might have. EEI proposed that:

• Transmission providers make their base-case load-flow studies available to potential customers (subject to reasonable security and confidentiality protections);

• The industry work through the North American Energy Standards Board to develop guidelines with respect to information that should be posted concerning denial of requests for transmission service; and

• The North American Electric Reliability Council (NERC) clarify what information should be posted concerning the reason for implementing transmission loading relief (TLR).

EEI believes that each of these proposals “if adopted, will increase transparency and reduce any perception, as unfounded as it is, of undue discrimination by transmission providers in responding to transmission requests.”

But Occidental Chemical Corp. believes greater transparency alone will not prevent undue discrimination and preference in the provision of transmission service.

Instead, Occidental takes a harder line. The company believes the OATT should make clear that transmission providers violating the OATT will be subject to penalties.

According to Occidental: “The OATT should be revised to provide for tariff-based sanctions against transmission providers that fail to meet specific requirements and/or engage in discriminatory behavior. In addition, the commission should clarify in the OATT that any violation by a transmission provider of its OATT obligations could result in the imposition of civil penalties.”

Occidental says the new civil penalty authority under EPACT 2005 was enacted by Congress to give the commission meaningful action in the face of discriminatory behavior by regulated utilities.

In addition, Occidental proposes revocation of market-based rate authority for transmission providers for certain OATT violations.

Meanwhile, EEI disagrees with the notion that the OATT should provide for civil penalties. The association believes that the penalties already provided for in the Federal Power Act and other laws should suffice, but many critics say that the existing penalties address only a fraction of potential tariff violations. And many believe any redefining of OATT provisions should focus on enforcement and penalties.

The Southern View: The Road Back to Unbundling

FERC commissioners promise that any reforms to Order 888 won’t serve as a backdoor re-entry for the now abandoned standard market design. But the suspicion persists nonetheless. In various comments, utilities like Southern Co. have urged FERC “not to view this rulemaking proceeding as a vehicle for mandating participation in an RTO, requiring the retention of an ICT, or ordering any other type of structural reform.”

The National Association of Regulatory Utility Commissioners (NARUC) has said: “States are in the best position to weigh the final impact of such changes on consumers, as well as other costs and benefits of structural separation. A state that chooses not to require structural separation should not be forced to do