The FERC didn't say, but honest lawyers want to know.
December was a grim month for those wanting the Federal Energy Regulatory Commission to further define the limits of a "sham transaction," as that idea is understood under the Federal Power Act, which dictates when an electric utility must offer transmission services to power producers, marketers or other utilities.fn1 Of the three cases concerning this issue that were pending before the FERC on the first day of the month, all were resolved. But none was explained.
One case was simply withdrawn. Another was settled.fn2 The third, Prairieland Energy Inc.,fn3 was perhaps the most disappointing. The sham question squarely came before the commission, but the FERC dismissed the case on what was essentially a procedural technicality.
Honest lawyers are left wondering, when is it wheeling retail and when is it wholesale? Is every middleman a sham?
The Prairieland decision was disappointing for two reasons. First, it added an unnecessary procedural hurdle for those applying for wheeling orders under FPA Section 211. Second, it avoided addressing a murky area of the law that needs to be defined. The commission should have addressed the substance of the transaction, which would have assisted attorneys (and others) practicing in the brave new world of wholesale competition. Instead, it left parties structuring these transactions to fight it out on their own.
The Prairieland Case