Even the FERC's own lawyers urge a new rule when a customer leaves a utility that already has too little capacity.
In a brief filed Aug. 18, staff counsel Theresa Burns and Diane Schratwieser urged the Federal Energy Regulatory Commission to rethink its policy on wholesale stranded costs when a customer threatens to leave but the utility is so short of generating capacity that it can easily make up any lost revenues by reallocating the reserves to other native load customers at prevailing, regulated embedded-cost retail rates.
Burns and Schratwieser thus have asked the FERC to modify an order issued July 16 by the commission's own administrative law judge, Judith A. Dowd, concerning the dispute over wholesale stranded costs between the city of Alma, Mich., and Consumers Energy Co. See Docket No. SC97-4-000, July 16, 1999, 88 FERC ¶ 63,002.)
However, the case also raises questions about whether the FERC can award compensation for a utility distribution system that becomes stranded by a municipalization effort.
ALJ Dowd had ordered the city to pay $14.7 million to CECo, representing revenues lost over the period that CECo had a reasonable expectation that it would continue to serve Alma, which decided to leave CECo and form its own municipal utility.
But as FERC lawyers Burns and Schratwieser said in their brief, "Consumers Energy is capacity deficient and hungry for more resources." Under such circumstances, they argued that the FERC should rethink its stranded cost policy and how to measure the utility's expectation that it would continue to serve a customer.