[Federal Register: July 8, 2008 (Volume 73, Number 131)]
[Rules and Regulations]
[Page 39091-39156]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jy08-22]
[[Page 39091]]
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Part II
Department of Energy
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Federal Energy Regulatory Commission
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18 CFR Part 37
Preventing Undue Discrimination and Preference in Transmission Service;
Final Rule
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 37
[Docket Nos. RM05-17-003 and RM05-25-003; Order No. 890-B]
Preventing Undue Discrimination and Preference in Transmission
Service
Issued June 23, 2008.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Order on rehearing and clarification.
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SUMMARY: The Federal Energy Regulatory Commission affirms its basic
determinations in Order Nos. 890 and 890-A, granting rehearing and
clarification regarding certain revisions to its regulations and the
pro forma open-access transmission tariff, or OATT, adopted in Order
Nos. 888 and 889 to ensure that transmission services are provided on a
basis that is just, reasonable, and not unduly discriminatory. The
reforms affirmed in this order are designed to: Strengthen the pro
forma OATT to ensure that it achieves its original purpose of remedying
undue discrimination; provide greater specificity to reduce
opportunities for undue discrimination and facilitate the Commission's
enforcement; and increase transparency in the rules applicable to
planning and use of the transmission system.
DATES: Effective Date: This rule will become effective September 8,
2008.
FOR FURTHER INFORMATION CONTACT:
W. Mason Emnett (Legal Information), Office of the General Counsel--
Energy Markets, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-6540.
Daniel Hedberg (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-6243.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph
Number
I. Introduction............................................ 1
II. Reforms of the OATT.................................... 7
A. Consistency and Transparency of ATC Calculations.... 7
1. Consistency..................................... 8
2. Transparency.................................... 25
B. Transmission Pricing................................ 38
1. Energy and Generation Imbalances................ 38
2. Credits for Network Customers................... 46
3. Capacity Reassignment........................... 68
4. Operational Penalties........................... 87
5. ``Higher Of'' Pricing Policy.................... 102
6. Other Ancillary Services........................ 109
C. Non-Rate Terms and Conditions....................... 116
1. Modifications to Long-Term Firm Point-to-Point 116
Service...........................................
2. Rollover Rights................................. 141
3. Acquisition of Transmission Service............. 155
4. Designation of Network Resources................ 162
5. Clarifications Related to Network Service....... 216
6. OATT Definitions................................ 220
III. Information Collection Statement...................... 250
IV. Document Availability.................................. 251
V. Effective Date and Congressional Notification........... 254
Appendix A: Petitioners' Acronyms
Appendix B: Pro Forma Open Access Transmission Tariff
Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.
Order on Rehearing and Clarification
I. Introduction
1. On February 16, 2007, the Commission issued Order No. 890,\1\
addressing and remedying opportunities for undue discrimination under
the pro forma Open Access Transmission Tariff (OATT) adopted in Order
No. 888.\2\ The pro forma OATT was intended to foster greater
competition in wholesale power markets by reducing barriers to entry in
the provision of transmission service. In the ten years since Order No.
888, however, flaws in the pro forma OATT undermined its ability to
realize the core objective of remedying undue discrimination. The
Commission acted in Order No. 890 to correct these flaws by reforming
the terms and conditions of the pro forma OATT in several critical
areas, including the calculation of available transfer capability
(ATC), the planning of transmission facilities, and the conditions of
services offered by each transmission provider.
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\1\ Preventing Undue Discrimination and Preference in
Transmission Service, Order No. 890, 72 FR 12266 (March 15, 2007),
FERC Stats. & Regs. ] 31,241 (2007) (Order No. 890), order on reh'g,
Order No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ]
31,261 (2007) (Order No. 890-A).
\2\ Promoting Wholesale Competition Through Open Access Non-
discriminatory Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities,
Order No. 888, 61 FR 21540 (May 10, 1996), FERC Stats. & Regs. ]
31,036 (1996), order on reh'g, Order No. 888-A, 62 FR 12274 (Mar.
14, 1997), FERC Stats. & Regs. ] 31,048 (1997), order on reh'g,
Order No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No.
888-C, 82 FERC ] 61,046 (1998), aff'd in relevant part sub nom.
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C.
Cir. 2000) (TAPS v. FERC), aff'd sub nom. New York v. FERC, 535 U.S.
1 (2002).
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2. In Order No. 890-A, the Commission largely affirmed the reforms
adopted in Order No. 890. The Commission noted that work was well
underway to develop consistent practices governing the calculation of
ATC in coordination with the North American Electric Reliability
Corporation (NERC) and the North American Energy Standards Board
(NAESB). When complete, the reliability standards developed through
NERC and the business practices developed
[[Page 39093]]
through NAESB will eliminate the broad discretion that transmission
providers have in calculating ATC, increasing nondiscriminatory access
to the grid and ensuring that customers are treated fairly in seeking
alternative power supplies.
3. The Commission also noted the substantial resources that
transmission providers have dedicated to the development of
transmission planning processes in response to Order No. 890.
Transmission planning is critical because it is the means by which
customers consider and access new sources of energy and have an
opportunity to explore the feasibility of non-transmission
alternatives. It is therefore vital for each transmission provider to
open its transmission planning process to customers, coordinate with
customers regarding future system plans, and share necessary planning
information with customers.
4. In addition, transmission providers have implemented new service
options for long-term firm point-to-point customers and adopted
modifications to other services. Instead of denying a long-term request
for point-to-point service because as little as one hour of service is
unavailable, transmission providers now consider their ability to offer
a modified form of planning redispatch or a new conditional firm option
to accommodate the request. This increases opportunities to efficiently
utilize transmission by eliminating artificial barriers to use of the
grid. Charges for energy and generation imbalances also have been
standardized, including relaxed penalties for intermittent resources.
This standardization reduces the potential for undue discrimination,
increases transparency, and reduces confusion in the industry that
resulted from the prior lack of consistency.
5. The Commission concluded that, taken together, these and other
reforms adopted in Order No. 890 will better enable the pro forma OATT
to achieve the core objective of remedying undue discrimination in the
provision of transmission service. The Commission therefore rejected
requests to eliminate, or substantially modify, the various reforms
adopted in Order No. 890. The Commission did, however, grant rehearing
and clarification regarding certain revisions to its regulations and
the pro forma OATT.
Several petitioners have sought further rehearing and clarification
of the Commission's determinations in Order No. 890-A.\3\
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\3\ A list of petitioners filing requests for rehearing and/or
clarification is provided in Appendix A.
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6. The Commission largely affirms the determinations reached in
Order No. 890-A, granting limited rehearing and clarification to
address certain specific matters raised by petitioners. Revisions to
the pro forma OATT are required to implement several of these
determinations, although none disturb the fundamental nature of the
reforms adopted in Order No. 890. We therefore do not anticipate any
difficulty in their implementation or disruption in on-going compliance
efforts. We direct transmission providers that have not been approved
as RTOs or ISOs, and whose facilities are not in the footprint of an
RTO or ISO, to submit a Federal Power Act (FPA) section 206 filing that
contains the revised non-rate terms and conditions of the pro forma
OATT stated in Appendix B within 60 days of publication of this order
in the Federal Register. We direct RTO and ISO transmission providers,
transmission providers whose facilities are in the footprint of an RTO
or ISO, and WSPP to submit an FPA section 206 filing that contains the
revised non-rate terms and conditions of the pro forma OATT as stated
in Appendix B within 90 days of publication of this order in the
Federal Register.
II. Reforms of the OATT
A. Consistency and Transparency of ATC Calculations
7. In Order No. 890-A, the Commission affirmed its conclusion in
Order No. 890 that the lack of consistency and transparency in the
methodology for calculating ATC creates the potential for undue
discrimination in the provision of open access transmission service. To
remedy this lack of consistency and transparency, the Commission
directed public utilities, working through the NERC reliability
standards and NAESB business practices development processes, to
produce workable solutions to implement ATC-related reforms adopted by
the Commission. A number of petitioners seek rehearing and/or
clarification regarding the Commission's ATC-related determinations in
Order No. 890-A, which we address below.
1. Consistency
a. Necessary Degree of and Process To Achieve Consistency
8. The Commission affirmed the decision in Order No. 890 to require
consistency of all ATC components \4\ and certain definitions, data
inputs, data exchange, and modeling assumptions in order to reduce the
potential for undue discrimination in the provision of transmission
service. In response to petitioner requests, the Commission clarified
that adjacent transmission providers must coordinate and exchange data
and assumptions to achieve consistent ATC values on either side of a
single interface, regardless of whether they use the same or different
ATC methodologies. The Commission also reiterated that its regulations
require the posting of ATC values associated with a particular path,
not available flowgate capacity (AFC) values associated with a
flowgate. The Commission clarified, however, that a transmission
provider is free to post both ATC and AFC values. The Commission
further clarified that transmission-owning utilities in an RTO region
can request waiver of the requirement to convert AFC calculations into
ATC for posting purposes in the event the RTO has been granted such a
waiver.
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\4\ The ATC components are total transfer capability (TTC),
existing transmission commitments (ETC), capacity benefit margin
(CBM), and transmission reserve margin (TRM).
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Requests for Rehearing and Clarification
9. Duke, EEI, and E.ON U.S. object to the requirement that ATC
values be consistent on either side of an interface and suggest
alternatively that transmission providers be required to achieve
consistent TTC values on either side of the interface. Duke contends
that achieving consistency in TTC values will not necessarily result in
consistent ATC values. EEI agrees, arguing that ATC will be identical
on both sides of an interface only in the unlikely event that the
transmission providers each simultaneously receive and process
corresponding transmission requests and schedules for the same type of
product. EEI contends that transmission providers therefore will have
to expend substantial effort and resources to constantly monitor and
investigate differences in ATC values, the burden of which EEI argues
outweighs any benefit realized.
10. Joined by E.ON U.S., Southern suggests that the Commission
clarify that ``consistent ATC values'' does not mean that ATC or TTC
values on either side of an interface must be identical. Southern
argues that interpreting ``consistent'' to mean ``identical'' would be
contrary to reliable planning and not reasonably achievable. Southern
contends that there are a number of reasons why adjacent transmission
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providers may have varying ATC and TTC values on an interface,
including partial path transmission service, CBM and TRM, and the
impacts of multiple interfaces.
11. EEI and E.ON U.S. also request the Commission clarify that the
process of achieving consistency of TTC values should occur through the
ongoing NERC and NAESB processes. They argue that the Commission in
Order No. 890 only required the consistency of components, definitions,
data and assumptions with respect to ATC and its components, including
TTC. They contend that the Commission did not require consistency in
ATC values or provide for a means to reconcile differences in ATC
calculations performed by multiple transmission providers. EEI and E.ON
U.S. suggest that it may take additional time for NERC and NAESB to
develop standards and business practices to achieve consistency in TTC
values or reconcile differences between ATC values at common
interfaces. Duke requests confirmation that compliance with the NERC
and NAESB methodologies regarding TTC and related calculations, once
they have been adopted and implemented, is sufficient to comply with
the consistency requirement imposed in Order No. 890-A.
12. Entergy requests the Commission to clarify that Order No. 890-A
was not intended to reverse the Commission's prior determination that
Entergy and other transmission providers can rely on the scenario
analyzer to satisfy the ATC posting requirements in part 37 of the
Commission's regulations.\5\ Although Entergy uses an AFC methodology,
it posts ATC values on a path-specific basis by providing transmission
customers a scenario analyzer tool that allows them to instantaneously
evaluate transfer capability on a source-to-sink basis. Entergy states
that its scenario analyzer is also relied on by other transmission
providers, such as the Southwest Power Pool, Inc. and the Midwest
Independent Transmission System Operator, Inc. Entergy states that the
scenario analyzer will notify the customer the proposed request could
be approved if sufficient AFC exists.
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\5\ Citing Entergy Servs., Inc., 106 FERC ] 61,115 (2004); 18
CFR 37.6(b)(2)(i) (2007).
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13. Entergy notes that the Commission has previously concluded that
``Entergy's AFC methodology meets the established minimum posting
requirements for transmission capability set forth in Order No. 889,''
\6\ which Entergy argues were not changed in Order Nos. 890 or 890-A.
If the Commission intended in Order No. 890-A to modify the
requirements for posting ATC, or reverse its determination that the
scenario analyzer complies with the posting requirements, Entergy
requests clarification regarding what specific actions are required of
transmission providers that rely on the AFC process. Entergy also asks
that those transmission providers be allowed to continue using the
scenario analyzer until those measures are in place. Entergy states
that the sole purpose of the scenario analyzer has been to comply with
the Commission's posting requirements and that transmission providers
should not be required to maintain two different and duplicative
systems for meeting those requirements.
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\6\ See Entergy Servs., Inc., 106 FERC ] 61,115 at P 50.
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14. E.ON U.S. requests clarification that all transmission-owning
utilities within an RTO region can request waiver of the requirement to
convert AFC calculations into ATC for posting purposes in the event the
RTO has been granted such a waiver, and not just transmission-owning
utilities that are members of the RTO. E.ON U.S. states that many of
its neighboring systems utilize AFC instead of ATC, requiring it to
calculate AFC in order to transact with the adjacent RTO members, to
alleviate seams issues with these neighboring systems, and increase
transparency for across the border transactions. E.ON U.S. contends
that AFC calculations are much more accurate means to determine if
capacity is available on a flowgate than are ATC calculations. If the
Commission declines to grant the requested clarification, E.ON U.S.
seeks rehearing on the grounds that the Commission is creating new
seams where they do not currently exist by requiring transmission
capacity to be calculated differently on both sides of the border for
such transactions.
Commission Determination
15. The Commission affirms the clarification provided in Order No.
890-A that adjacent transmission providers must coordinate and exchange
data and assumptions to achieve consistent ATC values on either side of
a single interface.\7\ We disagree with petitioners arguing that
``consistent'' ATC values should not be interpreted as identical. We
recognize that factors such as timing of reservation requests,
acceptances, and confirmations, and multiple interfaces between and
among transmission providers, can make it difficult to achieve
coincidental, identical postings of ATC values on both sides of an
interface. However, as the Commission explained in Order No. 890, if
all of the ATC components and certain data inputs and assumptions are
consistent, the ATC calculation methodologies being finalized by NERC
through the reliability standards development process should produce
predictable and sufficiently accurate, consistent, equivalent, and
replicable results.\8\ We therefore disagree that the directive to
coordinate and exchange data and assumptions to achieve consistent ATC
values on either side of an interface was newly imposed in Order No.
890-A. The Commission simply clarified that the requirement stated in
Order No. 890 applies equally to calculations of ATC on either side of
an interface.
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\7\ See Order No. 890-A at P 52.
\8\ See Order No. 890 at P 210.
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16. Public utilities have already been directed to work through the
NERC and NAESB processes to achieve such consistency in ATC and TTC
values. In response to Duke, the Commission will address whether the
resulting reliability standards and business practices adequately
satisfy this consistency requirement on review of those reliability
standards and business practices. We note that public utilities were
recently granted an extension of time to finalize their work through
the NERC and NAESB processes. In Order No. 890, the Commission directed
each transmission provider to file a revised Attachment C to its OATT
to incorporate any changes associated with the revised reliability
standards and business practices within 60 days of completion of the
NERC and NAESB processes. We clarify that these revised Attachment C
filings are due 60 days after the date on which the relevant
reliability standards or business practices takes effect, not their
submission for Commission review.
17. We grant the clarification requested by Entergy regarding the
Commission's February 11, 2004 determination that Entergy's AFC
methodology meets the minimum posting requirements for transmission
capability set forth in Order No. 889.\9\ The Commission did not amend
in Order Nos. 890 or 890-A the obligation for transmission providers to
post ATC values associated with a particular path instead of AFC values
associated with a flowgate.\10\ Prior determinations by the Commission
that a particular practice satisfies that obligation, or waiving that
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obligation altogether, therefore remain intact.\11\
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\9\ See Entergy Servs., Inc., 106 FERC ] 61,115 at P 50.
\10\ See 18 CFR 37.6(b)(1)(i); see also Order No. 890 at P 211;
Order No. 890-A at P 51.
\11\ See Order No. 890-A at P 36.
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18. We disagree with E.ON U.S. that non-member transmission-owning
utilities within an RTO region are similarly situated to member
transmission-owning utilities, which the Commission noted in Order No.
890-A may request waiver of the requirement to convert AFC calculations
into ATC for posting purposes in the event the RTO has been granted
such a waiver. RTO members that have retained control over certain
transmission facilities operate those transmission facilities in
coordination with the RTO. In comparison, non-RTO members provide
transmission service independently and, therefore, for purposes of ATC
calculation are similar to a transmission provider outside the RTO
region. Nevertheless, we reiterate that a transmission provider is free
to post both ATC and AFC values if it believes such postings provide
additional transparency.\12\
b. ATC Components--CBM and TRM
19. In Order No. 890-A, the Commission affirmed the decision in
Order No. 890 to require public utilities, working through NERC and
NAESB, to develop clear standards and business practices for how the
CBM value is determined, allocated across transmission paths and
flowgates, and used. The Commission also affirmed the requirement that
transmission providers design their transmission charges so that the
class of customers not benefiting from the CBM set-aside, i.e., point-
to-point customers, does not pay a transmission charge that includes
the cost of the CBM set-aside. The Commission explained that only
network customers and the transmission provider on behalf of its native
load may request that transmission capacity be set aside as CBM and,
therefore, only those users of the system should bear its costs. The
Commission also rejected requests to use CBM for reserve-sharing
arrangements, reiterating that TRM is the appropriate category for
reserve-sharing.
Requests for Rehearing and Clarification
20. Southern requests rehearing of the Commission's statement that
non-firm point-to-point transmission customers only receive an indirect
benefit from CBM. Southern contends that under normal conditions
without generation deficiencies, non-firm point-to-point customers may
use CBM set-aside capacity. Southern states that it has not called upon
CBM to meet a generation deficit emergency in six years, resulting in
that capacity consistently being made available to non-firm customers.
Southern argues that non-firm customers therefore directly benefit from
CBM and should bear transmission charges that include the cost of the
capacity they are actually utilizing. If the Commission does not wish
to make a generic determination, Southern asks the Commission to
clarify that the issue of whether non-firm customers benefit from CBM
will be addressed on a case-by-case basis.
21. TDU Systems request clarification of the Commission's statement
in Order No. 890-A that TRM is the appropriate category for reserve
sharing arrangements. TDU Systems request confirmation that, if a
transmission provider is using another form of set-aside for reserve
sharing purposes, such as CBM, the transmission providers' customers
are entitled to comparable use of the form of set-aside. TDU Systems
argue that comparability cannot be achieved where the transmission
provider does not offer use of transmission capacity set-asides to LSE
customers comparable to the use that the transmission provider allows
itself.
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\12\ See Order No. 890-A at P 51.
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Commission Determination
22. The Commission affirms the requirement adopted in Order No.
890, and affirmed in Order No. 890-A, that transmission providers
design their transmission charges so that the class of customers not
benefiting from the CBM set-aside, i.e., point-to-point customers, does
not pay a transmission charge that includes the cost of the CBM set-
aside.\13\ We disagree with Southern that non-firm customers benefit
directly from the CBM set-aside. The Commission acknowledged in Order
No. 890-A that capacity set aside for CBM may be made available to non-
firm customers when not otherwise in use.\14\ That benefit, however, is
indirect and inferior to the direct benefits enjoyed by those entities
that have the exclusive right to request the set-aside in the first
instance.
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\13\ See Order No. 890 at P 263; Order No. 890-A at P 86.
\14\ See Order No. 890-A at P 87.
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23. The Commission acknowledged in Order No. 890-A that use of
capacity set aside for CBM by non-firm customers may result in revenues
that are credited to the transmission provider's cost of service, to
the benefit of point-to-point customers.\15\ The Commission stated its
expectation that transmission providers would address in rate design
filings any possibility for particular customers to receive an
inappropriate credit for non-firm use of capacity set aside for CBM.
Further clarification is unnecessary.
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\15\ Id.
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24. With regard to reserve sharing arrangements, the Commission
clearly stated in Order No. 890-A that TRM is the appropriate category
for reserve sharing arrangements and that, in comparison, CBM is used
to meet generation reliability criteria in times of emergency
generation deficiencies.\16\ Therefore, transmission providers must use
TRM, not CBM, for reserve sharing arrangements and make ATC set aside
for that purpose available to all LSEs on a comparable basis for any
reserve sharing arrangements they may have.
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\16\ Id. P 85.
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2. Transparency
25. In Order No. 890-A, the Commission clarified that all data used
to calculate ATC and TTC for any constrained paths and any system
planning studies or specific network impact studies performed for
customers are to be made available on request, regardless of whether
the customer is non-affiliated or affiliated with the transmission
provider. The Commission also clarified that underlying load forecast
assumptions to be posted on OASIS should include economic and weather-
related assumptions. The Commission concluded that posting load
forecast and actual load data on a control area and LSE level does not
raise serious competitive implications. The Commission stated that it
would consider requests for exemption from this posting requirement on
a case-by-case basis if there is customer-specific information deemed
confidential by the affected customer that impedes the ability of the
transmission provider to post this data.\17\
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\17\ Id. P 143.
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26. The Commission further clarified that transmission providers
must make available, upon request and subject to appropriate
confidentiality protections and CEII requirements, certain modeling
data including load flow base cases and generation dispatch methodology
and, subject to additional reasonable and applicable generator
confidentiality limitations, production cost models (including
assumptions, settings, study results, input data, etc.). The Commission
declined to require transmission providers to post this information on
OASIS.
Requests for Rehearing and Clarification
27. Duke seeks clarification of the requirement to post information
requested by an affiliate when that information is already available to
the
[[Page 39096]]
public. Duke suggests that only a notice that an affiliate requested a
publicly-available study needs to be posted, and not the actual study,
because the additional effort of posting the actual study would be
redundant, burdensome, and without purpose.
28. Duke, EEI and Southern request rehearing to eliminate the
requirement to post the underlying assumptions used to develop load
forecasts on a daily basis, including economic and weather-related
assumptions. They claim that the requirement is a substantial
modification of regulations adopted in Order No. 890, is unduly
burdensome, and may cause transmission providers to violate their
contractual obligations by releasing proprietary assumptions and
forecasts obtained from forecasting service providers. Southern also
complains that it is unclear what is meant by ``economic assumptions''
and any requirement to provide daily updates of such assumptions would
be unduly burdensome given the amount of effort required and negligible
benefit that customers might gain from the information.
29. Duke argues that the Commission's expansion of posting
requirements to include load forecast assumptions daily is an entirely
new requirement for which notice and comment has not been provided.
Duke contends that Constellation's request for rehearing of Order No.
890 mentioning load forecast assumptions was inadequate to provide
notice because Constellation did not request that load forecast
assumptions be posted on a daily basis or that load forecast
assumptions unrelated to ATC calculations be posted.
30. If the Commission declines to eliminate this posting
requirement, Duke suggests that it be amended to require a one-time
(i.e., not daily) posting of a list of factors that go into the peak
load forecast, such as day of the week, a day's status as holiday or
non-holiday, temperature, dew point, precipitation forecast, etc. If
the Commission continues to require the daily posting of information,
Duke seeks clarification regarding the granularity of such information
given that it could vary widely over a control area. Duke questions
whether, for example, PJM would have to post weather forecasts for each
of its subregions. Until the Commission grants the requested
clarification, Duke argues that the posting requirement should be
waived or transmission providers should be permitted to satisfy the
requirement by reference to commercial/government weather websites.
31. Southern seeks clarification of the requirement to make
available, on request, the modeling data identified in paragraph 148 of
Order No. 890-A. Southern states that it does not use all of the
specified modeling data to calculate ATC, TTC, CBM and/or TRM. In
particular, Southern argues that neither production cost models nor
special protection systems and operation guides are used in its ATC
calculations and that production cost models in particular are not even
maintained by its transmission function given its highly sensitive
nature. Southern asks the Commission to clarify that transmission
providers are required to provide only the specified modeling data
actually used in performing those calculations and that a transmission
provider is not required to manufacture and/or produce the data in the
event it does not use a particular input in its ATC calculations.
32. Duke also argues that production cost models and generation
dispatch methodologies typically contain commercially sensitive or
proprietary information or information that should not be released to
the public. Duke acknowledges that the Commission stated that
availability of production cost models would be subject to reasonable
and applicable generator confidentiality limitations,\18\ but argues
that still would allow employees or consultants of competing entities
to be provided access to sensitive data. Duke therefore asks the
Commission to confirm that reasonable and applicable generator
confidentiality limitations means that the proprietary/sensitive
information may be released only to transmission function personnel
that are restricted from further disclosure, including to their own
merchant functions. Duke also requests clarification that the
transmission provider's merchant/generation function and third-parties
are to be treated identically as to their right to classify which
information that they have given to a transmission provider is
proprietary/sensitive, in accordance with Commission policies.
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\18\ Citing Order No. 890-A at P 148.
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Commission Determination
33. The Commission clarifies in response to Duke that, when an
affiliate requests information that is already available to the public,
the transmission provider need only post a notice that an affiliate
requested the particular information, not the actual information. This
clarification applies, however, only to those instances in which the
actual information is already publicly available.
34. We affirm the requirement that each transmission provider post
on a daily basis its load forecast, including underlying assumptions,
and actual daily peak load for the prior day.\19\ In the NOPR, the
Commission specifically raised the possibility of requiring
transmission providers to make available their underlying load forecast
assumptions for all ATC calculations.\20\ The Commission adopted that
proposal in Order No. 890, but failed to amend its regulations
accordingly.\21\ The Commission corrected that oversight in Order No.
890-A.\22\ We therefore disagree with Duke that transmission providers
were not on notice that posting of load forecast data and related
assumptions might be required.
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\19\ 18 CFR 37.6(b)(3)(iv) (2007).
\20\ See Preventing Undue Discrimination and Preference in
Transmission Services, Notice of Proposed Rulemaking, FERC Stats. &
Regs. ] 32,603, at P 194 (2006) (NOPR).
\21\ See Order No. 890 at P 416.
\22\ See Order No. 890-A at P 143.
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35. We clarify, however, that the Commission intended for
transmission providers to post the underlying factors used to make load
forecasts that have a significant impact on calculations, such as
temperature forecasts, not all economic and other data that underlies
each and every daily load forecast. Transmission providers must post a
description of their load forecast method including how economic and
weather assumptions are used in load forecasting. The Commission's
intent is to increase transparency in the transmission provider's
process of forecasting, providing assurance to customers that loads are
consistently being forecast using methodologies which are not subject
to daily manipulation to favor affiliates.
36. We also affirm the requirement to make available, upon request
and subject to appropriate confidentiality protections and CEII
requirements, certain modeling data including load flow base cases and
generation dispatch methodology and, subject to additional reasonable
and applicable generator confidentiality limitations, production cost
models (including assumptions, settings, study results, input data,
etc.).\23\ We clarify in response to Southern that a transmission
provider is not required under Order Nos. 890 or 890-A to manufacture
or otherwise make available modeling data that it does not use in its
ATC calculations. However, if the specified modeling data are used for
the calculation of ATC, or any of its components, they must be
[[Page 39097]]
made available as required in Order No. 890-A.
---------------------------------------------------------------------------
\23\ See Order No. 890-A at P 148.
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37. We agree with Duke that production cost models and generation
dispatch methodologies may contain commercially sensitive or
proprietary information. Transmission providers are therefore permitted
to condition the release of such information on appropriate
confidentiality restrictions. With regard to production costs models,
reasonable applicable generator confidentiality limitations could
include, among other things, restrictions on the release of proprietary
and commercially sensitive information to those engaged in the
marketing, sale, or purchase of electric power at wholesale. We agree
that the transmission provider's merchant and/or generation personnel
and third-parties are to be treated identically as to their right to
classify proprietary or commercially sensitive information that they
provide to a transmission provider, as well as their right to receive
such data from the transmission provider.
B. Transmission Pricing
1. Energy and Generation Imbalances
a. Generator Imbalance Penalties
38. In Order No. 890-A, the Commission affirmed the decision in
Order No. 890 to adopt standardized generator imbalance provisions in
Schedule 9 of the pro forma OATT. The Commission clarified that a
transmission provider only has to provide generator imbalance service
from its own resources to the extent that it is physically feasible to
do so (i.e., the transmission provider is able to manage the additional
potential imbalances without compromising reliability). Each
transmission provider may state on its OASIS the maximum amount of
generator imbalance service that it is able to offer from its resources
based on an analysis of the physical characteristics of its system.
Alternatively, a transmission provider may consider requests for
generator imbalance service on a case-by-case basis, performing as
necessary a system impact study to determine the precise amount of
additional generation it can accommodate and still reliably respond to
the imbalances that could occur.
39. The Commission clarified that neither of these options relieves
the transmission provider of its obligation to provide generator
imbalance service if it is able to acquire additional resources to do
so. If it is not physically feasible for the transmission provider to
offer generator imbalance service using its own resources, either
because they do not exist or they are fully subscribed, the
transmission provider must attempt to procure alternatives to provide
the service, taking appropriate steps to offer an option that customers
can use to satisfy their obligation to acquire generator imbalance
service as a condition of taking transmission service. If no such
resources are available, the transmission provider must accept the use
of dynamic scheduling to the extent a transmission customer has
negotiated an appropriate arrangement with a neighboring control area.
Request for Clarification
40. E.ON U.S. seeks clarification of the time frame within which
the transmission provider must post the availability of service (e.g.,
an hourly, 24-hour, or monthly interval). E.ON U.S. also asks the
Commission to clarify the time frame required for obtaining imbalance
service from other sources and the extent to which a transmission
provider is obligated to seek such resources. E.ON U.S. suggests that
this obligation could be interpreted as requiring only a single search
or a constant search for resources over a long period of time. E.ON
U.S. seeks further clarification regarding the point in the process
when the transmission provider must inform the generator that it must
arrange for dynamic scheduling because no other option is available.
Commission Determination
41. The Commission affirms the decision in Order No. 890-A to allow
a transmission provider to post on its OASIS the maximum amount of
generator imbalance service it is able to offer without impairing
reliability.\24\ To the extent necessary, we clarify that a
transmission provider must post the availability of generator imbalance
service and seek imbalance service from other sources in a manner that
is reasonable in light of the transmission provider's operations and
the needs of its imbalance customers. What is reasonable for some
imbalance customers and transmission providers may be unreasonable for
others. We therefore decline to set a specific time frame within which
the transmission provider must post the availability of generator
imbalance service. For the same reason, we decline to set a generic
time frame for obtaining imbalance service from other sources in the
event it is not physically feasible to offer generator imbalance
service using the transmission provider's resources.
---------------------------------------------------------------------------
\24\ Order No. 890-A at P 289.
---------------------------------------------------------------------------
42. In the event that there are no additional resources available
to enable the transmission provider to meet its obligation to provide
generator imbalance service, the transmission provider must accept the
use of dynamic scheduling by a transmission customer.\25\ The
transmission provider cannot, however, require the use of dynamic
scheduling, since the customer may choose to make other alternative
comparable arrangements to self supply generator imbalance service. If
a customer chooses to use dynamic scheduling in this circumstance, it
is the option and the responsibility of the transmission customer to
seek out and appropriately negotiate dynamic scheduling with a
neighboring control area. The transmission provider is required to
accommodate the use of dynamic scheduling only to the extent the
transmission provider is unable to provide generator imbalance service
and the customer has negotiated appropriate arrangements with the
relevant control areas.
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\25\ Id. P 290.
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b. Definition of Incremental Cost
43. In Order No. 890-A, the Commission granted rehearing of its
decision to calculate incremental costs for the purpose of assessing
imbalance charges based on the last 10 MW dispatched to supply the
transmission provider's native load. The Commission determined that it
is more reasonable to base imbalance charges on the actual cost to
correct the imbalance, which may be different than the cost of serving
native load. Accordingly, the Commission modified the definition to
require transmission providers to use the cost of the last 10 MWs
dispatched for any purpose, i.e., to serve native load, correct
imbalances, or to make an off-system sale.
Requests for Rehearing and Clarification
44. EEI and Southern argue that the Commission mistakenly used
``i.e.'' instead of ``e.g.'' when referring to the costs to be included
in the calculation of charges for energy imbalance service and
generator imbalance service. EEI contends that the specified purposes
exclude costs to serve other customers, such as on-system customers who
take partial requirements service from the transmission provider. EEI
asks the Commission to clarify that it meant to use ``e.g.'' to
indicate that the list of examples provided were non-exclusive.
Southern similarly requests that Schedules 4 and 9 of the pro forma
OATT be revised to use ``e.g.'' instead of ``i.e.''
[[Page 39098]]
Commission Determination
45. The Commission grants rehearing of the definition of
incremental cost as described in the preamble of Order No. 890-A and in
Schedules 4 and 9 of the pro forma OATT. Those schedules define
incremental cost and decremental cost as ``the Transmission Provider's
actual average hourly cost of the last 10 MW dispatched for any
purpose.'' \26\ We agree that use of the term ``e.g.'' instead of
``i.e.'' when referring to the types of energy to be included in the
incremental cost calculation better reflects the Commission's intent to
include within that calculation the last 10 MW dispatched for any
purpose. We revise the pro forma OATT accordingly.\27\
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\26\ Schedules 4, 9 of the pro forma OATT.
\27\ We note in response to EEI, however, that the existing
reference to native load in Schedules 4 and 9 already includes on-
system customers taking requirements service under section 1.23 of
the pro forma OATT.
---------------------------------------------------------------------------
2. Credits for Network Customers
46. In Order No. 890-A, the Commission affirmed its decision in
Order No. 890 to sever the link in the pro forma OATT between joint
planning and credits for new facilities owned by network customers. As
the Commission explained in Order No. 890, the linkage between credits
and joint planning gave the transmission provider an incentive to deny
coordinated planning to avoid granting credits for customer-owned
facilities. The Commission concluded that any efficiencies that may be
lost by severing that link should be offset by the increased
efficiencies resulting from the coordinated planning reforms adopted in
Order No. 890, which the Commission noted will ensure that most, if not
all, transmission facilities are planned on a coordinated basis.
47. The Commission similarly affirmed the decision to adopt a
revised test to determine whether a network customer is eligible to
receive credits for new facilities. Under the revised section 30.9 of
the pro forma OATT, customers are eligible for credits for those
facilities that are integrated with the operations of the transmission
provider's facilities; provided, that integration will be presumed for
customer-owned facilities that, if owned by the transmission provider,
would be eligible for inclusion in the transmission provider's annual
transmission revenue requirement as specified in Attachment H of the
pro forma OATT. The Commission clarified in Order No. 890 that this
revision did not alter the underlying integration standard. In order to
satisfy the integration standard, the customer must show that its new
facility is integrated with the transmission provider's system,
provides additional benefits to the transmission grid in terms of
capability and reliability, and can be relied on by the transmission
provider for the coordinated operation of the grid.\28\
---------------------------------------------------------------------------
\28\ Order No. 890 at P 754, n. 436 (citing Southwest Power
Pool, Inc., 108 FERC ] 61,078 (2004), reh'g denied, 114 FERC ]
61,028 (2006)).
---------------------------------------------------------------------------
48. The Commission explained in Order No. 890-A that adoption of
the presumption of credits in section 30.9 was necessary to ensure
comparability between network customers and transmission providers
serving load. To that end, the Commission clarified that the
presumption of integration is rebuttable as applied to both the
transmission provider and the network customer. A transmission provider
may challenge the presumption that the customer's facilities are
integrated by showing that the customer's facilities do not actually
meet the integration standard, notwithstanding the fact that they are
similar to facilities in the transmission provider's rate base.
Similarly, a customer could challenge the presumption that a
transmission provider's facilities are integrated by showing that the
facilities, for example, do not provide network benefits. As a result,
the Commission clarified that denial of credits for a network customer
no longer triggers a need for the transmission provider to demonstrate
that its own facilities satisfy the integration standard.
Requests for Clarification and Rehearing
49. NRECA and TAPS ask the Commission to clarify whether it
intended to apply a single integration standard to both transmission
customer and transmission provider facilities and, if so, what standard
will apply. These petitioners contend that several passages in Order
No. 890-A suggest that the Commission will now apply a single
integration standard, no matter whose facilities are under
consideration. They note, for example, the Commission's statement in
paragraph 353 of Order No. 890-A that ``[a] transmission provider may
overcome the network customer's presumed integration by demonstrating,
with reference to its own facilities that meet the integration
standard, that the network customer's facilities do not meet the
standard.'' \29\ They point to another statement that it is
``appropriate for both the transmission provider and its customers to
be subject to the integration standard to the extent the presumption of
integration is overcome.'' \30\ These petitioners express concern,
however, regarding the Commission's statement that the integration
standard for credits under section 30.9 remains unchanged and that
precedents applying that standard will continue to apply. They argue
that those precedents establish and apply a significantly more
stringent test for integration of customer-owned facilities than for
facilities of the transmission provider.\31\
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\29\ Order No. 890-A at P 353.
\30\ Id. P 354.
\31\ Citing East Texas Elec. Coop., Inc. v. Central & South West
Services, Inc. 108 FERC ] 61,079 (2004), reh'g denied, 114 FERC ]
61,027 (2006) (ETEC); Northeast Tex. Elec. Coop., Inc., 108 FERC ]
61,108, at P 48 (2004), reh'g denied, 111 FERC ] 61,189 (2005)
(NTEC).
---------------------------------------------------------------------------
50. TAPS suggests that the Commission's new policy for new
transmission facilities must mean one of three things. Its first and
preferred possibility is that, in assessing whether the new integration
presumption has been overcome, the Commission will apply a single
integration standard to both the transmission provider and the
transmission customer, i.e., the relaxed standard that has long applied
in determining whether a transmission provider's facilities should be
rolled into its rate base. Under a second possibility, a single
integration standard also would apply, but transmission providers would
be held to the same strict integration standard to which transmission
customers seeking section 30.9 credits have long been subject. As a
final interpretation, TAPS states that, to overcome the presumption
applicable to new transmission facilities, the Commission could
continue to apply two different tests: The more stringent one
applicable to customers seeking credits and the more relaxed one for
transmission providers to include facilities in rate base. TAPS notes,
however, that this would be inconsistent with Order No. 890-A's
repeated references to a single, comparable integration standard that
applies to both customer and transmission providers.
51. East Texas Cooperatives agree that the case law establishes a
different and harder test for integration of customer-owned facilities.
East Texas Cooperatives state that, under that precedent, a
transmission provider needs only to run the load flow study used in
ETEC to challenge credits for a customer-owned facility. East Texas
Cooperatives argue that this load flow study cannot be satisfied by any
transmission facilities, since it takes out both customer facilities
and load and asks if the grid can still run reliably. In comparison,
East Texas Cooperatives
[[Page 39099]]
contend that the cost of transmission provider facilities would
continue to be presumptively rolled in subject to challenge unless a
party can show that those facilities are so isolated from the grid that
they are and will likely remain non-integrated and thus provide no
benefit to the system.
52. East Texas Cooperatives therefore argue that the Commission's
statement in Order No. 890-A regarding the continued applicability of
integration precedent mandates discrimination in favor of transmission
provider facilities in violation of the FPA. They contend that
eligibility for rolled-in rate treatment of the same facilities would
vary solely as a result of their ownership, since customer-owned
facilities that are found not to be integrated under a load flow
integration test would become integrated if purchased by the
transmission provider, which is subject to a more relaxed application
of the integration standard. East Texas Cooperatives suggest that the
Commission justified its application of a more difficult test to
network customers on a presumption that the customer-owned facilities
are less integrated than transmission provider facilities. Joined by
NRECA and TAPS, East Texas Cooperatives argue that customer-owned
facilities are built to serve customer loads just as transmission
provider facilities are built to serve transmission provider loads.
These petitioners contend that there is no basis in the record for
presuming that transmission provider facilities are more integrated
than customer facilities.
53. FMPA, NRECA and TDU Systems contend that contradictory
statements in Order No. 890-A could be read to apply the more stringent
integration standard to customer-owned facilities and a more relaxed
integration standard for transmission provider facilities.\32\ In
particular, these petitioners question what standard the Commission was
referring to in paragraph 353 of Order No. 890-A when it stated that
the transmission provider may overcome the network customer's presumed
integration by demonstrating, with reference to its own facilities that
meet the integration standard, that the network customer's new
facilities do not meet the standard, i.e., the ``integration standard''
or the ``similar in purpose and design'' standard. NRECA and TDU
Systems argue that the appropriate standard to apply when both claiming
and rebutting the presumption of integration is whether the customer's
facilities are similar in design and purpose to those of the
transmission provider that are in rates.
---------------------------------------------------------------------------
\32\ Citing Order No. 890-A at P 351-52.
---------------------------------------------------------------------------
54. Florida Power also requests clarification of language in
paragraph 353 of Order No. 890-A. Florida Power asks the Commission to
confirm that this statement applies only to determine whether the
customer is entitled to the presumption in the first place, not to
rebut of the presumption once established, and that the standard to
which the Commission was referring is whether the customer-owned
facilities are similar in design and purpose to facilities owned by the
transmission provider that are included in rates. Florida Power also
asks the Commission to confirm that the transmission provider could
oppose a customer's initial attempt to establish a presumption of
credits by showing, by reference to the transmission provider's own
facilities that meet the integration standard, that the customer-owned
facilities are not similar in design and purpose to facilities owned by
the transmission provider that are included in rates.
55. With regard to rebutting the presumption once established,
Florida Power requests confirmation that the transmission provider can
overcome the presumption by showing that the customer-owned facilities
do not meet the integration standard, i.e., that it does not need the
network customer's facility to serve the network customer, the
transmission provider's other transmission customers, or the
transmission provider's retail customers.\33\ Florida Power contends
that it would not be just and reasonable, or consistent with the cost
causation principle, to shift the cost of customer-owned facilities if
those facilities do not benefit the transmission provider's system.
---------------------------------------------------------------------------
\33\ Citing Southern California Edison Co., 108 FERC ] 61,085,
at P 9 n.11 (2004); Southwest Power Pool, Inc., 108 FERC ] 61,078,
at P 18 n.7 (2004), reh'g denied, 114 FERC ] 61,028 (2006); ETEC,
108 FERC ] 61,079, at P 26 n.11; Northern States Power Co., 87 FERC
] 61,121 at 61,488 (1999).
---------------------------------------------------------------------------
56. E.ON U.S. argues that the rebuttable presumption of integration
should apply only to customer-owned facilities that are planned through
the Attachment K or similar process. If the Commission's expectation
that most, if not all, transmission upgrades eligible for credits will
be planned in the Attachment K process is true, E.ON U.S. suggests that
the rebuttable presumption of integration most reasonably applies only
to facilities planned through that process.\34\ E.ON U.S. contends that
linking credits for customer-owned facilities to the Attachment K
planning process would allow the transmission provider an opportunity
to coordinate with customers on facilities, while preventing any
opportunities for undue discrimination given the non-discretionary
nature of the planning obligation. E.ON U.S. argues that failure to
plan facilities through the Attachment K or similar process should
trigger a presumption against receiving credits for such facilities.
---------------------------------------------------------------------------
\34\ Citing Order No. 890-A at P 426.
---------------------------------------------------------------------------
57. Several petitioners request rehearing of the Commission's
determination that denial of credits for a network customer would no
longer trigger a need for the transmission provider to demonstrate that
its own facilities satisfy the integration standard. East Texas
Cooperatives contend that this decision improperly reverses the
approach adopted in FP&L \35\ and prohibits a network customer from
challenging the rolled-in rate treatment of transmission provider
facilities even when the customer's own facilities are found ineligible
for credits. TAPS contends that reversing this policy is inconsistent
with notions of comparability unless the Commission clarifies, as
requested above, that the relaxed integration standard applies to both
network customers and transmission providers. If a network customer's
facilities are disqualified from eligibility for credits due to
application of a more stringent integration standard, TAPS and TDU
Systems argue that comparability requires the removal of the
transmission provider's similar facilities from rates. NRECA agrees,
arguing that the transmission provider must be required to remove its
facilities from rates if customer-owned facilities that are similar in
design and purpose to those transmission provider facilities are found
ineligible for credits under the integration standard.
---------------------------------------------------------------------------
\35\ Florida Mun. Power Agency v. Florida Power and Light Co.,
74 FERC ] 61,006, at 61,010 (1996), reh'g denied, 96 FERC ] 61,130,
at 61,544-45 (2001), aff'd sub nom. Florida Mun. Power Agency v.
FERC, 315 F.3d 362 (D.C. Cir. 2003) (FP&L).
---------------------------------------------------------------------------
58. TAPS and FMPA ask the Commission to clarify that removal of the
trigger applies only to denial of credit for new facilities to which
the new presumption of integration applies. TAPS and FMPA point to
language in paragraph 352 of Order No. 890-A providing that ``the
denial of credits for a network customer no longer triggers a need for
the transmission provider to demonstrate that its own facilities
satisfy the integration standard.'' Both FMPA and TAPS interpret this
language as applying to new facilities only. TAPS contends that the
Commission does not and cannot offer any justification for
[[Page 39100]]
dispensing with the trigger in cases involving requests for credits for
existing facilities, in which the presumption of integration adopted in
Order No. 890 does not apply. TAPS is concerned that transmission
providers will seek to remove the trigger for existing facilities,
relying, inter alia, on the more general reference in Order No. 890-A
to elimination of trigger.
59. Finally, FMPA seeks clarification on how the Commission's
determinations on transmission credits will affect pending cases. FMPA
asks the Commission to confirm that Order No. 890-A will not be applied
to deny or weaken the comparability requirement for facilities at issue
in Docket No. ER93-465-000, et al. FMPA also asks the Commission to
clarify that the transmission credit policy articulated in Order No.
890 and Order No. 890-A will not preclude FMPA's ability to obtain full
relief if the D.C. Circuit remands the Commission's decisions at issue
in Fla. Mun. Power Agency v. FERC regarding charges for transmission
that a network customer is physically unable to use.\36\
---------------------------------------------------------------------------
\36\ No. 06-1285 (D.C. Cir. filed July 26, 2006).
---------------------------------------------------------------------------
Commission Determination
60. The Commission affirms the decision in Order Nos. 890 and 890-A
to revise the test for determining whether a network customer is
eligible to receive credits for new facilities. Under the revised
section 30.9 of the pro forma OATT, a network customer is eligible for
credits if it demonstrates that its facilities are integrated with the
operations of the transmission provider's facilities, provided that
integration will be presumed for new customer-owned facilities that, if
owned by the transmission provider, would be eligible for inclusion in
the transmission provider's annual transmission revenue requirement as
specified in Attachment H of the pro forma OATT. As the Commission
explained in Order No. 890-A, the adoption of this presumption ensures
comparability between network customers and transmission providers
serving native load given that transmission providers are now obligated
to plan their systems on an open and coordinated basis.\37\
---------------------------------------------------------------------------
\37\ See Order No. 890-A at P 350.
---------------------------------------------------------------------------
61. Several petitioners question how this revised test is
consistent with the Commission's statements that the integration
standard applicable to new facilities remains unchanged and that
Commission precedent regarding application of that standard will
continue to apply.\38\ As these petitioners note, the integration
standard has historically been applied differently to network customers
and transmission providers.\39\ Transmission facilities owned by the
transmission provider enjoyed a presumption of rolled-in rate treatment
so long as any degree of integration was shown, while network customers
were required to demonstrate affirmatively that their facilities were
relied upon by the transmission provider to provide service to its
customers.\40\ The Commission therefore described the test for
integration for network customer facilities as being more stringent
than the test applied to transmission provider facilities.\41\ The
application of the integration standard was, in fact, more stringent as
applied to network customers because they did not enjoy the benefit of
presumed integration, as did the transmission provider. The underlying
integration standard, however, has been and continues to be the same
for all transmission facilities. Only those facilities that are, in
fact, integrated with the transmission grid and used by the
transmission provider to serve customers should be subject to rolled-in
rate treatment. It is in this sense that the precedent continues to
apply, providing guidance regarding the treatment of facilities that
benefit from the presumption of integration and those that do not.
---------------------------------------------------------------------------
\38\ See Order No. 890-A at P 349.
\39\ Compare Utah Power & Light Co., 27 FERC ] 61,258, at
61,485-87 (1984), reh'g denied, 28 FERC ] 61,088, at 61,165 (1984)
(citing Utah Power & Light Co., Opinion No. 113, 14 FERC ] 61,112,
reh'g denied, 15 FERC ] 61,076 (1981)) with ETEC, 114 FERC ] 61,027
at P 42.
\40\ NTEC, 111 FERC ] 61,189 at P 17.
\41\ Id. P 15.
---------------------------------------------------------------------------
62. The presumption of integration enjoyed by the transmission
provider has never been absolute. Customers have always been able to
challenge the inclusion of certain transmission provider facilities by
showing that the facilities did not actually provide a systemwide
benefit to the transmission grid.\42\ In most instances, however, this
has not been the case given that the transmission provider generally
plans, constructs and owns its facilities, from the very beginning, to
meet delivery obligations, which justifies the presumption of
integration.\43\ In the event the transmission provider denied credits
to a network customer, however, the transmission provider lost the
benefit of the presumption and the same integration standard applied to
customer-owned facilities was applied to the transmission provider's
facilities.\44\ This again demonstrates that the same underlying
integration standard has applied to all facilities, regardless of
ownership, notwithstanding the presumed integration generally enjoyed
by the transmission provider.
---------------------------------------------------------------------------
\42\ See Idaho Power Co., 3 FERC ] 61,108 (1978), reh'g denied,
5 FERC ] 61,009 (1978); Minnesota Power & Light Co., 16 FERC ]
63,012 (1981), aff'd 21 FERC ] 61,233 (1982).
\43\ See Niagara Mohawk Power Corp., 42 FERC ] 61,143, at 61,531
(1988); Otter Tail Power Co., 12 FERC ] 61,169, at 61,420 (1980).
\44\ See Florida Power & Light Co., 105 FERC ] 61,287, at P 16
(2003).
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63. In light of the planning-related reforms implemented in Order
No. 890, the Commission determined it is now appropriate to grant the
same presumption of integration to new customer-owned facilities that
are similar in scope and design to those transmission provider
facilities that are in rates. Implementation of planning-related
reforms will now ensure that most, if not all, transmission facilities
are planned on a coordinated basis.\45\ However, only those new
customer-owned facilities that are similar in design and purpose to the
transmission provider's facilities that are in rates will be eligible
for the presumption of rolled-in rate treatment. Other customer-owned
facilities will be eligible for credits only if the network customer is
able to make an affirmative showing that the facilities satisfy the
integration standard, i.e., that the facilities are nonetheless
integrated notwithstanding their ineligibility for the presumption of
integration.\46\
---------------------------------------------------------------------------
\45\ See Order No. 890 at P 736; Order No. 890-A at P 337.
\46\ See, e.g., Ne. Tex. Elec. Coop., Inc., 111 FERC ] 61,189 at
P 16.
---------------------------------------------------------------------------
64. To be clear, if the transmission provider disagrees that the
customer-owned facilities are similar in design and purpose to its own
facilities, it may challenge the threshold application of the
presumption with a comparative analysis of its facilities and those for
which credits are claimed. Neither the transmission provider nor the
network customer need analyze complete satisfaction of the integration
standard in order to determine whether, as a threshold matter, the
presumption of integration applies. Assuming that the network customer
prevails in its claim for presumed integration, then the network
customer will enjoy the same rolled-in rate treatment enjoyed by the
transmission provider for its similar facilities. As the Commission
explained in Order No. 890, this is appropriate to ensure comparability
between the transmission provider and network customer now that all
transmission facilities will be planned pursuant to an open and
coordinated process.\47\
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\47\ Order No. 890 at P 435.
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[[Page 39101]]
65. The transmission provider may nevertheless overcome the
presumption of integration by demonstrating, with reference to its own
facilities that meet the integration standard, that the customer-owned
facilities are not, in fact, integrated and do not provide benefits to
the system. The same is true of transmission provider facilities
previously presumed to be integrated. In either case, the challenging
party will bear the burden in overcoming the presumption of integration
and rolled-in rate treatment. It is for this reason that it would no
longer be appropriate to remove the presumption of integration enjoyed
by the transmission provider, i.e., apply the more strict integration
standard, upon denial of credits to a network customer. In the past,
only the transmission provider enjoyed the presumption of integration,
which justified elimination of the presumption in the event credits
were denied to a network customer. Both transmission providers and
network customers now enjoy the benefits of presumed integration, and
both may challenge application of the presumption to each other's
facilities. We continue to believe that this will ensure that all
similar facilities that are, in fact, not part of the integrated
network that serves all customers are excluded from rates.\48\ We
acknowledge that this approach departs from the approach adopted in
FP&L.\49\ Our departure is justified, however, because the presumption
of integration is now shared with new customer-owned facilities,
shifting to the transmission provider the burden of demonstrating that
credits for similar customer-owned facilities are not warranted.
---------------------------------------------------------------------------
\48\ See Order No. 890-A at P 351.
\49\ FP&L, 74 FERC at 61,010 (finding that the integration of
facilities into the plans or operations of a transmitting utility is
the proper test for cost recognition).
---------------------------------------------------------------------------
66. We reject the suggestion by E.ON U.S. to reestablish a link
between credits and joint planning by applying the presumption of
integration only to upgrades planned through the transmission
provider's Attachment K process. Although we support coordinated, open,
and transparent planning, transmission providers are not required to
develop transmission plans on a co-equal basis with customers.\50\ It
would therefore be unfair to network customers to condition the receipt
of credits for new facilities on planning activities that are out of
their control. Indeed, restablishing a link between joint planning and
credits would revive disincentives the Commission sought to correct by
severing the link between planning and credits in Order No. 890. We
therefore affirm our decision to sever the link between credits and
joint planning.
---------------------------------------------------------------------------
\50\ Order No. 890-A at P 188.
---------------------------------------------------------------------------
67. To the extent necessary, we clarify that none of the reforms
regarding transmission credits adopted in Order No. 890 were intended
to apply to facilities existing prior to the effectiveness of the
revised section 30.9 nor to pending cases involving such facilities.
Denial of credits to a network customer's previously existing
facilities therefore still triggers review of the transmission
provider's rate base. Similarly, a network customer may not rely on the
presumption of integration for its previously existing facilities.
3. Capacity Reassignment
68. In Order No. 890-A, the Commission granted rehearing of its
decision in Order No. 890 to remove the price cap on reassignments of
transmission capacity, concluding that it is more appropriate to allow
reassignments above the cap only during a study period ending on
October 1, 2010. The Commission directed staff to closely monitor the
development of the secondary market for transmission capacity during
this period. To assist staff in this effort, the Commission affirmed
the requirement for transmission providers to aggregate and summarize
in an electronic quarterly report (EQR) the data contained in service
agreements and related OASIS schedules for reassigned capacity. The
Commission also directed staff to prepare a report on staff's findings
within 6 months of the receipt of two years worth of data, i.e., by May
1, 2010. Upon review of the staff report and any feedback from the
industry, the Commission will determine whether it is appropriate to
continue to allow reassignments of capacity above the price cap beyond
the study period. In the absence of further Commission action, the
price cap will resume effect as of October 1, 2010 under section 23.1
of the pro forma OATT.
69. The Commission clarified in Order No. 890-A that, as of the
effective date of the reforms adopted in Order No. 890, all
reassignments of capacity must take place under the terms and
conditions of the transmission provider's OATT. As a result, there is
no longer a need for the assigning party to have on file with the
Commission a rate schedule governing reassigned capacity. To the extent
that a reseller has a market-based rate tariff on file, the provisions
of that tariff, including a price cap or reporting obligations, will
not apply to the reassignment since such transactions no longer take
place pursuant to the authorization of that tariff.
Request for Rehearing
70. The APPA Joint Filers argue on rehearing that the decision to
remove the price cap for reassignments of transmission capacity during
the study period is not supported by substantial evidence that the
price cap has discouraged development of a secondary transmission
market.\51\ The APPA Joint Filers also contend that lifting the price
cap on reassigned capacity will harm consumers by making transmission
artificially scarce and overpriced. The APPA Joint Filers argue that
the existence of congestion creates constrained regions within which
market power can be exercised.
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\51\ The APPA Joint Filers include: APPA, NRECA, TAPS and TDU
Systems.
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71. To further protect consumers, the APPA Joint Filers suggest
that the Commission limit the experimental lifting of price caps to
short-term reassignments.\52\ The APPA Joint Filers state that long-
term firm point-to-point transmission service is particularly important
to LSEs looking to secure economic and reliable power supply and that
non-firm releases of unscheduled transmission capacity will not help
those LSEs needing long-term firm service. The APPA Joint Filers also
argue that, by extending the experiment to long-term sales, including
reassignments by the transmission provider's merchant function or
affiliate, the Commission has discouraged needed transmission
construction. If the secondary market is clearing at prices above the
transmission provider's rate ceiling, the APPA Joint Filers contend
that the parent corporation will have incentives to put as much
capacity in the hands of its merchant function or affiliates as
possible and to avoid new transmission construction. That result, the
APPA Joint Filers argue, would reduce the access of LSEs to the long-
term firm transmission service they require to meet their service
obligations, in violation of FPA section 217(b)(4). The APPA Joint
Filers suggest that the Commission can achieve its goal of determining
whether the price cap encourages development of a secondary market and
whether there is competition in such a market by lifting the price cap
only for short-term reassignments.
---------------------------------------------------------------------------
\52\ Citing Interstate Natural Gas Ass'n of Am. v. FERC, 285
F.3d 18 (D.C. Cir. 2002).
---------------------------------------------------------------------------
72. The APPA Joint Filers also contend that the affirmative
obligation
[[Page 39102]]
of the transmission provider to expand its system in order to
accommodate requests for service is inadequate to ensure customers are
protected. The APPA Joint Filers note that this obligation has existed
since 1996, yet the Commission in Order No. 890 found that it had not
succeeded in overcoming transmission providers' incentives to avoid
transmission investment, especially in favor of their own
generation.\53\ The APPA Joint Filers contend that the Commission has
no factual basis to conclude that entry in the form of expanded
transmission capacity will be timely, likely and sufficient to defeat
price increases due to transmission market power.
---------------------------------------------------------------------------
\53\ Citing Order No. 890 at P 424.
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73. The APPA Joint Filers acknowledge that Commission staff will be
monitoring the EQRs and other data during the two-year period with the
goal of preparing its report, but argue that this does not alleviate
the Commission of its obligation to actively monitor resale of
transmission capacity during the period to ensure that rates for
customers remain just and reasonable and that there are no abuses of
market power. The APPA Joint Filers ask the Commission to explicitly
establish its intent to continue to exercise its obligations under
sections 205 and 206 throughout this period so that resellers are on
notice that they cannot charge unjust and unreasonable rates. If the
Commission discovers evidence of unjust and unreasonable rates at any
time, the APPA Joint Filers urge the Commission to address this as it
occurs, including if necessary by terminating the experiment prior to
October 1, 2010.
74. With regard to the staff report, the APPA Joint Filers ask the
Commission to prescribe the parameters, procedures and data to be
collected and provide guidance as to the issues that should be
addressed. The APPA Joint Filers suggest that the Commission direct
staff to address the following specific matters in the report: Identify
whether there is an increase in reassignments by examining data on the
amount of reassignments before and after the price caps were lifted;
examine prices both offered and accepted to determine the level of
market interest in reassigned capacity, whether prices increased, the
cause of price changes, and whether prices remained within a zone of
reasonableness; examine whether competition among resellers is
sufficient to protect consumers from excessive rates; identify the
kinds of products resold, such as the length of reassignments and
whether reassigning customers redirected service; consider whether
reservations by the transmission provider's merchant function or
affiliates increased, whether they reassigned the capacity reserved,
and to whom and at what price they reassigned service; indicate whether
the transmission provider's interactions with affiliated resellers were
covered by the Standards of Conduct; and, assess whether those needing
transmission capacity were able to obtain it, whether in the primary or
secondary market.
75. To the extent the EQR data or other sources do not provide this
information, the APPA Joint Filers suggest that the Commission
institute data reporting and collection requirements to obtain that
information. The APPA Joint Filers state particular concern regarding
the elimination of the reporting requirement under the reseller's
market-based rate tariff. The APPA Joint Filers contend that lifting
the price cap will allow market-based sellers to use transmission
capacity reassignment to support attempts to exercise market power in
sales of transmission, electricity, or both. Because a market-based
seller no longer needs to report its own transmission reassignments and
because the transmission provider will report reassignments only on an
aggregate, summary basis, the APPA Joint Filers argue that the EQR data
will not permit monitoring to detect patterns or conduct that suggest
efforts to manipulate or exercise market power in transmission markets.
The APPA Joint Filers contend that, by separating data on the market-
based seller's electricity sales from the data on the same seller's
transmission reassignments, the Commission has made it difficult to
determine whether a market-based seller is manipulating transmission
resales to favor its market-based sales because it will be impossible
to determine whether a particular capacity reassignment supported a
market-based sale. The APPA Joint Filers therefore request that the
Commission grant rehearing and retain the requirement that all holders
of market-based rate authority report both their electricity sales and
their capacity reassignments in the same EQR.
76. Finally, once the staff report is issued, the APPA Joint Filers
ask that it be noticed and that the public be provided an opportunity
to comment. The APPA Joint Filers contend that the data underlying the
report must be made public, with sensitive information subject to
appropriate confidentiality protections. If the Commission believes
that further extension of the experiment is merited, the APPA Joint
Filers ask the Commission to use full notice and comment rulemaking
procedures to ensure a complete record is developed to support any
further Commission action.
Commission Determination
77. The Commission affirms its decision to remove the price cap on
reassignments of transmission capacity to accommodate a study period
expiring on October 1, 2010. For the reasons stated in Order Nos. 890
and 890-A, we continue to believe that lifting the price cap during the
study period will foster the development of a more robust secondary
market for transmission capacity.\54\ Point-to-point transmission
service customers will have increased incentives to make their service
available to others that place a higher value on it, which in turn will
send more accurate signals that promote efficient use of the
transmission system by fostering the reassignment of unused capacity.
---------------------------------------------------------------------------
\54\ Order No. 890 at P 808; Order No. 890-A at P 388-89.
---------------------------------------------------------------------------
78. Although the Commission agrees with the APPA Joint Filers that
transmission capacity, and in particular long-term transmission
capacity, is of great importance to LSEs and other customers, we
disagree that restricting transactions above the price cap only to
short-term reassignments is necessary to preserve access to service
under the pro forma OATT. As the Commission emphasized in Order Nos.
890 and 890-A, transmission providers are under an affirmative
obligation to offer all available capacity to customers on a non-
discriminatory basis and to expand their systems as necessary to
accommodate additional requests for service.\55\ The pro forma OATT
does not, and will not, permit the withholding of transmission capacity
by the transmission provider and effectively establishes a price
ceiling for long-term reassignments at the transmission provider's cost
of expanding its system. The fact that a transmission provider's
affiliate may profit from congestion on the system does not relieve the
transmission provider of its obligation to offer all available
transmission capacity and expand its system as necessary to accommodate
requests for service. We therefore disagree that allowing reassignments
of transmission capacity above the price cap will reduce the access of
any customer to service under the pro forma OATT.
---------------------------------------------------------------------------
\55\ Order No. 890 at P 814; Order No. 890-A at P 392.
---------------------------------------------------------------------------
79. The APPA Joint Filers are therefore incorrect that lifting the
price cap will make transmission capacity
[[Page 39103]]
artificially scarce and overpriced during the study period.
Transmission providers must continue to make primary capacity available
at the rates specified in their individual OATTs. Customers that do not
wish to participate in the secondary market may continue to take
service from the transmission provider directly, just as if the price
cap had not been lifted. For those customers participating in the
secondary market, however, lifting the price cap will create additional
incentives for others to make service available, increasing the ability
to obtain transmission capacity.
80. The APPA Joint Filers incorrectly characterize the Commission's
statement in paragraph 392 of Order No. 890 as finding that the
transmission provider's obligation to expand the system in response to
service requests was inadequate to overcome incentives to avoid
transmission investment. In the passage cited, the Commission instead
found that this requirement was inadequate to overcome incentives to
exclude customers from the transmission planning process.\56\
---------------------------------------------------------------------------
\56\ Id. P 424.
---------------------------------------------------------------------------
To remedy that disincentive, the Commission required transmission
providers to implement open and transparent planning processes that
allow customers and other stakeholders to provide input in the
development of transmission plans. The Commission specifically noted
that those planning obligations did not address or dictate which
investments identified in a transmission plan should be undertaken by
the transmission provider.\57\
---------------------------------------------------------------------------
\57\ Id. P 438.
---------------------------------------------------------------------------
81. The APPA Joint Filers inappropriately discount the importance
of the transmission provider's affirmative obligation to expand its
system in response to requests for service. The Commission has
historically relied on these and other obligations under the pro forma
OATT sufficient to mitigate the potential exercise of transmission
market power by transmission providers and their affiliates.\58\
Lifting the price cap on reassignments of transmission capacity does
not alter those obligations in any way and, therefore, does not impair
the ability of load-serving entities to meet their load service
obligations. By lifting the price cap on capacity reassignments, the
Commission has instead enhanced the options available to customers
seeking transmission service by increasing the incentives for customers
with transmission reservations to make capacity available to others
placing a higher value on it.
---------------------------------------------------------------------------
\58\ See Order No. 697 at P 408.
---------------------------------------------------------------------------
82. We are nevertheless sensitive to the concerns expressed
regarding the potentially negative competitive effects of lifting the
price cap on reassignments of transmission capacity. It is for that
very reason that the Commission granted rehearing in Order No. 890-A,
at the request of the APPA Joint Filers, to limit the period in which
the price cap is lifted. During the study period, continuing rate
regulation of the transmission provider's primary capacity, competition
among resellers, and reforms to the secondary market for transmission
capacity, combined with enforcement proceedings, audits, and other
regulatory controls, will assure that prices in the secondary market
remain within a zone of reasonableness.\59\ Should any customer believe
that capacity is being preferentially allocated to a transmission
provider's affiliates, that particular holders of transmission capacity
are attempting to exercise market power through hoarding or other
tactics, or that the transmission provider is failing to meet its
expansion obligations, the customer should bring the matter to the
Commission's attention through a complaint or other appropriate
procedural mechanisms. If the Commission finds evidence of market
abuse, it can act to restrict the ability of an offending reseller (and
possibly its affiliates) to participate in the secondary market or
impose other remedies, including civil penalties, as appropriate to
ensure that rates for secondary transmission capacity are just and
reasonable.
---------------------------------------------------------------------------
\59\ See Order No. 890 at P 811; Order No. 890-A at P 391.
---------------------------------------------------------------------------
83. With respect to our expectations for the report to be prepared
by Commission staff, we clarify that staff should focus on the
competitive effects of removing the price cap for reassigned capacity.
Staff should consider the number of reassignments occurring over the
study period, the magnitude and variability of resale prices, the term
of the reassignments, and any relationship between resale prices and
price differentials in related energy markets. Staff should also
examine the nature and scope of reassignments undertaken by the
transmission provider's affiliates and include in its report any
evidence of abuse in the secondary market for transmission capacity,
whether by those affiliates or other customers.\60\
---------------------------------------------------------------------------
\60\ See id. P 406.
---------------------------------------------------------------------------
84. As requested by the Joint APPA Filers, we have reconsidered our
reporting requirements and determined that it would be useful to direct
transmission providers to include certain additional information in
their EQRs. We direct transmission providers to include in their EQRs
the identity of the reseller and indicate whether the reseller is
affiliated with the transmission provider. Each transmission provider
also must include the rate that would have been charged under its OATT
had the secondary customer purchased primary service from the
transmission provider for the term of the reassignment. We direct
transmission providers to submit this additional data for all resales
during the study period and to update, as necessary, any previously-
filed EQRs on or before the date they submit their next EQR.
85. We disagree that elimination of the reporting requirement under
the reseller's market-based rate tariff will impair the ability of
staff to perform its analyses. All reassignments of transmission
capacity now take place under the transmission provider's OATT and,
therefore, it is appropriate for the transmission provider to report
those transactions on its EQR. We reiterate that the EQR must contain
all relevant transaction data, whether stated in the service agreement
governing the reassignment or in a related OASIS schedule.\61\
Transmission providers should not aggregate multiple transactions into
single line items on the EQR. All terms must instead be fully described
and rates provided for each reassignment.\62\
---------------------------------------------------------------------------
\61\ See Order No. 890 at P 423, n.162.
\62\ See Order No. 890 at P 818, n.499. The Commission's
reference to ``aggregate[ing] and summarize[ing] in an EWQ the data
contained in the service agreements for reassigned capacity'' in
Order Nos. 890 and 890-A was intended to refer to the transmission
provider's obligation to compile reassignments involving multiple
parties in a single EQR, not consolidate multiple reassignments into
single line items on the EQR.
---------------------------------------------------------------------------
86. Upon review of the staff report, the Commission will determine
whether it is appropriate to institute further rulemaking procedures to
amend the pro forma OATT to allow reassignments of transmission
capacity above the price cap after October 1, 2010. The report will be
made public and subject to comment, with sensitive information subject
to appropriate confidentiality protections. In the absence of
Commission action, the rate charged by the transmission provider for
each reassignment, and the corresponding credit to the reseller, may
not exceed the higher of (i) the original rate paid by the reseller,
(ii) the transmission provider's maximum rate on file at the time of
the assignment, or (iii) the reseller's
[[Page 39104]]
opportunity cost capped at the transmission provider's cost of
expansion.\63\
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\63\ See section 23.1 of the pro forma OATT.
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4. Operational Penalties
87. In Order No. 890-A, the Commission affirmed the decision in
Order No. 890 to subject all transmission providers, including RTOs and
ISOs, to operational penalties when they routinely fail to meet the
deadlines prescribed in sections 19.2, 19.4, 32.3 and 32.4 of the pro
forma OATT. The Commission explained that the 60-day due diligence
deadlines set forth in those sections serve as a good measure of a
transmission provider's use of due diligence since, in its experience,
the vast majority of transmission studies can be completed in that time
period.
88. The Commission rejected requests to change section 19.9 of the
pro forma OATT, concluding that transmission providers will have the
ability to explain in notification filings the extenuating
circumstances that lead to delay in processing transmission service
request studies and, in turn, demonstrate their use of due diligence
notwithstanding the inability to meet the 60-day target. The Commission
also rejected requests to create broad categories or lists of
extenuating circumstances that would exempt transmission providers from
late study penalties or related posting requirements.
Requests for Rehearing and Clarification
89. E.ON U.S., EEI, and Southern contend that the Commission has
failed to justify the use of 60 days as the time frame for processing
transmission service request studies with due diligence. These
petitioners argue that the Commission's stated experience that the vast
majority of studies are completed within 60 days is unsupported by data
or any other evidence. Southern further argues that any experience
regarding processing times does not reflect the increased redispatch
and conditional firm study obligations imposed under Order No. 890.
Southern argues that transmission planners are also facing additional
workforce pressures due to development of reliability standards, worker
shortages, and Attachment K planning processes. Southern suggests that
the Commission grant rehearing to allow for an additional 30 days to
process transmission studies or, at a minimum, to process conditional
firm and redispatch options. Southern acknowledges that the Commission
determined in Order No. 890-A that the mere possibility of penalties
did not justify extension of the 60-day study period. Southern argues,
however, that the notification and additional posting requirements are
in and of themselves penalties, as are the requirements to then
complete 90 percent of studies within 60 days.
90. E.ON U.S., EEI, and Southern also ask the Commission to add a
clearer due diligence standard to section 19.9 of the pro forma OATT.
They contend that it is necessary to specify in the tariff the
circumstances that will excuse the transmission provider from
penalties. These petitioners argue that failure to articulate a clear
standard gives the Commission too much discretion in applying penalties
and leaves transmission providers guessing as to what due diligence
means. Southern argues that a lack of clarity violates due process and
the Commission's enforcement policies because transmission providers do
not have adequate notice of the circumstances that will subject them to
penalties. Southern contends that the risk of late study penalties
creates a guilty until proven innocent standard that will result in
transmission providers favoring speed over accuracy, which could harm
reliability.
91. EEI agrees that failure to expressly include a due diligence
standard in section 19.9 provides the Commission undue discretion to
apply penalties even if the transmission provider has used due
diligence in processing request studies. EEI argues that the language
of section 19.9 does not adequately reflect that the inability to
complete a study within the 60-day timeframe may be due to customer
actions or the need to complete other interdependent studies. At a
minimum, EEI asks the Commission to amend section 19.9(iii) to state
that the transmission provider will not be subject to penalties if it
demonstrates that it exercised due diligence but nonetheless failed to
complete a sufficient percentage of its studies within 60 days. EEI
also requests that the Commission provide additional guidance in this
proceeding as to what factors constitute due diligence that are
sufficiently clear and specific that a transmission provider can
reasonably determine whether its actions satisfy those guidelines.
92. E.ON U.S., EEI, and Southern further argue that operational
penalties should not be imposed until the Commission makes an
affirmative finding that the transmission provider did not exercise due
diligence in processing request studies. EEI and Southern argue that
due process and the Commission's enforcement policies require notice
and hearing procedures prior to application of penalties. If a
transmission provider fails to complete 90 percent of studies within a
60-day period, EEI suggests that the transmission provider be
rebuttably presumed to have failed to exercise due diligence in
processing request studies and that penalties apply only after notice
and an opportunity for hearing.
93. Southern suggests that the explanation of extenuating
circumstances in a notification filing should automatically suspend the
obligation to post additional metrics, the obligation to process 90
percent of study requests within 60 days, and the threat of monetary
penalties until the Commission determines that the extenuating
circumstances did not exist. Southern states that this would shift the
burden of proof to the Commission and no longer treat transmission
providers as guilty until proven innocent. E.ON U.S. argues that
deferring the obligation to pay penalties until after the Commission
has rejected the transmission provider's explanation for delay would be
more efficient because transmission providers would not need to seek
refunds from customers to whom it has made distribution of penalties
for delays the Commission later finds justifiable.
94. E.ON U.S. seeks clarification that not-for-profit transmission
providers are responsible for processing transmission request studies
within the same time period prescribed for other transmission providers
and are equally responsible for paying late study penalties. E.ON U.S.
argues that the ability to request cost recovery of late study
penalties on a case-by-case basis should not be used to skirt the
obligations established in Order No. 890.
95. NYISO asks the Commission to clarify that it did not intend in
Order No. 890-A to preclude transmission providers from proposing
alternative study deadlines pursuant to FPA section 205. NYISO states
that, because it provides a financial reservation based transmission
service reservation, it does not receive, or deny, requests for
transmission service in the way that Order Nos. 888 and 890
contemplate. NYISO states it conducts transmission studies only in
unusual situations, such as when a customer wants to explore whether it
would be more economical to pay congestion charges or to fund the
construction of new transmission facilities in order to obtain
incremental congestion hedging rights from NYISO. As a result, only a
handful of system impact study requests have been submitted to the
NYISO in the last nine
[[Page 39105]]
years and, according to NYISO, each take substantial time to process.
96. NYISO also requests clarification regarding the transmission
provider's liability when delegating responsibilities for conducting
transmission studies. NYISO states that it has responsibility for
conducting system impact studies under its OATT, while its member
transmission owning utilities retained responsibility for conducting
facilities studies. NYISO asks the Commission to clarify that its
member transmission owning utilities are responsible for ensuring that
facilities studies are conducted in a timely manner. NYISO argues that
it would be arbitrary and capricious to hold NYISO responsible for
failures by the member transmission-owning utilities to comply with
their own obligations.
Commission Determination
97. The Commission affirms the decision in Order Nos. 890 and 890-A
to subject transmission providers to operational penalties when they
routinely fail to meet the 60-day due diligence deadlines prescribed in
sections 19.2, 19.4, 32.3, and 32.4 of the pro forma OATT.\64\
Transmission providers must have a meaningful stake in meeting study
timeframes, and the operational penalty structure adopted by the
Commission provides reasonable financial incentives for transmission
providers to exercise due diligence in processing service requests in a
timely and nondiscriminatory manner.
---------------------------------------------------------------------------
\64\ See Order No. 890 at P 1340; Order No. 890-A at P 741.
---------------------------------------------------------------------------
98. We disagree that the notice procedures adopted in Order No. 890
give inadequate opportunities to explain why studies have been
completed late. Due process does not require the use of notice and
hearing procedures prior to applying operational penalties for failing
to exercise due diligence in processing transmission service request
studies within the 60-day study period, nor must the Commission make an
affirmative finding regarding the justifications provided in a
notification filing prior to the application of penalties. Section 19.9
of the pro forma OATT requires the submission of a notification filing
and the application of penalties when certain clearly identified
triggering conditions occur, i.e., failure to complete studies within
the prescribed timeframes. Transmission providers therefore have
adequate notice of the actions that may lead to penalties. We note that
transmission customers that pay other operational penalties, like
unreserved use penalties, do not receive notice or have hearing
procedures prior to paying the penalty.
99. At the same time, to ensure that penalties are not applied to
transmission providers when study delays are justified, the Commission
has provided an opportunity for each transmission provider to explain
the extenuating circumstances that prevented it from meeting the 60-day
study completion deadline. Upon review of the notification filing, the
Commission will waive the penalties if a transmission provider
establishes that its non-compliance is the result of extenuating
circumstances.\65\ If the Commission is unable to act on the
notification filing prior to the date on which the penalties would
apply, the transmission provider will remain liable for paying the
penalties, but is not required to distribute those penalties while the
notification filing remains pending.\66\ The Commission concluded in
Order No. 890, and we affirm here, that this adequately balances the
transmission provider's due process rights with the need to provide an
incentive to the transmission provider to complete studies on a timely
basis.\67\ It is therefore unnecessary, as petitioners argue, to amend
the language of section 19.9 of the pro forma OATT to specifically
include a due diligence standard or otherwise identify in the tariff or
elsewhere the circumstances that will excuse the transmission provider
from penalties. Consideration of the particular extenuating
circumstances causing a transmission provider to repeatedly miss study
deadlines is best left to a case-by-case analysis.
---------------------------------------------------------------------------
\65\ See Order No. 890 at P 1343.
\66\ See id. P 1349.
\67\ Id.
---------------------------------------------------------------------------
100. We also affirm the decision in Order No. 890-A not to extend
the 60-day deadline as petitioners request.\68\ The 60-day deadlines
have existed for many years.\69\ Although petitioners challenge that
conclusion as unsupported, none dispute the proposition that 60 days is
generally sufficient to complete most transmission studies and,
instead, contend that certain types of studies take longer or that
certain transmission providers have less ability to process studies
within that period. Yet that is precisely why the Commission has
provided an opportunity for each transmission provider to demonstrate
that extenuating circumstances prevented it from timely processing the
relevant studies notwithstanding its inability to meet the 60-day
target. Transmission providers are free to discuss in their
notification filings any factors they believe are relevant, including
any of the factors cited by Southern.
---------------------------------------------------------------------------
\68\ Order No. 890-A P 746.
\69\ See Order No. 888-A at 30,324.
---------------------------------------------------------------------------
101. In response to E.ON U.S., we affirm that all transmission
providers, including RTOs and ISOs, are bound by the 60-day timelines
of sections 19.2, 19.4, 32.3 and 32.4 and the requirements of section
19.9. The Commission clarifies, in response to NYISO, that transmission
providers are free to make filings under FPA section 205 to seek
variations from the pro forma OATT and demonstrate that alternative
tariff provisions are consistent with or superior to the pro forma
OATT. With regard to the allocation of study responsibilities between
NYISO and its transmission owning members, we note that the Commission
in Docket No. OA08-13-000 determined that the responsibility for
facility studies, and penalties associated with such studies, rests
with the transmission owning members under the NYISO tariff.\70\
---------------------------------------------------------------------------
\70\ See N.Y. Indep. Sys. Operator, Inc., 123 FERC ] 61,134
(2008).
---------------------------------------------------------------------------
5. ``Higher Of'' Pricing Policy
102. In Order No. 890, the Commission concluded that changes to the
pro forma OATT were not needed to address the practice by some
transmission providers of quoting incremental rates as lump sum
payments, a practice that is inconsistent with our ratemaking policy.
The Commission explained that the transmission provider must continue
to include a proposed monthly incremental rate with its offer of
service whenever it proposes to charge the customer an incremental
rate. The transmission provider also must provide cost support for the
derivation of the rate consistent with the cost support that the
transmission provider would provide to the Commission in a section 205
rate filing.
103. The Commission affirmed this decision in Order No. 890-A,
noting that the capital costs of upgrades, as estimated in a facilities
study and eventually specified in a service agreement through an
incremental rate, are not subject to change once the customer has
executed the service agreement. The Commission explained that it would
not be appropriate to vary capital costs over the term of such
contracts.
Request for Rehearing
104. Duke, E.ON U.S., and EEI argue that the Commission's statement
that
[[Page 39106]]
capital costs of network upgrades may not vary during the term of a
service agreement is inconsistent with other sections of the pro forma
OATT. Duke notes that section 19.4 of the pro forma OATT requires
execution (or filing) of a service agreement a mere thirty days after
completion of the facilities study and, therefore, the service
agreement can only contain a good faith estimate of network upgrade
costs. EEI and E.ON U.S. agree, noting section 19.5 further allows for
revisions to the good faith estimate to reflect certain changed
circumstances. EEI and E.ON U.S. contend that transmission providers
generally are not able to determine the actual cost of required
facilities until construction is completed, which is long after
execution of the service agreement.
105. EEI and E.ON U.S. argue that not allowing capital costs of
upgrades to vary after execution of the service agreement will result
in the transmission provider either under-recovering the cost of the
incremental facilities or the customer overpaying the cost of those
facilities and, as a result, charges will not be just and reasonable.
These petitioners suggest that the transmission provider be allowed to
modify a service agreement to reflect the actual costs of
incrementally-charged network upgrades after the facilities are placed
in service. Duke agrees, arguing that providing for a true-up at a
later date is routine when facility costs are directly assigned, rather
than rolled in. Duke suggests that customers be free to negotiate the
ability to terminate the service agreement if a cost estimate turns out
to far understate actual costs. Duke contends that the Commission's
statement regarding the inability of capital costs to vary was merely a
general observation and that the Commission should review rate changes
on a case-by-case basis.
106. Duke, EEI, and E.ON U.S. further argue that prohibiting
recovery of additional capital costs that the transmission provider is
likely to incur when repairing or replacing portions of incrementally-
charged upgrades during the term of a service agreement denies the
transmission provider of its rights under section 205 of the FPA. While
the incremental facilities on which the cost of service is based (e.g.,
a specific substation or line segment) should not be allowed to vary,
EEI contends that transmission providers should be allowed recover the
additional capital costs associated with repair or replacement of those
facilities. EEI and E.ON U.S. suggest that remedies such as formula
rates or a section 205 filing should be available to a transmission
provider to recover these additional costs.
Commission Determination
107. The Commission affirms the determination in Order No. 890 that
capital costs specified in a service agreement are not subject to
change once the customer has executed the service agreement.\71\ We
clarify, however, that this statement was intended to refer to
agreements in which a customer and transmission provider have
specifically identified particular upgrade costs to be paid by the
customer, allowing for a clear comparison of incremental costs to the
transmission provider's embedded cost rate. In such instances, it would
violate fundamental concepts of contract law, as well as undermine the
``higher of'' pricing policy, to allow either the customer or the
transmission provider to unilaterally change the costs previously
agreed to by the parties. The Commission therefore explained in Order
No. 890-A that it would not be appropriate to vary, i.e., change,
capital costs specified in such contracts.
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\71\ See Order No. 890-A at P 491.
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108. Nothing in Order Nos. 890 or 890-A, however, altered the
ability of the transmission provider and transmission customer to
negotiate alternative pricing arrangements such as recovering estimated
costs subject to a true-up when upgrades are complete. The Commission
did not mean to imply in Order No. 890-A that such alternative pricing
arrangements are necessarily prohibited. As the Commission explained in
Order No. 890, application of the ``higher of'' policy to particular
cases, including proposals to adopt flexible pricing arrangements, is
largely fact-specific and best addressed on a case-by-case basis during
particular rate proceedings.\72\
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\72\ See Order No. 890-A at P 883.
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6. Other Ancillary Services
109. In Order No. 890-A, the Commission denied a request by Sempra
Global to require the transmission provider to offer and make available
operating reserves under schedules 5 and 6 of the pro forma OATT when
transmission service is used to serve load outside the transmission
provider's control area. The Commission explained that operating
reserves are needed to serve load within the control area in the event
of system contingencies and, unless alternative arrangements are made,
the transmission provider provides these reserves from its own
resources. The Commission found that it would be inappropriate to
require the transmission provider to use its resources to provide
additional operating reserves to loads in other control areas because
the transmission providers in those control areas are under their own
obligations to make operating reserves available. The Commission
affirmed those obligations and stated that modifications to the pro
forma OATT were not necessary to enable generators to engage in firm
power sales to loads outside of their control area.
Request for Clarification
110. Sempra Global argues that the Commission did not fully
appreciate the problems faced by generators in obtaining operating
reserves in the WECC. If transmission providers are not required to
offer operating reserves when transmission service is used to serve
load outside the transmission provider's control area, Sempra Global
asks that the Commission, at a minimum, clarify that generator
imbalance service under Schedule 9 of the pro forma OATT may be
utilized to provide sufficient imbalance energy to keep a customer's
schedule whole for at least two hours following a generator derating or
forced outage, if necessary to allow the generator sufficient time to
find and schedule replacement energy. Sempra Global states that
clarification is needed because, if a generator trips within 20 minutes
prior to the beginning of the hour, it is too late to schedule
replacement energy for the hour that is about to begin.
111. Sempra Global disagrees that the existing requirements of the
pro forma OATT are sufficient to ensure that operating reserves are
available to merchant generators in the WECC, pointing to the differing
definitions for ``reserves'' in the West. Sempra Global explains that
in the WECC ``Operating Reserves'' consist of two main components:
Regulating Reserve and Contingency Reserve.\73\ According to Sempra
Global, WECC's Regulating Reserve could include, but would not
necessarily be limited to, regulation service offered under schedule 3
of the pro forma OATT, while WECC's Contingency Reserve could include,
but would not necessarily be limited to, operating reserve services
under Schedules 5 and 6 of the pro forma OATT.
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\73\ Citing WECC Standard BAL-STD-002-0--Operating Reserves.
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112. Although independent power generators have access to
regulation service under schedule 3 and generator
[[Page 39107]]
imbalance service under Schedule 9 from their source balancing
authority, Sempra Global states that they may not have access to any
Contingency Reserves for exports from their host balancing authority.
Sempra Global contends that it can be difficult, if not impossible, for
generators to contract for Contingency Reserves from a third party
without switching to that party's balancing authority or having a
dynamic schedule or other telemetry to enable the provider of
Contingency Reserves to know when the generator trips and to have the
reserves provider's generation respond within ten minutes. Sempra
Global contends that intra-hour schedule changes are not normally
allowed by most balancing authorities in the West and that Operating
and/or Contingency Reserve service can most logically be provided to a
balancing authority or reserve sharing group, not an individual
customer. Sempra Global states that this complex type of arrangement
could not be practicably implemented for short-term transactions, or
when the output of a generator is split between multiple buyers and
ultimately delivered into multiple balancing authorities.
113. Even if a generator were able to contract with a third party
to provide operating reserves, Sempra Global states that it is unaware
of any workable mechanism to assure a load (or ``sink'') balancing
authority that it will have access to such reserves when needed. Sempra
Global also notes that a generator, as a seller, may not necessarily
have a load since transactions frequently involve numerous parties
between the generator and the load. Sempra Global states that a
generator may not know who the load is until the NERC eTags are
generated during the WECC pre-scheduling process, which typically takes
place the day before the power flows. Even if the sink balancing
authority is known at the time a long-term transaction is entered into,
Sempra Global states that a generator still may be unable to procure
operating reserves to support the transaction. Sempra Global describes
a transaction it entered into in 2002 in which none of the host
transmission provider, the purchaser's transmission provider, nor the
purchaser itself was willing to offer to provide Sempra Global with
operating reserves to support the transaction. Since many LSE
purchasers in the West enter into firm energy import transactions
specifically to reduce their operating reserves obligations, Sempra
Global states that it would be rarely fruitful for a generator to
request, as part of its negotiation with a customer, that the customer
acquire reserves from its transmission provider.
Commission Determination
114. The Commission affirms the decision in Order No. 890-A not to
require transmission providers to offer and make available operating
reserves under Schedules 5 and 6 of the pro forma OATT when
transmission is used to serve load outside the transmission provider's
control area. As the Commission explained, operating reserves are
needed to serve load within the control area in the event of system
contingencies. Unless alternative arrangements are made, the
transmission provider would serve as the provider of last resort for
these reserves. We continue to believe it would be inappropriate to
require the transmission provider to provide additional operating
reserves to loads in other control areas because the transmission
providers in those areas are under their own obligation to make
operating reserves available.
115. We appreciate Sempra Global's concern that these obligations
may be insufficient to enable merchant generators in the WECC to obtain
operating reserves in certain circumstances. Since its adoption,
however, the pro forma OATT has placed the obligation to procure
operating reserves squarely on load.\74\ It appears that market rules
have developed in the WECC in a way that transfers that responsibility
from transmission customers serving load to those providing resources.
It does not follow, however, that the pro forma OATT--a tariff of
general applicability--must be amended to accommodate that regional
practice. To the extent transmission providers in the WECC wish to
amend their tariffs to accommodate the WECC market rules, they may
submit such variations to the Commission for consideration.
Alternatively, the market rules themselves could be amended to reflect
the structure of obligations under the pro forma OATT.\75\
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\74\ See Section 3 of the pro forma OATT.
\75\ We understand that WECC is in the process of developing a
revised standard to address the responsibility for procuring
contingency reserves. WECC Standard BAL-002-WECC-1--Contingency
Reserves, available at http://www.wecc.biz/documents/library/
Standards/2007/BAL-002/BAL-002-WECC-1_1-25-08.pdf. To the extent
that there are any conflicts between the revised WECC standard and
the pro forma OATT, Sempra Global should raise those concerns when
that revised standard is submitted for consideration by the
Commission.
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C. Non-Rate Terms and Conditions
1. Modifications to Long-Term Firm Point-to-Point Service
116. In Order No. 890, the Commission concluded that the methods
for evaluating requests for long-term point-to-point transmission
service may not be comparable to the manner in which transmission
service is planned for bundled retail native load and, therefore, may
no longer be just, reasonable and not unduly discriminatory. To remedy
this potential for undue discrimination, the Commission amended the pro
forma OATT to modify planning redispatch requirements and require
transmission providers, other than most RTOs and ISOs, to offer a
conditional firm option to long-term point-to-point customers. The
Commission affirmed that decision in Order No. 890-A and provided
certain clarifications regarding the transmission provider's obligation
with regard to planning redispatch and conditional firm service.
a. Requirement To Offer Conditional Firm Service
117. In Order No. 890-A, the Commission denied rehearing of its
decision not to require transmission providers to offer conditional
firm service to network customers. The Commission explained that
network customers can designate network resources any time firm
transmission is available and that the term of the designation can
include periods of less than a year. Network customers can also use
secondary network service to access resources during times when firm
service is not available. The Commission concluded that this
flexibility to use designated network resources and secondary network
service to access undesignated resources already provides a service
that is like conditional firm that can be used to integrate new
resources. The Commission noted, however, that transmission providers
employ automatic devices, such as special protection schemes, to take
resources offline during certain system conditions. The Commission
determined that comparability requires the study of these automatic
devices for network customers seeking to designate network resources
and revised section 32.3 of the pro forma OATT to require the study of
automatic devices at the request of a network customer.
Requests for Rehearing and Clarification
118. NRECA and TAPS repeat arguments made on rehearing of Order No.
890 that the Commission must make
[[Page 39108]]
conditional firm service available to network customers. NRECA contends
that a transmission provider will not reject a resource for its own
bundled retail load simply because it may be unavailable for a few
hours per year due to congestion. NRECA argues that a transmission
provider will, however, reject a request by a network customer to
designate that same resource because of the same limited availability.
NRECA concludes that conditional firm network service is therefore
necessary to eliminate undue discrimination between network customers
serving network load and the transmission provider serving its load.
119. NRECA acknowledges that network customers may designate
network resources any time firm transmission is available and use
secondary network service to access resources when firm service is not
available. NRECA notes, however, that the Commission justified granting
conditional firm service to point-to-point customers by stating that it
made little sense to ask point-to-point customers to cobble together a
collection of firm and non-firm requests when only the transmission
provider has information about when service may be available or
unavailable.\76\ NRECA argues that network customers should not be
required to cobble together service comparable to that enjoyed by the
transmission provider by designating a resource at some times and
accessing it through secondary network service at others.
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\76\ Citing Order No. 890 at P 925.
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120. NRECA also argues that the Commission improperly assumed that
secondary network service can provide a service that resembles
conditional firm service. NRECA contends that the curtailment priority
of secondary network service is inferior to conditional firm service.
NRECA provides a scenario in which the transmission provider, a
conditional firm customer and a network customer using secondary
network service are taking power from the same generator in a location
that is constrained ten hours per year. NRECA argues that the network
customer will be curtailed before the transmission owner and before the
conditional firm customer. NRECA adds that conditional firm customers
are considered firm customers and will be able to request service far
in advance and to the detriment of secondary network customers. NRECA
concludes that a network customer can only protect itself from loss of
service and loss of scheduling priority by paying for a network
upgrade, which is an obligation not imposed on either the transmission
provider or the point-to-point customer.
121. TAPS agrees that the rights of network customers are
significantly inferior to those of conditional firm customers. TAPS
contends that a network customer would be required to have perfect
knowledge, at the time of a network resource designation, as to the
effects of constraints in order to limit its decision to periods when
transmission is adequate to accommodate the request. TAPS argues that
information about constraints gained as a result of an initial
designation request is of minimal value since a reframed request would
take a later place in the queue.
122. TAPS also argues that the clarification provided in Order 890-
A that excess capacity created by transmission upgrades should be
allocated first to conditional firm customers based on their initial
order in the queue further degrades the benefit of network service.
Even if network customers could predict periods for which to request
secondary network service and firm designations, TAPS argues that they
still could not create a service comparable to conditional firm service
given the potential benefit of being firmed up by excess capacity
produced by later upgrades. TAPS contends that the exclusion of network
customers is discriminatory given the Commission's finding that
transmission providers provide conditional service to themselves and
the requirement under section 28.2 of the pro forma OATT that
transmission providers ``designate resources and loads in the same
manner as any Network Customer under Part III of this Tariff.'' TAPS
further asserts that the Commission should clarify whether the customer
supporting the upgrade is protected from having its upgrade sized to
meet the needs of earlier-queued conditional firm customers.
Commission Determination
123. The Commission again affirms the decision not to create a
conditional firm network service.\77\ As the Commission explained in
Order No. 890-A, the flexibility to use designated network resources
and secondary network service to access undesignated resources already
provides a service that is like conditional firm service that can be
used to integrate new resources. The Commission also revised section
32.3 of the pro forma OATT to make clear that network customers have
the right to request the study of special protection schemes like those
used by transmission providers in designating resources for their
native loads.\78\ Further, Order No. 890 provided that network
customers may designate off-system resources supported by conditional
firm point-to-point service.\79\ All of these provisions collectively
allow network customers to designate resources in the same manner that
transmission providers designate resources for their loads. We
therefore reject arguments that denial of conditional firm network
service results in network service that is inferior to the transmission
provider's own use of the system to serve its load.
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\77\ Order No. 890-A at P 558.
\78\ Id. P 559.
\79\ Order No. 890 at P 1091.
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124. While we agree with NRECA that conditional firm customers will
be able to request service in advance of secondary network customers,
we find this provides no reason to create a new conditional firm
service for network customers. Those seeking conditional firm service
should have the ability to request service ahead of secondary network
service, a non-firm service. Network customers seeking to designate
their resources and avoid the use of secondary network service may
request the study of special protection schemes in their system impact
study. Taken together, the rights of network customers are therefore
not inferior to those of conditional firm customers. Indeed, network
customers enjoy advantages over conditional firm customers, including
access to reliability redispatch to avoid curtailment of their loads.
In any event, we remind NRECA and TAPS that network service and point-
to-point service were not designed to be identical and the rights and
obligations of each type of customer need not be the same.\80\
Comparability does not require the same service be made available to
network customers and point-to-point customers; rather, the concept
applies to the service taken for transmission provider's load by the
transmission provider as compared to the service for network customer
loads.
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\80\ Order No. 890-A at P 559.
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125. Additionally, we disagree with the conclusions that NRECA
draws from its hypothetical scenario involving a network customer using
secondary network service, a conditional firm customer, and the
transmission provider taking power from the same generator. NRECA's
assertion that the transmission provider will not curtail its own
deliveries from the resource incorrectly assumes that the transmission
provider will employ redispatch instead of something akin to
conditional firm service. If the transmission provider is
[[Page 39109]]
designating network resources using service analogous to conditional
firm service, it will use a special protection scheme to curtail or
limit the transmission service for the resource at the same time a
network customer's secondary network service is curtailed. The
conditional firm customer also should be curtailed about the same
amount as the secondary network service customer because the
conditional firm service, by definition, should be subject to
curtailment at the secondary network service level during the forecast
constraints.\81\ NRECA's objection to conditional firm service is
therefore based on a misunderstanding of the new service and the way
that transmission providers use similar mechanisms to designate
resources on their systems.
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\81\ We note, however, that network customer load is unlikely to
be curtailed due to provision of reliability redispatch. In
contrast, conditional firm customers' transactions are more likely
to be curtailed during conditional periods because reliability
redispatch is not required for point-to-point service.
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126. In Order No. 890-A, the Commission clarified that customers
supporting upgrades have priority access to the capability created by
those upgrades even if conditional firm customers earlier in the queue
opt not to support upgrades.\82\ The Commission also stated that ``any
capacity created in excess of the service request should be allocated
to those planning redispatch and conditional firm customers earlier in
the queue, based on their order in the queue.'' \83\ TAPS requests
clarification of the former determination and objects to the latter
determination. We clarify that customers supporting upgrades, whether
through direct assignment or rolled-in pricing, will not have their
upgrades sized based on the needs of planning redispatch and
conditional firm customers that opt not to support upgrades. Upon
further consideration, we grant rehearing of Order No. 890-A with
regard to how excess capacity created by upgrades should be allocated
among transmission customers.\84\ We conclude that it is premature to
make this determination given that the complicated series of events
leading to such an allocation may never come to pass.\85\ Should
transmission providers encounter this series of events, they should
file, prior to completion of the transmission upgrades, proposed tariff
provisions to address the allocation of the transmission capacity.
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\82\ Order No. 890-A at P 584.
\83\ Id.
\84\ We note that the clarification provided in Order No. 890-A
with regard to the allocation of excess capacity was not required to
address the original issue raised by Southern. See id. P 571, 584.
\85\ For this circumstance to present itself, all of the
following, at a minimum, must occur: (1) Conditional firm or
planning redispatch service is granted to a customer unwilling to
support upgrades; (2) a customer seeking service over the same
transmission capacity agrees to support transmission upgrades to
secure its service; (3) the upgrade construction is completed; (4)
the upgrades create additional capacity that the customer supporting
the upgrades did not request; and (5) the conditional firm or
planning redispatch customer will be taking service when
construction is completed.
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b. Implementation of Planning Redispatch and Conditional Firm Service
(1) Characteristics of Service
127. The Commission reiterated in Order No. 890-A that both the
transmission provider and reliability coordinator play a role in
ensuring that adequate reliability is maintained when a customer uses
third-party provided reliability dispatch. The Commission stated that
this would entail review of redispatch plans submitted by the
customers, coordination between the transmission provider and
reliability coordinator, and signaling third-party generators when the
redispatch is needed. It is the customer's ultimate responsibility,
however, to ensure that any technical arrangements required by the
reliability coordinator are in place in order to maintain reliability.
128. With regard to the conditional firm option, the Commission
reiterated that transmission providers are allowed to add a risk factor
to their calculation of annual curtailment hours to account for
forecasting risks. The Commission clarified that the modeling of
conditions to determine the number of non-firm curtailments for any
conditional firm request should not incorporate unexpected events, such
as hurricanes and ice storms.
Requests for Rehearing and Clarification
129. E.ON U.S. requests that the Commission clarify that the
reliability coordinator oversees third-party-provided planning
redispatch to ensure there is no conflict with reliability redispatch.
E.ON U.S. also states, however, that third-party planning redispatch
may have a negative impact on system reliability and ATC and,
therefore, the transmission provider should not be completely separated
from the third-party planning redispatch process. E.ON U.S. nonetheless
argues that the reliability coordinator is in the best position to
monitor the reliability impacts of third-party planning redispatch.
E.ON U.S. notes that the reliability coordinator and transmission
provider sometimes are separate entities, as in E.ON U.S.'s case where
Tennessee Valley Authority is the reliability coordinator.
130. E.ON U.S. asks for further clarification that unexpected
events that are not incorporated into the calculation of annual
curtailment hours for a conditional firm customer do not impact the
number of hours the customer can be curtailed. Although the Commission
acknowledged in Order No. 890-A the need for flexibility in modeling
various conditions, E.ON U.S. notes the Commission did not specify a
level of appropriate risk factor to apply when making annual
curtailment calculations and further found that unexpected events
should not be included in calculating annual curtailment analysis.\86\
E.ON U.S. requests that the Commission clarify whether unexpected
events that are not included in the curtailment hours calculation also
do not count towards the annual curtailment hours for customers taking
conditional firm service.
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\86\ Citing Order No. 890-A at P 588.
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Commission Determination
131. In Order No. 890, the Commission directed transmission
providers to modify their OASIS sites to allow for posting of third-
party offers for planning redispatch and to work with NAESB to develop
the OASIS functionality and any necessary business practice standards
to allow for third-party planning redispatch.\87\ The Commission noted
that provision of third-party planning redispatch required coordination
between the customer, transmission provider and reliability
coordinator, but determined that the customer bears the burden to
ensure that the necessary contractual and technical arrangements are in
place to maintain reliability.
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\87\ Order No. 890 at P 1007.
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132. We clarify in response to E.ON U.S. that the role of the
reliability coordinator in coordinating third-party planning redispatch
is very limited. The transmission provider should have primary
responsibility for overseeing the coordination of third-party planning
redispatch. For example, if third-party planning redispatch impacts
ATC, as E.ON U.S. suggests, the transmission provider will make this
determination and relay that information to the customer. It is
important to distinguish reliability redispatch, for which reliability
coordinators generally play a larger role, from planning redispatch.
Planning redispatch is used to create additional transmission capacity
in order to accommodate a request for
[[Page 39110]]
long-term firm transmission service.\88\ The transmission provider or
third-party generation operator must plan to dispatch its generator(s)
so that the requested transmission service, otherwise shown unavailable
by the transmission provider's ATC model, may be granted. In
comparison, reliability redispatch is used to relieve actual system
constraints that would otherwise cause curtailment of network customer
or transmission provider loads. While the reliability coordinator has a
larger role to play in reliability redispatch, its role in coordinating
third-party provision of planning redispatch is very limited.
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\88\ See Order No. 890-A at P 603.
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133. With regard to our determination that unexpected events should
not be incorporated into the analysis to determine the number of annual
curtailment hours applying in any transmission service agreement, we
clarify that whether such events impact the accounting for annual
curtailment hours depends on the curtailment priority of the service at
the time of the event. If an unexpected event occurs when the
conditional firm customer is curtailed pursuant to a firm curtailment
priority, then the curtailment will not count against the annual hours.
In determining whether the annual conditional curtailments are met,
transmission providers should count curtailments made when the service
is otherwise conditional, i.e., tagged with a secondary network
curtailment priority, regardless of whether the curtailment occurred
during an unexpected event.
(2) Pricing of Planning Redispatch
134. The Commission affirmed the determination in Order No. 890
that customers taking long-term point-to-point service with planning
redispatch will have the option of paying either (i) the higher of (a)
actual incremental costs of redispatch or (b) the applicable embedded
cost transmission rate on file with the Commission or (ii) a fixed rate
for redispatch to be negotiated by the transmission provider and
customer and subject to a cap representing the total fixed and variable
costs of the resources expected to provide the service. The Commission
clarified that, in months in which generation-related payments are
collected for planning redispatch, these payments should be treated as
a revenue credit to offset the native load customers' fuel adjustment
clause. In months in which the embedded cost rate of transmission is
collected for planning redispatch, those revenues should be included in
the numerator of the rate calculation as a revenue credit. The
Commission stated that transmission providers may propose in an FPA
section 205 filing any rate design change that may be necessary through
an amendment to its formula rate or in a single rate case filing.
Requests for Rehearing and Clarification
135. E.ON U.S. and EEI request rehearing of the Commission's
pricing provisions with respect to the crediting of transmission
revenues from planning redispatch. Both repeat arguments that the
Commission has forced transmission providers' native load to bear the
cost of planning redispatch on behalf of point-to-point customers. They
ask the Commission to grant rehearing to require that, when
transmission revenues exceed the cost of planning redispatch on a
monthly basis, only the amount of the excess transmission revenues
should be credited against the cost of transmission service and the
remainder should be credited against the fuel adjustment clause. In the
alternative, EEI asks the Commission to clarify that, when the
transmission revenues exceed the cost of redispatch, all of the
revenues should be included as a credit in developing the transmission
cost of service that is used to determine the transmission rate, and
the generation redispatch costs should be included as a debit in
determining the transmission cost of service and also should be
credited against the fuel adjustment clause.
136. Southern repeats arguments made on rehearing of Order No. 890
that transmission providers should be able to charge planning
redispatch customers the embedded costs of transmission as well as the
generation-related costs of providing redispatch. Southern contends
that it is unduly discriminatory and arbitrary and capricious to allow
a transmission customer to be charged both the costs of generation
redispatch and the embedded transmission rate when the redispatch is
provided by a third party, but not when redispatch is provided by the
transmission provider. In months in which redispatch costs are higher
than the embedded cost rate, Southern contends that the transmission
provider is similarly situated to a third party generator that provides
redispatch because neither would receive transmission revenues for the
additional transmission capability created by their redispatch.
Southern therefore argues that the policy against ``and pricing'' is
unduly discriminatory as applied to transmission providers and that
this disparate treatment of transmission providers and third-party
providers of planning redispatch does not withstand scrutiny.
137. Southern also repeats arguments that the Commission
incorrectly concluded in Order No. 890-A that planning redispatch
creates additional transmission capacity and does not take away firm
service from native load and network customers. Southern contends that
planning redispatch merely reallocates, rather than creates,
transmission capability by forcing certain generators to run and others
not to run, thereby changing power flows. Southern, raising a new
argument, asserts that the provision of planning redispatch could
result in reduced subsequent, later-queued sales of long-term or short-
term transmission service that might have produced higher transmission
revenues than the provision of planning redispatch. Southern adds that
planning redispatch could prevent a network customer from designating a
new network resource by taking all of the transmission capacity near a
generating source. Southern therefore contends that the Commission's
conclusion in Order No. 890-A that the provision of planning redispatch
provides purely incremental service without effect to existing
transmission capacity is arbitrary and capricious.
Commission Determination
138. The Commission grants clarification regarding the rate
treatment of generation-related revenues and revenues from the embedded
cost rate of transmission associated with planning redispatch. In Order
No. 888, the Commission concluded that revenues from direct assignment
of redispatch costs must be credited to the costs of fuel and purchased
power expense included in the transmission provider's wholesale fuel
adjustment clause.\89\ This rate treatment is appropriate for all
generation-related incremental costs, whether the customer pays the
embedded cost transmission rate or the costs of planning redispatch in
any particular month. Therefore, we direct that in months in which the
embedded cost transmission rate is higher than the generation-related
costs of providing redispatch, the revenues in excess of the
generation-related costs should be credited against the costs of
transmission service and the remaining revenues, those representing the
monthly costs of reconfiguring generation resources, should be credited
against the fuel adjustment clause.
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\89\ See Order No. 888 at 31,740.
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139. We affirm our decision in Order No. 890-A to deny requests to
depart
[[Page 39111]]
from our long-standing prohibition of ``and'' pricing for planning
redispatch service first adopted in Order No. 888 and followed in Order
No. 890.\90\ In Order No. 890, the Commission modified pre-existing
planning redispatch obligations and lessened the impact on transmission
providers (and their customers) with the continuing support of many
transmission providers, including Southern. The Commission also
modified pricing provisions to allow for the comparison of monthly
generation-related costs of planning redispatch to determine the
applicable rate. In directing this monthly comparison, the Commission
rejected the former provisions for basing the charge on a life of the
contract comparison, concluding that it was appropriate to make
planning redispatch service more attractive for transmission providers
to provide.\91\
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\90\ See Order No. 890 at P 1028.
\91\ Order No. 890 at P 1025.
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140. We also affirm, as the Commission did in Order Nos. 890 and
890-A, the determination in Order No. 888 that planning redispatch
creates additional transmission capability.\92\ We agree with Southern
that provision of planning redispatch may have an impact on subsequent,
later-queued requests to use the transmission grid. It is the nature of
networked transmission grids that granting any firm point-to-point or
network service will impact the ability of those seeking to use the
system in the future. The impact of planning redispatch, or any other
firm service, on subsequent uses of the grid does not provide a valid
reason for lifting the long-standing prohibition on ``and'' pricing,
nor does it undermine the determination in Order No. 888-A that
planning redispatch creates additional transmission capacity. To the
extent that Southern argues it could collect additional revenues from
network customers' designation of additional resources were Southern
not providing planning redispatch, we find this unconvincing as network
customers are charged for service based on their load not the number of
resources designated.
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\92\ Order No. 888-A at 30,267; Order No. 890 at P 1028; Order
No. 890-A at P 602, n.241.
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2. Rollover Rights
141. In Order No. 890-A, the Commission affirmed the decision in
Order No. 890 to limit rollover rights to contracts with a minimum term
of five years. The Commission rejected requests to condition
application of the minimum five-year term on a demonstration that the
relevant generation markets support five-year power supply contracts.
The Commission explained that the purpose of its reform of the rollover
policy is to align the rights and obligations of the customer with
those of the transmission provider, not with the availability of
supplies within a market or particular commercial practices in a
region. The Commission noted that a point-to-point customer does not
need to have a five-year power contract in order to secure a five-year
transmission service contract and that the length of the network
customer's service agreement, not the length of the power contract
supporting a network resource designation, determines whether a
customer is eligible for rollover.
142. The Commission also affirmed the decision in Order No. 890 not
to eliminate the requirement to match competing requests in order to
retain rollover rights. With regard to the effectiveness of the
rollover reforms, the Commission acknowledged that requiring a five-
year contract term for pending transmission service requests could
cause significant disruption to those transmission customers already in
the transmission queue at the time of the effective date of Order No.
890. The Commission therefore revised section 2.2 of the pro forma OATT
to provide that the current one-year contract commitment requirement
will continue to apply to all transmission service requests that were
in a transmission provider's transmission queue as of the effective
date of the reforms adopted in Order No. 890 (i.e., July 13, 2007).
Requests for Rehearing and Clarification
143. Entergy objects to the Commission's statement in Order No.
890-A that the term of the network customer's underlying service
agreement establishes whether a network service reservation is eligible
for rollover rights, rather than the term of the relevant designated
network resources.\93\ Entergy argues that this determination is an
unexplained departure from existing rollover policy providing that a
network service reservation's eligibility for a rollover is based on
the term of the underlying network resource.\94\ Entergy argues that
network customers most often execute long-term service agreements,
sometimes up to as many as 30 years in length, that act as umbrella
agreements under which network customers designate and undesignate
different network resources as needed to serve network load. Entergy
explains that the transmission provider studies these reservations as
they are submitted and, if they are deliverable to the relevant network
load on a firm basis, then they are designated as network resources.
---------------------------------------------------------------------------
\93\ Citing Order No. 890-A at P 645.
\94\ Citing Wis. Pub. Power, Inc. v. Wis. Pub. Serv. Corp., 84
FERC ] 61,120, at 61,659 (1998) (WPPI).
---------------------------------------------------------------------------
144. Entergy argues that granting rollover rights based solely on
the term of a network service agreement, rather than the term of the
network resource designation, would effectively ignore the firm
deliverability requirement underlying all network resources, allowing a
network customer to execute a multi-year service agreement and obtain
rollover rights even though it actually may have only designated
network resources for as little as one day. Entergy contends that this
is not the intent of allowing transmission customers to designate
network resources on a short-term basis and constitutes bad
transmission policy and undermines reliability.
145. Cargill objects to the revision of section 2.2 of the pro
forma OATT requiring existing customers to match the longest-term
competing request in order to rollover service. Cargill contends that
the Commission in Order No. 890 determined that a rollover customer
must agree to another five-year contract term or match any longer-term
competing request in order to be eligible for a subsequent
rollover,\95\ but imposed no similar requirement when exercising a
rollover right when a subsequent rollover is not desired. Cargill
argues that the new requirement to match the longest-term competing
request in order to roll over service violates the first-come, first-
served principles affirmed in Order No. 890. Cargill suggests, for
example, that one potential customer could submit a competing request
well in advance of the incumbent's rollover, followed by a second
longer-term competing request submitted by another potential customer
closer in time to the incumbent's rollover. Cargill contends that the
revision to section 2.2 would allow the second customer to effectively
preempt the earlier submitted competing request simply because both are
vying for capacity subject to the incumbent's rollover right.
---------------------------------------------------------------------------
\95\ Citing Order No. 890 at P 1231.
---------------------------------------------------------------------------
146. Cargill argues that the revised language of section 2.2
therefore violates the first-come, first-served principle of section
13.2 of the pro forma OATT and Commission precedent regarding the
application of rollover rights,\96\ nullifying the benefit of being the
first competitor to submit a competing
[[Page 39112]]
request for capacity subject to a rollover right. Cargill contends that
the Commission provided no justification in Order No. 890-A for
revising its rollover policy to require a customer to match the
longest-term competing request in order to rollover its service.
Cargill also argues that the Commission provided no notice or
opportunity to comment on this change in Commission policy.
---------------------------------------------------------------------------
\96\ Citing Tenaska Power Services Co. v. Midwest ISO, 106 FERC
] 61,230 at P 28, reh'g denied, 107 FERC ] 61,308 (2004) (Tenaska).
---------------------------------------------------------------------------
147. TranServ requests clarification of the Commission's
determination regarding the application of the new rollover policies to
customer requests queued prior to the effective date of the reforms
adopted in Order 890. TranServ states that there is continued confusion
over exactly when customers would be required to request long-term
service for five years or longer to be granted rollover rights.
TranServ contends that customers submitting long-term service requests
after July 13, 2007, but prior to the effectiveness of revised section
2.2 of the OATT, are not granted the right to rollover service under
the previous one-year term rollover policy. TranServ suggests that it
may be more appropriate to allow transmission customers that submitted
requests for one year or longer after July 13, 2007, but executed a
service agreement prior to the effective date of the revised section
2.2, to also be allowed to operate under the one-year term rollover
policy through their first rollover date.
Commission Determination
148. The Commission affirms the determination in Order No. 890-A
that the length of a network customer's network service agreement, not
the length of a power contract supporting a network service agreement,
determines whether the network customer is eligible for rollover
rights.\97\ A network customer's eligibility for rollover rights is
distinct from its ability to rollover a particular resource
designation. In order for a network customer to qualify for rollover
rights, it must have a network service agreement that satisfies the
minimum term necessary for rollover rights. The network customer may
then continue to designate and undesignate resources pursuant to that
service agreement, subject to the availability of adequate transmission
capability to accommodate the request.
---------------------------------------------------------------------------
\97\ See Order No. 890-A at P 645.
---------------------------------------------------------------------------
149. This does not, as Entergy argues, depart from Commission
precedent regarding the network customer's eligibility for rollover
rights. At issue in WPPI was whether a network customer is required to
compete with other firm uses of the system in order to continue its
resource designation at the time of rollover.\98\ In considering that
issue, the Commission first addressed whether rollover rights are
available to network customers, concluding that all network customers
of the transmission system are long-term users of the system and,
therefore, meet the minimum term required to qualify for rollover
rights. That determination was appropriate when the one-year contract
commitment was in effect, since network service agreements are not
short-term in nature. However, when the Commission extended the minimum
contract commitment for rollover rights from one year to five years, it
was necessary to state more clearly that a network customer's threshold
eligibility for rollover rights is linked to the term of its network
service agreement.
---------------------------------------------------------------------------
\98\ See WPPI, 84 FERC at 61,659.
---------------------------------------------------------------------------
150. We disagree that this determination undermines the ability of
the transmission provider to study the potential impact that future
resource designations may have on the system. Although a network
customer rolling over its network service may match a competing point-
to-point request by extending its network service agreement rather than
the power contract supporting the resource designation, the Commission
specifically noted that any subsequent request to designate a network
resource would remain subject to the requirements of the pro forma
OATT, as with any other request to designate a network resource.\99\
The transmission provider will therefore continue to be able to
consider the deliverability of a particular resource at the time of
designation. We note that this does not relieve the transmission
provider of its obligation under section 28.2 of the pro forma OATT to
plan, construct, operate and maintain its transmission system in order
to provide the network customer with network service over the
transmission system.
---------------------------------------------------------------------------
\99\ See Order No. 890-A at P 666, n.264. With regard to
competing network resource designations, the Commission affirmed in
Order No. 890-A that the network customer seeking rollover must
match the term of the competing network resource power contract,
consistent with WPPI. See Order No. 890-A at P 666.
---------------------------------------------------------------------------
151. We agree with Cargill, however, that the revisions to the
language of section 2.2 of the pro forma OATT adopted in Order No. 890-
A do not properly reflect the obligation of customers rolling over
their service to match competing requests for service. Section 2.2 of
the Order No. 888 pro forma OATT required customers rolling over their
service to accept a contract term for their new service at least as
long as that offered by another potential customer.\100\ This
obligation was independent of the separate requirement for the rollover
customer to request a term of at least one year in order to be eligible
for rollover rights on the new service. In amending section 2.2 in
Order No. 890, the Commission inadvertently misstated the matching
requirement as requiring the customer to match the longer of the term
of a competing request or five years in order to roll over its
service.\101\ That was incorrect, as the requirement to commit to at
least five years of service is relevant only to whether the new service
has rollover rights, not to whether the customer may roll over its
existing service.
---------------------------------------------------------------------------
\100\ See Order No. 888 at 31,665.
\101\ See Order No. 890 at Appendix C, pro forma OATT section
2.2.
---------------------------------------------------------------------------
152. The Commission corrected this misstatement in Order No. 890-A
by amending section 2.2 to require customers rolling over the service
to match the longest competing request.\102\ As Cargill points out, the
Commission's reference to the longest-term competing request could
require a rollover customer taking long-term service to match the
length of any competing long-term request. Under the Commission's
existing precedent regarding section 2.2 of the pro forma OATT,
however, there would be only one potential competitor for rollover
customers seeking long-term service, i.e., the first customer in the
queue requesting competing service.\103\ We did not intend to modify
this policy and, therefore, revise the language of section 2.2 to
require customers rolling over their service to accept a contract term
at least equal to a competing request. Any such competing request
should be identified by the transmission provider consistent with the
reservation priorities stated in the pro forma OATT.
---------------------------------------------------------------------------
\102\ See Order No. 890-A at P 695 (``An existing customer may
rollover its service for a term of less than five years, but will
not then retain a rollover right for this service. We revise section
2.2 of the pro forma OATT to make these requirements clear.'').
\103\ See Tenaska, 106 FERC ] 61,230 at P 48; see also Cargill
Power Marketers, LLC v. Southwest Power Pool, Inc., 122 FERC ]
61,068 (2008) (distinguishing the ``equal to a competing request''
language of section 2.2 of the pro forma OATT from the ``longest
confirmed competing request'' language of SPP's tariff).
---------------------------------------------------------------------------
153. We affirm the decision in Order No. 890-A to continue to apply
the current one-year contract commitment requirement to all
transmission service requests that were in the transmission provider's
transmission queue as of the effective date of the reforms adopted in
Order No. 890, i.e., July 13, 2007.\104\ This does not mean, as
TranServ implies, that the five-year contract
[[Page 39113]]
commitment requirement applies to a customer executing a service
agreement after that date, but prior to the effectiveness of rollover
reforms for the particular transmission provider. The Commission
reiterated in Order No. 890-A that the previously existing rollover
provisions will remain in effect for the transmission provider until
such time as the Commission accepts the transmission provider's
Attachment K compliance filing.\105\ We therefore agree with TranServ
that the one-year contract commitment requirement continues to apply to
any customer executing a service agreement prior to the effective date
of the transmission provider's revised section 2.2, regardless of when
the customer's service request was submitted.
---------------------------------------------------------------------------
\104\ See Order No. 890-A at P 691.
\105\ See id. P 684.
---------------------------------------------------------------------------
154. Finally, we take this opportunity to clarify the statement in
Order No. 890-A that the transmission provider may file the revised
rollover language only after the transmission provider's Attachment K
planning process is accepted by the Commission.\106\ Transmission
providers may file the revised rollover language adopted in this
proceeding at any point after the Commission has accepted the
transmission provider's Attachment K compliance filing, even if such
acceptance is subject to further compliance obligations, unless
otherwise provided by the Commission in the order addressing the
Attachment K compliance filing. The effective date of that revised
tariff language should be commensurate with the date of the filing
containing the revised language.
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\106\ See id.
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3. Acquisition of Transmission Service
a. Reservation Priority
155. The Commission confirmed in Order No. 890-A that longer
duration service requests will continue to have priority over shorter
duration service requests, with pre-confirmation serving as a tie-
breaker for requests of equal duration. Order No. 890-A also affirmed
the decision to limit priority for pre-confirmation status to short-
term firm and long-term non-firm requests for service. The Commission
also revised sections 1.39, 17.2 and 18.2 of the pro forma OATT to make
clear that pre-confirmation service should be available to all eligible
customers seeking short-term firm and non-firm transmission services.
Requests for Rehearing and Clarification
156. Schedule 20A Service Providers request rehearing of the
Commission's decision to revise the pro forma OATT to allow pre-
confirmation by eligible customers that have not yet executed service
agreements. They argue that this revision is inconsistent with how
service is reserved on the Phase I/II HVDC-TR transmission system
operated by ISO New England and Hydro-Quebec TransEnergie. The Schedule
20A Service Providers state that they have therefore requested approval
of a variation from the pro forma OATT in their October 11, 2007
compliance filing to accommodate their reservation practices.
157. The Schedule 20A Service Providers also argue more generally
that OASIS is not set up to take pre-confirmed applications and,
therefore, there is no means by which an eligible customer that is not
yet a transmission customer can request pre-confirmed service. They
argue that limiting pre-confirmation status to transmission customers
does not preclude new customers from seeking service on an equal
footing since the obligation to execute a service agreement does not
impose an undue burden. To the contrary, they argue that substantial
implementation difficulties would arise if transmission providers are
forced to recognize pre-confirmation status for eligible customers that
do not have access to OASIS. The Schedule 20A Service Providers
therefore ask the Commission to grant rehearing to provide that the
modifications to sections 1.39, 17.2 and 18.2 of the pro forma changes
are not necessary or appropriate when applications are not a means for
requesting service through OASIS.
Commission Determination
158. The Commission affirms the decision in Order No. 890-A to
allow eligible customers to submit pre-confirmed requests for
transmission service.\107\ The ability to submit pre-confirmed requests
should not be limited to existing short-term and non-firm transmission
customers. To the extent this policy conflicts with the operations of
any given transmission provider, as the Schedule 20A Service Providers
suggest, the transmission provider may seek a variation from the terms
and conditions of the pro forma OATT as necessary to accommodate its
operations. We note, for example, that the Commission approved the
variation requested by the Schedule 20A Service Providers in Docket No.
ER08-54-000.\108\
---------------------------------------------------------------------------
\107\ Order No. 890-A at P 790.
\108\ See ISO New England, Inc., 123 FERC ] 61,133 (2008).
---------------------------------------------------------------------------
b. Right of First Refusal and Preemption
159. The Commission affirmed in Order No. 890-A the decision not to
change the first-come, first-served nature of the reservation process
and the right of first refusal. In response to comments that
administration of the right of first refusal has the potential to
create complicated scenarios, such as when scarce capacity exists, the
Commission declined to expand upon the language of the pro forma OATT
to account for every factual scenario that could arise. The Commission
recognized that certain unique cases can present difficult allocation
issues, but concluded that such cases arise infrequently and that
sections 13.2 and 14.2 of the pro forma OATT provide adequate guidance
for the vast majority of requests.
Request for Rehearing and Clarification
160. Duke asks the Commission to clarify that a transmission
provider need not offer a right of first refusal if it cannot be done
in a single offering to other eligible customers. Duke argues that it
is unduly complicated to offer a right of first refusal when the offer
triggers other transmission customers' rights of first refusal. If it
is the Commission's intention that the transmission provider offer
cascading rights of first refusal, Duke requests guidance that can be
used by NAESB to develop adequate business practices.
Commission Determination
161. The Commission declines to address in this rulemaking
proceeding how transmission providers should resolve complicated and
fact-specific scenarios such as the cascading rights of first refusal
described by Duke. Sections 13.2 and 14.2 of the pro forma OATT provide
adequate guidance for transmission providers to fairly administer the
vast majority of competing requests, including priorities for
determining which reservations or requests trump one another as well as
the timeframes for eligible customers to respond to competing requests.
As the Commission explained in Order No. 890-A, we expect that more
complex circumstances such as those suggested by Duke will be
relatively limited and, therefore, are best addressed on a case-by-case
basis.\109\ Transmission providers remain free, however, to develop
through the NAESB process standard procedures for processing
complicated request scenarios.
---------------------------------------------------------------------------
\109\ See Order No. 890-A at P 816.
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[[Page 39114]]
4. Designation of Network Resources
162. In Order No. 890-A, the Commission clarified certain
determinations regarding the qualification, documentation and
undesignation of resources by a network customer. A number of
petitioners request additional rehearing and clarification regarding
these issues. We address each of these issues in turn.
a. Qualification as a Network Resource
(1) LD Contracts
163. In Order No. 890, the Commission affirmed its existing policy
that a power purchase agreement may be designated as a network resource
provided it is not interruptible for economic reasons, does not allow
the seller to fail to perform under the contract for economic reasons,
and requires the network customer to pay for the purchase. The
Commission concluded that power purchases with a firm liquidated
damages (LD) provision may be eligible for designation as a network
resource if the contract obligates the supplier, in the case of
interruption for reasons other than force majeure, to make the
aggrieved buyer financially whole by reimbursing them for the
additional costs, if any, of replacement power. The Commission found
that the ``make whole'' LD provisions in EEI's Master Power Purchase
and Sale Agreement's Firm LD product (EEI's Firm LD Product) and the
WSPP Service Schedule C agreement satisfy this requirement. In Order
No. 890-A, the Commission affirmed its finding that the make whole LD
provisions in the EEI Firm LD Product and the WSPP Service Schedule C
agreement are sufficiently firm to make those agreements eligible for
designation as a network resource.
Requests for Rehearing and Clarification
164. Duke asks the Commission to confirm that firm LD contracts
that are not strictly limited to interruption for reliability reasons,
such as the EEI Master Agreement Firm LD Product, no longer can be
designated as network resources in the future. Duke contends that the
Commission's statement in Order No. 890-A that ``the make whole LD
provisions in the EEI firm LD product and WSPP Schedule C agreement are
sufficiently firm to make those agreements eligible for designation as
a network resource'' implies that LD contracts with make-whole
provisions may serve as network resources, even if not coupled with
provisions that also restrict interruption for reasons other than
reliability.\110\ Duke requests clarification that both a make-whole
provision and a restriction on the grounds for interruption, such as
the restriction added to the WSPP Schedule C agreement, are required
for an LD contract to be eligible for network resource status.
---------------------------------------------------------------------------
\110\ Citing Order No. 890-A at 832.
---------------------------------------------------------------------------
Commission Determination
165. The Commission reiterates that a power purchase agreement must
meet all of the requirements for designation as a network resource in
order to be designated by the network customer or transmission
provider's merchant function. The fact that a firm LD contract with a
make whole provision is sufficient to satisfy one aspect of these
requirements does not mean that it can be designated as a network
resource. The remaining requirements must also be met.\111\ As the
Commission made clear in Order No. 890, one of those other requirements
is that such contracts expressly prohibit interruption for reasons
other than reliability.
---------------------------------------------------------------------------
\111\ See, e.g., id. P 864 (``The Commission did not state that
every firm LD contract can be designated as a network resource, but
rather that they are eligible for designation.'') (emphasis in
original); Order No. 890 at n. 869 and P 1460 (finding that the then
current WSPP Schedule C agreement, while meeting requirements for LD
provisions, otherwise allows interruptions for reasons other than
reliability and, as a result, would not be eligible for designation
as a network resource).
---------------------------------------------------------------------------
166. We disagree with Duke that the EEI firm LD product fails to
prohibit interruptions for reasons other than reliability. Duke raised
a similar argument in its NOPR comments, suggesting that the EEI firm
LD product allows power to be interrupted for any reason. The
Commission expressly disagreed, finding that power cannot be
interrupted for economic reasons under the EEI firm LD product and that
the supplier is obligated to provide power except in cases of force
majeure.\112\ Duke is therefore mistaken in implying that the EEI firm
LD product is not eligible for designation under Commission policy
because of its interruptibility.
---------------------------------------------------------------------------
\112\ Order No. 890 at P 1452.
---------------------------------------------------------------------------
(2) Off-System Resources
167. In Order No. 890, the Commission modified section 29.2(v) to
state more clearly the information that must be provided for the
designation of off-system network resources. Among other things, the
network customer must provide its transmission arrangements on the
external transmission system(s). In Order No. 890-A, the Commission
clarified that this requirement applies to the transmission leg from
the resource being designated to the transmission provider's
transmission system. If an off-system power purchase is sufficiently
firm to satisfy the designation requirements, the transmission provider
need not be concerned with the upstream transmission leg(s) from the
generator(s) to the point where the buyer takes title of the firm
power. The Commission concluded that the firm contract itself is the
resource being designated and, therefore, it is not necessary to
demonstrate the firmness of the upstream transmission.
Requests for Rehearing and Clarification
168. Entergy requests clarification that customers designating an
LD contract as an off-system network resource must still arrange a firm
transmission path from the generator to the transmission system in
order for the purchase to qualify as a network resource, regardless of
where title of energy and/or capacity actually passes. If the point
where title to energy and/or capacity underlying a network resource
transfers is now relevant, Entergy argues that the Commission at a
minimum should clarify how that information should be relayed to the
transmission provider in the network customer's attestation and the
procedures, if any, that the transmission provider must undertake in
order to ensure the veracity of information provided regarding title.
Entergy argues that elimination of the requirement to support an LD
contract with a firm transmission path from the source generator would
violate the long-standing obligation that third-party transmission
arrangements delivering purchases be firm and depart from prior
governing precedent without a reasoned explanation.\113\
---------------------------------------------------------------------------
\113\ Citing WPPI, 84 FERC at 61,660.
---------------------------------------------------------------------------
Commission Determination
169. The Commission affirms the determination in Order No. 890-A
that the requirement in section 29.2(v) of the pro forma OATT to
identify the transmission arrangements on external systems applies only
to the transmission leg from the resource being designated to the
transmission provider's transmission system.\114\ If an off-system
power purchase is sufficiently firm to satisfy the designation
requirements, then the transmission provider need not be concerned with
the upstream transmission leg(s) from the generator(s) to the point
where the buyer takes title of the firm power. As the Commission
explained in Order No. 890-A, the resource being designated is the firm
[[Page 39115]]
contract. The network customer therefore must provide to the
transmission provider information regarding its transmission
arrangements only from the point that the network customer takes title
to the power to the point of delivery to the transmission provider's
transmission system, to the extent such points are distinct.
---------------------------------------------------------------------------
\114\ See Order No. 890-A at P 867.
---------------------------------------------------------------------------
170. We disagree that this determination conflicts with the
Commission's decision in WPPI. In that case, the Commission clarified
that the transmission provider could require network customers to
document compliance with specific requirements for obtaining tariff
service and that such documentation might include contractual
materials.\115\ The Commission did not address whether those
requirements include the requirement to provide information regarding
transmission arrangements between a designated power purchase agreement
and the source generator. The Commission concluded in Order No. 890-A
that they do not, given that the designated purchased power contract is
itself firm.\116\ Entergy provides no justification for granting
rehearing of this determination, which is well-founded in the record of
this proceeding.\117\
---------------------------------------------------------------------------
\115\ See WPPI, 84 FERC at 61,660.
\116\ See Order No. 890-A at P 867.
\117\ See id. P 854-55.
---------------------------------------------------------------------------
171. We disagree that a network customer must separately identify
in its attestation the location at which the network customer takes
title of purchased power. Section 30.2 of the pro forma OATT requires
the network customer to attest that, among other things, the network
customer owns or has committed to purchase the resource being
designated. Implicit in the identification of a resource, then, is the
requirement that the network customer has or has committed to acquire
title to the resource at that location. As the Commission explained in
Order No. 890-A, it is the responsibility of the network customer to
assure that the requirements of the pro forma OATT are satisfied prior
to requesting the designation of a network resource and executing the
attestation.\118\ Review of the network customer's power supply
contracts by the transmission provider is therefore not necessary.
Submitting an attestation with incorrect information as to its
ownership of purchased power would violate section 30.2, subjecting the
network customer to potential penalties.\119\
---------------------------------------------------------------------------
\118\ See id. P 921.
\119\ See Order No. 890 at P 1523-25. As we note below, the
Commission can audit a network customer's compliance with a
transmission provider's OATT in a variety of circumstances.
---------------------------------------------------------------------------
b. General
172. In Order No. 890-A, the Commission affirmed the decision to
allow off-system resources supported by conditional firm point-to-point
service to be designated as network resources. The Commission declined
to require a network customer with a designated off-system resource
supported by conditional firm service to obtain reserves or backup
resources to cover the periods when the resource supported with
conditional firm point-to-point transmission service might not be
delivered. The Commission explained that, in the event conditional firm
service is curtailed, the network customer would be required to serve
its network load from other resources, just as when the transmission
provider curtails the network customer's use of secondary network
service. The Commission reiterated that it is not the responsibility of
the transmission provider to ensure that the network customer has
sufficient resources to meet its load.
Requests for Rehearing and Clarification
173. Duke argues that the Commission, in its finding that
transmission providers are not to serve as provider of last resort for
their network customers, did not explain how transmission providers can
realistically avoid this role or how transmission providers or their
merchant function should be compensated in the likely event that the
transmission provider will continue to provide power to network
customers that are short of energy resources. Duke argues that several
of the Commission's policies on designation of network resources create
or exacerbate risks that network customers may at times be short of
resources. First, Duke cites the Commission's decision to allow a
network customer to deliver power from off-system network resources
using conditional firm point-to-point service, which it argues may be
curtailed with much greater frequency than network resources supported
by firm point-to-point service. Second, Duke cites the Commission's
rejection of requests to allow transmission providers to verify that a
network resource is supported by firm transmission service upstream of
the location of the purchase. Third, Duke cites the Commission's policy
of allowing power sales contracts that permit interruption by the
seller in order to reliably serve native load to qualify as network
resources, arguing that such policy may permit double-counting of
resources. Fourth, Duke states concern regarding the grandfathering of
existing designations for resources that may be curtailed by the seller
for any reason. Finally, Duke argues that the Commission's attestation
requirement will not adequately curb the practice of designating
unqualified resources as network resources due to a lack of audit
resources.
174. Duke requests clarification that transmission providers or
their merchant functions may make section 205 filings to provide for
penalty rates for network customers that fail to provide enough energy
to serve load because network resources were not delivered for reasons
that could be expected. Duke explains that the most severe penalty for
energy imbalance service under Schedule 4, 125 percent of incremental
cost, is not particularly onerous and thus may be insufficient to
motivate appropriate behavior. Duke suggests that a rate of two times
system incremental costs would be appropriate.
Commission Determination
175. The Commission reiterates that it is not the responsibility of
the transmission provider to ensure that the network customer has
sufficient resources to meet its load. The Commission has made clear
that the requirements for the designation of network resources are not
intended to replace or replicate resource adequacy requirements, which
impose distinct obligations on the transmission provider and its
customers.\120\ To that end, the Commission has determined that a
resource's qualification for network resource status does not
necessarily mean that the resource can or should be counted as firm
capacity for the purposes of resource adequacy.\121\ We therefore
disagree with Duke that the Commission's policies regarding the
designation of network resources creates or exacerbates risks that
inadequate resources will be available to meet network load.
---------------------------------------------------------------------------
\120\ See Order No. 890 at P 1584; Order No. 890-A at P 835,
837.
\121\ Midwest Indep. Transmission Sys. Operator, Inc., 122 FERC
] 61,283, at PP 274-76 (2008), reh'g pending.
---------------------------------------------------------------------------
176. We decline to address Duke's suggestion that increased penalty
rates may be appropriate for network customers that fail to provide
enough energy to serve network load because their network resources
were not delivered for reasons that could be expected. The Commission
has already made clear that it will consider on a case-by-case basis
proposals to adopt enhanced imbalance penalties subject to
[[Page 39116]]
a showing that they are necessary under the circumstances.\122\
---------------------------------------------------------------------------
\122\ Order No. 890 at P 676.
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c. Documentation for Network Resources
177. In Order No. 890, the Commission required network customers
and the transmission provider's merchant function to include a
statement with each application for network service or to designate a
new network resource that attests, for each new network resource
identified, that (1) the transmission customer owns the resource, or
has committed to purchase the resource pursuant to an executed contract
or where execution of a contract is contingent upon the availability of
transmission service, and (2) the resource comports with the
requirements for designated network resources. The Commission stated
that these attestations are not required to be submitted until the
service request is confirmed. In Order No. 890-A, the Commission
affirmed the requirement that each network customer designating network
resources must submit an attestation using the language set forth in
sections 29.2 and 30.2 of the pro forma OATT.
178. The Commission also affirmed the decision to require each
transmission provider to verify that third-party transmission
arrangements used to deliver an off-system designated network resource
to the transmission provider's system are firm. The Commission
explained that, under normal circumstances, this verification
requirement should not present a significant burden for the
transmission provider because it only requires review of the
transmission arrangements from the designated network resource to the
transmission provider's system.
Requests for Rehearing and Clarification
179. NRECA and TDU Systems seek confirmation that network customers
are not required to submit attestations until the customer confirms the
service request on OASIS. These petitioners state that clarification is
necessary because some of their members have been told by transmission
providers that this attestation is required at the time of application
for service, despite the Commission's guidance in the preambles of both
Order Nos. 890 and 890-A.\123\ NRECA and TDU Systems contend that the
language of section 29.2 of the pro forma OATT is inconsistent with the
preamble and should be amended because courts have held that language
in the preamble of a regulation is not controlling over the language in
the regulation itself.\124\ If the Commission actually intended to
require the attestation at the application stage, they request
rehearing on the grounds that a network customer cannot be expected to
commit to purchase a resource before the resource has even been studied
by the transmission provider.
---------------------------------------------------------------------------
\123\ Citing Order No. 890 at P 1531; Order No. 890-A at P 909.
\124\ Citing Wyoming Outdoor Council v. U.S. Forest Serv., 165
F.3d 43, 53 (D.C. Cir. 1999) (citing Jurgensen v. Fairfax County,
Va., 745 F.2d 868, 885 (4th Cir. 1984)) and Rowell v. Andrus, 631
F.2d 699, 705 (10th Cir. 1980).
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180. Duke states continued concern regarding the effectiveness of
the attestation requirement submitted by network customers that are not
subject to the Commission's ratemaking jurisdiction. Duke maintains
that, while the Commission plainly has the authority to penalize
nonjurisdictional entities that submit false attestations, the
Commission has never routinely audited such entities. Unless the
Commission begins an audit program that routinely reviews the
designation attestations and supporting contracts of nonjurisdictional
network customers, Duke argues that noncompliance could be viewed as
nearly risk-free. Duke contends that this would be inequitable given
that merchant functions of transmission providers are routinely
audited. If the Commission lacks the resources to begin routine, random
auditing of nonjurisdictional entities' attestations, Duke suggests
that the Commission consider permitting market monitors or independent
entities to at least perform spot checks and report to the Commission
if a questionable attestation has been made.
181. TranServ requests clarification of the means by which a
transmission provider may comply with its obligation to verify the
firmness of off-system transmission service to deliver designated
network resources to the transmission provider's system. TranServ
requests that only long-term designations of network resources should
require an up-front verification of any off-system transmission
arrangements. For shorter-term designations, TranServ suggests that it
is sufficient for the transmission provider to verify that all
transmission arrangements upstream of the provider's system are
supported by firm transmission at the time the transactions from the
resource are scheduled. TranServ contends that this would allow more
flexibility on the part of the transmission customer in terms of
balancing the use of a portfolio of point-to-point transmission rights,
while still providing the necessary assurance to the transmission
provider that the designated resource is backed by firm transmission up
to the point of delivery to the provider's system.
Commission Determination
182. The Commission grants rehearing to more accurately state the
requirement to provide an attestation supporting the designation of
network resources pursuant to sections 29.2(viii) and 30.2 of the pro
forma OATT. In order to designate a network resource, section 30.7 of
the Order No. 888 pro forma OATT required each network customer to
demonstrate that (i) it owns or has committed to purchase generation
pursuant to an executed contract or (ii) execution of a contract is
contingent upon the availability of transmission service in order to
designate a generating resource. In Order No. 890, the Commission
adopted the attestation requirement as the means by which the network
customer can make this demonstration, revising sections 29.2 and 30.2
accordingly. We affirm this requirement, consistent with the network
customer's obligations under section 30.7, and grant rehearing of the
Commission's statements in this proceeding indicating that the
attestation can instead be submitted at the time a resource designation
is confirmed, rather than requested.
183. We disagree with NRECA and TDU Systems that a customer
submitting an attestation pursuant to section 29.2(viii) or 30.2 of the
pro forma OATT must commit to purchase the resources for which
designation is requested irrespective of the outcome of the network
service request. Consistent with section 30.7, a network customer may
attest that execution of a contract is contingent upon the availability
of transmission service under Part III of the pro forma OATT. Network
customers are therefore not required to commit to purchasing a resource
prior to submitting a request to designate that resource.
184. In response to Duke, we disagree that it is necessary to
establish audit programs specifically for nonjurisdictional entities in
order to verify attestations supporting their network resource
designations. The Commission could audit any network customer's
compliance with a transmission provider's OATT in a variety of
circumstances. For instance, network customers (including
nonjurisdictional entities) and the transmission provider's merchant
function could be asked to support selected attestations during audits
of the transmission providers to whom the
[[Page 39117]]
attestations were submitted. Thus, no special audit programs are
necessary.
185. We deny TranServ's request that the firmness of transmission
service used to deliver short-term designations of network resources be
verified at the time of scheduling, rather than at the time of
designation. The time of designation is when the transmission provider
determines that power from a network resource is deliverable to
associated network load and, therefore, it is appropriate to require
the verification of related transmission service at that time.
d. Undesignation of Network Resources
(1) Risk to ATC Rights
186. In Order No. 890, the Commission clarified that a request for
termination of a network resource that is concurrently paired with a
request to redesignate that resource at a specific point in time will
not result in the network customer permanently forfeiting rights to use
that resource as a designated network resource. Any change in ATC that
is determined by the transmission provider to have resulted from the
temporary termination shall be posted on OASIS during this temporary
period. The Commission directed transmission providers to develop OASIS
functionality and, working through NAESB, business standards describing
the procedures for submitting temporary terminations of network
resources, including the identification of any related transmission
service requests to be evaluated concomitantly with the request for
temporary termination.
Requests for Rehearing and Clarification
187. TranServ requests clarification of the sequence of events and
requirements for releasing transmission capability as a result of a
customer's request to undesignate one network resource and replace it
with an alternate resource. TranServ argues that the process should be
deemed similar in nature and treatment to a redirect of firm point-to-
point service or a network service request related to the temporary
termination of a resource designation, which must be evaluated
concomitantly.\125\ Although TranServ acknowledges that network
customers should not be ``first-in-line'' for ATC made available from
an undesignation, it contends that transmission providers should
evaluate simultaneous transmission service requests with the knowledge
that both resource designations will not run concurrently.
---------------------------------------------------------------------------
\125\ Citing Order No. 890 at P 1541.
---------------------------------------------------------------------------
Commission Determination
188. In Order No. 890, the Commission directed transmission
providers to evaluate as a single request a request for temporary
undesignation and related requests for transmission service.
Transmission providers were therefore directed to develop, working
through NAESB, business practices allowing for electronic
identification of related transmission service requests to be evaluated
concomitantly with the request for temporary undesignation. This was
appropriate in light of the Commission's decision to allow network
customers to temporarily undesignate their network resources without
forfeiting the right to use the resource at a specified point in the
future, provided they pair the temporary undesignation with a request
to redesignate the resource.
189. We find that similar procedures for permanent undesignations
of network resources are unnecessary given the transmission provider's
obligation to consider clustering transmission service requests at the
request of customers. If a network customer or the transmission
provider's merchant function wishes for the transmission provider to
take into consideration the effect of a request to terminate a network
resource on a concomitant request to designate another network
resource, it may request the transmission provider to cluster the
requests. As TranServ acknowledges, this will not alter the priority of
the network customer or the transmission provider's merchant function
with regard to any ATC that may be made available by undesignating the
network resource.
(2) System Sales
190. In Order No. 890-A, the Commission clarified the circumstances
in which a network customer must undesignate its resources on a unit-
specific basis when making a system sale. The Commission determined
that portions of the seller's individual network resources supporting a
sale of system power do not need to be undesignated so long as the
system sale is itself designated as a network resource by the buyer.
Instead, the seller should undesignate a portion of its system equal to
the amount of the system sale, but which is not attributed to any
specific generators. If the system sale is not designated as a network
resource by the buyer, the seller must submit undesignations for each
portion of each resource supporting the third-party sale. The
Commission stated that most, if not all, system sales sourced from
designated network resources are themselves designated as network
resources by the buyer and, therefore, few system sales would require
undesignation on a unit-by-unit basis.
Requests for Clarification and Rehearing
191. Several petitioners request rehearing and clarification of the
requirement that generating units supporting a sale of system power
that is not designated as a network resource by the buyer must be
undesignated by the seller on a unit-by-unit basis.\126\ Petitioners
generally argue that a seller should not be required to undesignate
individual resources used to support any system sale of power.
---------------------------------------------------------------------------
\126\ E.g., Deseret, Duke, EEI, NRECA, Pacific Northwest IOUs,
Southern, and TranServ.
---------------------------------------------------------------------------
192. Various petitioners argue that requiring unit-by-unit
undesignations by sellers for system sales to buyers who use point-to-
point service to deliver the power to their load has certain
undesirable effects, including increased cost and administrative burden
for system sales, increased tendency of sellers to discriminate against
point-to-point buyers, foreclosed opportunities for transactions,
decreased liquidity, decreased revenues for sellers, decreased
efficiency in transmission use, and further discouragement of network
customers from making system sales that do not qualify for designation
by the buyer, such as sales into day-ahead RTO markets.\127\
---------------------------------------------------------------------------
\127\ E.g., Deseret, NRECA, Southern, and TAPS.
---------------------------------------------------------------------------
193. Deseret argues that an LSE's access to system sales, rather
than a unit-specific or hub-based sales, further assures delivery of a
product necessary to fulfill native load requirements. Deseret contends
that limiting the flexible undesignation of network resources
supporting system sales to instances where the buyer designates the
purchase as a network resource is therefore contrary to section 217 of
the FPA. Deseret also argues that the Commission's policy unduly
preferences buyers that designate the purchase as a network resource.
Deseret contends that the Commission has failed to justify why system
sales to point-to-point customers are more problematic than sales to
network customers, even where the two buyers would be using the
resource in the same way. Southern agrees, arguing that there is no
support in the record for the Commission's determination regarding the
undesignation of resources used for system sales.\128\ Duke states
similar concerns, noting that all commenters
[[Page 39118]]
addressing the issue took the opposite position with regard to slice-
of-system sales, i.e., that in all cases the slice, not units, should
be undesignated.
---------------------------------------------------------------------------
\128\ Citing National Fuel Gas Supply Corp. v. FERC, 468 F.3d
831 (D.C. Cir. 2006).
---------------------------------------------------------------------------
194. Several petitioners challenge the Commission's statement that
buyers taking advantage of system purchases are almost always network
customers.\129\ Deseret explains that, in part due to the remote nature
of its loads and the composition of the integrated transmission grid in
its region, it is more efficient, both from a cost perspective and a
transmission use perspective, for LSEs like itself to serve their loads
using point-to-point service, either pursuant to an OATT or under pre-
Order No. 888 transmission arrangements. NRECA and TAPS similarly argue
that some LSEs rely on point-to-point service instead of network
service to serve their native loads. Pacific Northwest IOUs state that
the majority of system purchases they make are not designated as
network resources, due at least in part to the fact that many purchases
are imported for short-term balancing purposes where flexibility is
important. Southern agrees that the bulk of system purchases occur in
the short-term markets and suggests that buyers may simply not want to
bother with designating the purchases as network resources.
---------------------------------------------------------------------------
\129\ E.g., Deseret, NRECA, Pacific Northwest IOUs, Southern,
and TAPS.
---------------------------------------------------------------------------
195. TAPS argues that the Commission's assumption that unit-
specific undesignations will rarely be required supports elimination of
the unit-specific undesignations for all transactions. TAPS argues that
the better course is to allow system-based undesignation for all system
sales given that the ATC refinement efforts remain under development by
NERC and NAESB and the Commission will have the opportunity to revisit
the undesignation requirements once that work is complete.
196. Some petitioners challenge the Commission's underlying
concern, as expressed in Order No. 888 and referenced in Order No. 890-
A, that network customers may have an incentive to designate unlimited
generation resources absent a prohibition on network resources
including any portion of a resource that is committed for sale to a
third party.\130\ Pacific Northwest IOUs argue that a buyer's decision
as to whether or not to designate a system sale as a network resource
has no bearing on the seller's incentive or disincentive to
overdesignate network resources. Pacific Northwest IOUs contend that
the seller will designate those resources which it believes are
necessary to serve its load regardless of how a buyer chooses to use a
system sale from the seller. Southern agrees, arguing that the costs
associated with acquiring resources that meet all the requirements for
designation serve as an appropriate economic incentive not to
overdesignate. These petitioners note that the Commission already
addressed concerns regarding over-designation of network resources in
Order No. 888 by determining that ``a transmission customer, like a
transmission provider, has an incentive not to oversubscribe its
capacity requirements because the cost of excessive reserve margins
will be prohibitive.'' \131\ Pacific Northwest IOUs argue that the
procedural complexities associated with designating network resources
provide further incentives not to overdesignate and that such
incentives exist regardless of how a buyer uses a system purchase.
---------------------------------------------------------------------------
\130\ E.g., EEI, Pacific Northwest IOUs, and Southern (citing
Order No. 888 at 31,753-53; Order No. 890 at P 951).
\131\ Quoting Order No. 888 at 31,754.
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197. EEI contends that a seller will charge more for a power sale
that it cannot recall without paying a penalty, or that it cannot
recall at all, than it will charge for a sale that it can recall. EEI
argues that there is therefore an additional financial disincentive to
overdesignate network resources regardless of whether a seller
undesignates a slice of its entire system or a portion of each
generator involved in the sale. EEI acknowledges that transmission
service that the buyer takes in connection with a system sale might
affect ATC associated with the transaction. EEI suggests, however, that
the Commission address any concerns about reservations of transmission
service by buyers of slice-of-system energy directly through
requirements that apply to buyers rather than sellers. EEI argues that
restricting the type of transmission service the buyer may choose with
respect to a slice-of-system purchase violates the basic tenet of open
access transmission service that a transmission customer has the
freedom to take whatever transmission service is available to it under
the pro forma OATT.
198. Some petitioners argue that the policy of requiring resource-
specific undesignations for system sales which are not designated as
network resources by the buyer creates implementation problems.\132\
These petitioners state that the entity making the sale may have no
knowledge as to whether the sale is being used as a network resource
and, thus, would not know which undesignation rule to apply.
Petitioners also note confusion over what the seller's undesignation
obligation would be were the buyer to undesignate its purchase after
the sale is made, particularly when such activity is not known to the
seller. E.ON U.S. requests clarification that the seller in a slice-of-
system sale will not have violated the transmission provider's OATT as
a result of its counterparty's failure to designate or undesignate the
network resource as required, so long as the seller treated the slice-
of-system sale appropriately by relying on the counterparty's actions
at the commencement of the transaction. Pacific Northwest IOUs question
whether an undesignation may be made on a project basis when the
resource has been designated on a project basis.
---------------------------------------------------------------------------
\132\ E.g., Duke, E.ON U.S., EEI, and Pacific Northwest IOUs.
---------------------------------------------------------------------------
199. Several petitioners question the relevance of an off-system
buyer's designation of a system sale as a network resource on another
transmission provider system. Duke argues that a sale by its merchant
function to an off-system network customer designating the purchase as
a resource and a sale by its merchant function to an off-system power
marketer intending to resale the power elsewhere must both be
accomplished by scheduling point-to-point service from Duke to the
neighboring system. Duke contends that it makes no sense to require its
merchant to undesignate generating units used to serve one sale but not
the other, particularly since its merchant would have no knowledge of
subsequent changes in the designation status of the resource purchased
by the off-system network customer.
200. EEI states similar concern regarding the ability of a seller
to know the sink where energy from a system power sale is delivered to
an off-system buyer since the buyer may resell it to another customer.
EEI contends that the seller may not have access to the OASIS of the
transmission provider where the buyer is located and, therefore, may
not be able to determine whether the buyer has designated the purchase
as a network resource. EEI notes that, while the Commission directed
NERC and NAESB to develop processes to allow transmission personnel to
obtain access to the OASIS of other transmission providers to verify
the firmness of transmission arrangements delivering off-system
designated network resources, the Commission did not grant the same
level of OASIS access to the merchant function making sales of system
power.
201. Pacific Northwest IOUs ask the Commission to specifically
clarify that
[[Page 39119]]
the limitations stated in Order No. 890-A apply only to on-system sales
and that sellers may undesignate a slice of their system used to
support off-system sales regardless of how the buyer treats,
designates, or uses the purchased power. Pacific Northwest IOUs state
that this would be consistent with the Commission's apparent focus on
on-system sales in its discussion of this issue in Order No. 890-A. In
support of their request, Pacific Northwest IOUs state that the off-
system buyer's use of the system sale has no impact on the seller's
transmission system, including ATC.
Commission Determination
202. The Commission affirms the determination in Order No. 890-A
that a network customer and the transmission provider's merchant
function must undesignate each portion of each resource that is used to
support a sale of system power if the buyer has not designated the
purchase as a network resource.\133\ The requirement that network
customers undesignate their network resources when making firm third-
party sales was first imposed in Order No. 888 to ensure that all
designated network resources can, in fact, be called upon by the
transmission provider to serve network load:
---------------------------------------------------------------------------
\133\ See Order No. 890-A at P 947.
Absent a requirement that network resources always be available
to meet a customer's network loads, reliability of service to the
network customer as well as to native load and other network
customers could be affected * * *. If a network customer desires to
enter into a firm sale from its designated network resource * * *,
it must eliminate the appropriate resources or portions thereof from
its designated network resources pursuant to pro forma tariff
section 30.[134]
---------------------------------------------------------------------------
\134\ See Order No. 888-A at 30,326.
203. The restriction on third-party sales from designated network
resources therefore enhances the ability of the transmission provider
to plan and operate its system to integrate designated resources with
the customer's loads. Without the restriction, transmission providers
could reduce ATC by maintaining the same existing transmission
commitments for anticipated uses of the network customer's designated
resources even though the network customer has otherwise committed
those same resources to other parties on a firm basis.
204. The Commission in Order No. 890 therefore retained the
requirement to undesignate network resources that are used to support
firm third-party sales, reiterating that the undesignation and
redesignation requirements work together to promote reliability,
prevent undue discrimination, promote comparable treatment of
customers, and increase the accuracy of ATC calculations.\135\ In Order
No. 890-A, however, the Commission clarified that the requirement to
undesignate on a resource-by-resource basis does not apply to system
sales in the event the buyer has also designated the purchase as a
network resource.\136\ This clarification was provided in response to
complaints by various petitioners that keeping track of individual
generating units and amounts of generation from each unit being used to
support system sales is unduly burdensome or impossible.\137\
---------------------------------------------------------------------------
\135\ See Order No. 890 at P 1576.
\136\ See Order No. 890-A at P 947.
\137\ See id. P 936-37.
---------------------------------------------------------------------------
205. At the outset, we note that the discussion in Order No. 890-A
appears to have caused confusion by not specifically stating that the
exception to the requirement to undesignate capacity supporting a
system sale on a resource-by-resource basis for system sales that are
designated as network resources by the buyer applies only to
transactions in which the buyer and seller are located on the same
transmission system. As the Commission explained in Order No. 890-A,
when a seller's network resources are used to support an on-system
system sale, the buyer meets the informational requirements of section
29.2(v) simply by identifying the seller's system as the resource,
because the detailed operating characteristics for those generators
were already provided when they were designated by the seller.\138\ The
transmission provider is therefore already modeling power transfers
from those resources to the seller's load. The designation of a system
sale as a network resource by the buyer provides the transmission
provider adequate information to also simulate power transfers from
that resource to the buyer's load given that the transmission provider
already has information on the system resources resulting from the
seller's designation of the underlying resources. It is not necessary
to require the seller to undesignate individual resources and, instead,
the undesignation can be done on a system basis, i.e., by undesignating
an aggregate portion of network resources equal to the amount of the
system sale, but which is not attributed to any specific resource.
---------------------------------------------------------------------------
\138\ See id. P 889.
---------------------------------------------------------------------------
206. In comparison, when the buyer does not designate the system
purchase as a resource, the buyer will not be using network service to
take delivery of associated energy. In order for the buyer to schedule
point-to-point service to take delivery, the transmission customer must
identify the points of receipt and delivery for the transaction, i.e.,
the points on the host transmission system where capacity and energy
will be received from the seller and delivered to the buyer.\139\ The
point-to-point transmission reservation and the corresponding resource-
specific undesignation provide the transmission provider with the
information it needs regarding location of the particular resources
being used by the seller to source the transaction in order to model
the effect of the transaction on its transmission system and set aside
ATC accordingly. Without this information, transmission capacity
associated with integrating the seller's resources with its load could
continue to be set aside for the seller's benefit, even though the
resources have been committed for sale to third parties on a firm
basis.\140\
---------------------------------------------------------------------------
\139\ See pro forma OATT, sections 1.35, 1.36 and 13.7. The
Commission therefore stated in Order No. 890-A its expectation that
most, if not all, system sales sources from designated network
resources are themselves designated as network resources by the
buyer. See Order No. 890-A at P 947. Even if this is not the case,
as a number of petitioners argue, the Commission continues to be
concerned that system sales from units that are not designated by
the buyer as a network resource may impair the reliable planning and
operation of the transmission provider's system.
\140\ We clarify in response to the Pacific Northwest IOUs that
the Commission's reference to the undesignation of ``units'' in
paragraph 947 of Order No. 890-A was unintentionally narrow. The
restriction on certain third-party sales from a designated network
resource applies to each resource or portion thereof under section
30.4 of the pro forma OATT.
---------------------------------------------------------------------------
207. We therefore disagree that there is no support for
distinguishing sales of system power that have been designated as
network resources by the buyer and those that have not. Several
petitioners argue that the individual undesignation of network
resources used to supply system sales will not have an effect on ATC or
the reliable operation of the transmission system regardless of the
type of transmission service used to deliver the power to the buyer.
EEI, however, acknowledges that the type of transmission service used
by the buyer of system power may affect ATC associated with the
transaction, and we agree. It is for that reason that the Commission
directed transmission providers to address the effect on ATC of
designating and undesignating network resources as part of the on-going
NERC/NAESB ATC
[[Page 39120]]
standardization effort.\141\ This does not mean, as EEI suggests, that
distinguishing the seller's undesignation obligation on the actions of
the buyer undermines the buyer's access to service under the pro forma
OATT. The buyer is free to request either network or point-to-point
service as it believes best fits its needs in light of the resources it
wishes to deliver.
---------------------------------------------------------------------------
\141\ See Mandatory Reliability Standards for the Bulk-Power
System, Order No. 693, FERC Stats. & Regs. ] 31,242, at P 1041,
order on reh'g, Order No. 693-A, 120 FERC ] 61,053 (2007).
---------------------------------------------------------------------------
208. We disagree that it is unduly burdensome or complicated to
condition the seller's ability to make system sales from designated
network resources on the buyer's decision to designate the purchase as
a network resource. As explained above, the Commission has long
prohibited firm sales to third parties from any designated network
resource. The Commission has made an exception for system sales that
also have been designated as a network resource by a buyer located on
the same transmission system. This increases, not decreases,
opportunities for network customers and the transmission providers'
merchant functions to engage in transactions. Although the Commission
could further expand these opportunities by eliminating the
undesignation requirement altogether, to do so could adversely affect
the transmission provider's ability to reliably plan and operate its
system. Because the undesignation restrictions apply equally to all
designated resources and are necessary to ensure that the transmission
provider can provide reliable service to all customers, they are
therefore consistent with our obligations under FPA section 217.
209. We also conclude that concerns regarding the ability to verify
or monitor the buyer's decision to designate a purchase of system power
as a network resource are overstated in light of the clarification that
the buyer and seller must be on the same transmission system. In Order
No. 890, the Commission directed transmission providers, working
through NERC, to develop OASIS functionality for the designation of
network resources and for queries of information provided with
designation requests.\142\ Parties to a sale of system power on the
same transmission system will therefore have ready access to the
treatment of the resource. Sellers also may rely on commitments made by
the buyer to designate the purchase as a network resource.
---------------------------------------------------------------------------
\142\ See Order No. 890 at P 1477.
---------------------------------------------------------------------------
210. We reiterate that, if the particular ATC methodology used by a
transmission provider allows for flexibility in implementing the
undesignation requirements for system sales, the transmission provider
may propose a variation to the pro forma OATT in an FPA section 205
filing. In Order No. 890-A, the Commission stated that such requests
should address the Commission's concern, as stated in Order No. 888,
that network customers may have the incentive to designate unlimited
generation resources absent a prohibition on network resources
including any portion of a resource that is committed for sale to a
third party.\143\ Several petitioners argue that the Commission
mischaracterized the concern stated in Order No. 888, since there the
Commission found that the cost of excessive reserve margins acts as a
financial disincentive to overdesignate resources.\144\ However, the
reason the cost of reserve margins acts as a disincentive to
overdesignate resources is because designated resources may be used
only for certain specified purposes. It therefore remains appropriate
to require those seeking a variation from the pro forma OATT with
respect to eligibility for network resource status to address the
Commission's concern regarding overdesignation of resources. In
addition, to the extent necessary, we clarify that the transmission
provider should also address the Commission's concern, also stated in
Order No. 888-A and reiterated above, that sales from designated
network resources not impair the reliable planning and operation of the
transmission provider's system.
---------------------------------------------------------------------------
\143\ See Order No. 890-A at P 951.
\144\ Quoting Order No. 888 at 31,754.
---------------------------------------------------------------------------
(3) General
211. In response to requests for rehearing, the Commission in Order
No. 890-A amended sections 1.26 and 30.4 of the pro forma OATT to make
clear that network resources do not have to be undesignated before they
are used to support the provision of reserve energy under a Commission-
approved reserve sharing agreement.
Requests for Rehearing and Clarification
212. E.ON U.S. requests clarification that the exception to the
requirement for undesignation for resources used to support the
provision of reserve energy under a Commission-approved reserve sharing
agreement also applies to back-up power sales, which E.ON U.S.
describes as long-term, cost-based sales aimed at substituting power
for generation that is not available for reasons such as planned or
forced outages, curtailments, or unit de-ratings. E.ON U.S. argues
that, like reserve sharing arrangements, back-up power sales are made
for reliability purposes and may require the provision of energy within
a timeframe that is too short for the seller to undesignate the
resource. E.ON U.S. states that back-up power sales are not limited to
per se emergency situations, but rather are necessary to avert
emergencies.
213. TDU Systems seek clarification of the determination in Order
No. 890-A that network resources do not have to be undesignated before
they are used to support the provision of reserve energy under a
Commission-approved reserve sharing agreement. TDU Systems question
whether the Commission intended to impose an additional approval
process for reserve-sharing agreements being made from designated
network resources. TDU Systems seek guidance regarding which reserve
sharing agreements qualify as Commission-approved and what criteria a
reserve sharing agreement must meet in order to be approved. TDU
Systems ask whether, for example, existing Commission-approved
bilateral interchange agreements providing for emergency and
maintenance services between and among utilities qualify. TDU Systems
also seek clarification that Order No. 890-A is not excluding from this
exception interchange agreements or reserve-sharing agreements among
non-jurisdictional entities.
Commission Determination
214. The Commission declines to expand the categories of third-
party sales that can be made from designated network resources to
include back-up power sales, as requested by E.ON U.S. Network
customers and the transmission provider's merchant function are
permitted to use designated network resources to fulfill obligations
under reserve-sharing agreements given the particular nature of those
transactions, which involve the need to deliver power to counterparties
promptly during emergency situations. E.ON. U.S. acknowledges that,
unlike reserve-sharing agreements, back-up power sales are not limited
to emergency situations. E.ON U.S. has not justified further expanding
the categories of third-party sales that may be made from designated
network resources.
215. In response to TDU Systems, we grant rehearing of Order No.
890-A to eliminate the requirement that a reserve sharing program be
approved by the Commission in order for a network customer or the
transmission provider's
[[Page 39121]]
merchant function to use a designated network resource to meet its
reserve sharing obligations.\145\ As TDU Systems explain, certain
reserve sharing arrangements may not be subject to our jurisdiction,
and the Commission did not intend in Order No. 890-A to establish new
criteria for reviewing and approving reserve sharing arrangements in
this proceeding. We clarify, however, that, for purposes of sections
1.26 and 30.4 of the pro forma OATT, a reserve sharing program must
limit service to the sharing of contingency reserves among the members
for emergencies \146\ and the ability to use designated network
resources to support reserve sharing obligations does not extend to
other types of third-party sales. Any use of designated network
resources for reserve sharing events would be subject to justification
during an audit.
---------------------------------------------------------------------------
\145\ We also revise sections 29.2(viii), 30.1 and 30.2 of the
pro forma OATT to include references to the use of network resources
to meet reserve sharing obligations. These tariff revisions do not
relieve participants to an otherwise jurisdictional reserve sharing
arrangement of any obligations they may have under FPA section 205
to obtain Commission approval for that arrangement.
\146\ See, e.g., Sw. Reserve Sharing Group, 83 FERC ] 61,314
(1998), reh'g denied, 95 FERC ] 61,071 (2001).
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5. Clarifications Related to Network Service
216. In Order No. 890-A, the Commission reiterated that the pro
forma OATT permits transmission customers to exclude the entirety of a
discrete load from network service and serve such load with the
customer's behind the meter generation and through any needed point-to-
point service, thereby reducing the network customer's load ratio
share. In other situations, use of point-to-point service by network
customers is in addition to network service and, therefore, does not
serve to reduce their network load. With regard to concerns about
insufficient transmission to serve a network customers' entire load,
the Commission stated that it failed to understand how, under normal
circumstances, the transmission provider has no capacity to serve a
load that has been designated by the network customer. Once a load has
been designated, it is the obligation of the transmission provider to
serve that load and to plan its system so that the load can be
accommodated in the future.
Requests for Rehearing and Clarification
217. Pacific Northwest IOUs request clarification that there is no
per se prohibition on a transmission customer using both point-to-point
and network service to serve load in the same balancing authority area,
provided that the point-to-point service is acquired in addition to the
customer's network service payment obligation and provided that all
other conditions for the use of point-to-point service are satisfied.
Pacific Northwest IOUs argue that, for certain compliance and
commercial reasons (e.g., lack of sufficient allocated network
service), point-to-point service can be an appropriate and important
adjunct to network service even considering the added cost of the
point-to-point purchase. Where load ratio share obligations are not at
issue, Pacific Northwest IOUs argue that transmission customers should
be permitted to use both point-to-point and network service.
218. EEI and E.ON U.S. request clarification of the Commission's
statement in Order No. 890-A that, once a load has been designated by
the network customer, it is the obligation of the transmission provider
to serve that load and to plan its system so that the load can be
accommodated in the future.\147\ These petitioners ask the Commission
to confirm that a transmission provider has the obligation to serve and
plan for a network customer's load only to the extent that the customer
has designated sufficient network resources to serve that load. In
their view, section 28.2 of the pro forma OATT requires only that a
transmission provider plan for and construct transmission facilities
sufficient to deliver energy from the network customer's network
resources to meet the customer's network load on a basis comparable to
the transmission provider's delivery of its own generating and
purchased resources to its native load customers. EEI contends that the
requirement of section 29.2(v) to provide projections of network
resources further confirms that the transmission provider is only
required to plan for and construct transmission facilities required to
deliver the network customer's energy from resources designated or
forecasted by the network customer. E.ON U.S. argues that failure to
provide the requested clarification could result in transmission
providers having to guess where facilities will need to be built in
order to serve load.
---------------------------------------------------------------------------
\147\ See Order No. 890-A at P 971.
---------------------------------------------------------------------------
Commission Determination
219. The Commission clarifies, to the extent necessary, that there
is no per se prohibition on a transmission customer using both point-
to-point and network transmission service, but that any use of point-
to-point service by a network customer does not decrease the size of
the network customer's load for purposes of calculating its load ratio
share payment obligations except to the extent the discrete load being
served has been excluded in its entirety from network service. In
response to EEI and E.ON U.S., we clarify that the Commission did not
intend in Order No. 890-A to modify the obligation of transmission
providers under section 28.2 of the pro forma OATT to endeavor to
construct and place into service sufficient transfer capability to
deliver the network customer's network resources to serve its network
load on a basis comparable to the transmission provider's delivery of
its own generating and purchased resources to its native load
customers. The statement questioned by petitioners was made in response
to requests for an exception from load ratio pricing when a particular
network load cannot be entirely served by the transmission provider's
system without upgrades.\148\ The Commission rejected that request,
explaining that the transmission provider should be planning its system
to serve its network customers' designated loads and that situations in
which a particular designated load cannot be served are best addressed
on a case-by-case basis. We agree, however, that the obligation of the
transmission provider to adequately plan for the needs of its network
customers is of course dependent on the network customer designating
adequate network resources as well as providing information regarding
its forecasted loads and resources, as required under section 29.2 of
the pro forma OATT.
---------------------------------------------------------------------------
\148\ See Order No. 890-A at P 971.
---------------------------------------------------------------------------
6. OATT Definitions
a. Non-Firm Sales
220. In Order No. 890, the Commission adopted the following
definition of Non-Firm Sales to identify more clearly those types of
sales that are permitted from designated network resources: ``An energy
sale for which receipt or delivery may be interrupted for any reason or
no reason, without liability on the part of either the buyer or
seller.'' The Commission concluded that it would be inappropriate to
adopt commenter suggestions to relax the definition of a Non-Firm Sale
to include any sale that is not otherwise firm enough to be designated
as a network resource.
221. In Order No. 890-A, the Commission clarified that, under
normal circumstances, a system sale that permits curtailment without
penalty to serve the seller's native load
[[Page 39122]]
would fall within the definition of a Non-Firm Sale since the seller
would have the right to rely on that capacity in the event it is needed
to serve native load, which the Commission stated is the principle
concern in restricting sales from designated network resources to non-
firm sales. The Commission disagreed with petitioners arguing that the
definition of Non-Firm Sales includes transactions that permit
interruption with financial liability, whether make whole or limited to
certain penalties, explaining that any interruption in service that
would create liability on the part of the seller would create
conflicting incentives regarding use of the network resource.
222. The Commission also denied requests to amend the definition of
Non-Firm Sales to accommodate the particular market operations of each
RTO and ISO. The Commission acknowledged that centralized dispatch in
those markets may very well eliminate any effect that temporary
resource undesignations and redesignations have on dispatch or ATC
calculations and, therefore, tailoring the rules governing the
designation of network resources to each RTO/ISO market could be
appropriate.
Requests for Rehearing and Clarification
223. TAPS argues that the Commission's determinations in Order No.
890 regarding the sales that may be made from a network resource
without undesignation leaves the OATT in a state of confusion that will
make compliance by transmission providers and network customers
hazardous. TAPS contends allowing sales that are curtailable for native
load reliability purposes, not economics, to be considered non-firm
sales is in conflict with the plain language of the definition, which
is strictly limited to sales that are interruptible for any or no
reason. TAPS contends this modifies without explanation the
Commission's clarification provided in Order No. 890 that energy sales
that can be interrupted to maintain system reliability are considered
firm sales.\149\
---------------------------------------------------------------------------
\149\ Citing Order No. 890 at P 1688, 1692.
---------------------------------------------------------------------------
224. TAPS argues that the Commission's focus in Order No. 890-A on
the ability to curtail sales (without liability) for native or network
load is inconsistent with the Non-Firm Sales definition and produces
illogical results, allowing the same recallable sale to be
simultaneously both non-firm for the seller and firm for the buyer and,
as a result, be designated twice. At the same time, TAPS argues, the
Commission expanded the class of sales that are neither firm nor non-
firm sales by clarifying that sales that may be interrupted for any
reason, but with potential liability, do not fall within the definition
of Non-Firm Sales. TAPS contends that finding a total bar on recall for
native load economic purposes, as in the case of curtailable sales, to
be less of a disincentive than the ability to recall for native load
with potential liability, no matter how small, defies common sense and
is not supported by evidence. TAPS notes that commenters at the July 30
technical conference in this proceeding stated that sellers were moving
away from participation in the Midwest ISO day-ahead market because of
uncertainties about redesignation if an undesignated resource selling
into that market were needed in real time to serve native load due to a
real-time contingency. TAPS argues that the obligation to pay the real-
time locational marginal price (LMP) would not create a disincentive to
recall the sale if needed for native load and, to the contrary, the
flexibility to interrupt for any reason or no reason to meet native
load needs is so valuable that uncertainties associated with
undesignation deter sales into RTO markets from resources that are
designated within and outside the RTO.
225. TAPS contends that distinguishing between curtailable sales
that may be made from designated network resources and fully
interruptible sales that entail some financial liability runs counter
to the fundamental principle that it is the nature of the delivery
obligation, not the LD provisions, that determine whether a resource is
sufficiently firm to qualify for designation as a network
resource.\150\ TAPS states that Order No. 890 suggested that the
existence of any financial liability controls whether a sale may be
deemed a non-firm sale, regardless of the nature of the seller's
obligation to deliver, while Order No. 890-A relies on restrictions to
warrant exclusion of unit contingent sales from the definition of Non-
Firm Sales.\151\ TAPS argues that the Commission has failed to provide
any consistently applied standard that network customers and
transmission providers can use to determine whether a sale qualifies as
a non-firm sale, much less one that conforms to the new definition.
---------------------------------------------------------------------------
\150\ Citing id. P 1452; Dynegy Midwest Generation, Inc. v.
Commonwealth Edison Co., 101 FERC ] 61,295, at P 1 (2002), reh'g
dismissed as moot, 108 FERC ] 61,175 (2004).
\151\ Citing Order No. 890-A at P 1016.
---------------------------------------------------------------------------
226. TAPS also argues that the Commission's determinations do not
make sense from the standpoint of freeing up ATC since sales that are
curtailable for reliability reasons may be designated as network
resources by both the buyer and seller. TAPS contends that dual
designation potentially double counts resources for ATC purposes, tying
up firm ATC potentially on a long-term basis. In contrast, TAPS
continues, day-ahead hourly sales that can be interrupted for any or no
reason, that have been treated as non-firm, and that are not and could
not be designated as network resources by the buyer require
undesignation because the potential for any financial consequence of
interruption disqualifies them as Non-Firm Sales. TAPS argues that the
only ATC that might be created by such undesignations would be very
short-term. Pending the results of on-going standards development work
with NERC and NAESB, TAPS contends it is not clear whether such short-
term undesignations will create firm capacity more useable than the
unused non-firm capacity released by the transmission provider without
undesignation.
227. TAPS objects to the Commission's determination in Order No.
890-A that issues related to sales into RTO markets should be dealt
with in the context of individual requests for deviation from the pro
forma OATT. Although issues pertaining to the ability of a network
customer within an RTO to use its network resources to participate in
the RTO's day-ahead market can be addressed in the RTO tariff, TAPS
argues that restrictions on use by a network customer outside the RTO
of its network resources designated on another transmission provider's
system cannot be addressed through modifications to the RTO's tariff.
TAPS therefore argues that the Commission can avoid discouraging
network customers (and transmission providers) located outside an RTO
from selling into the RTO's day-ahead market only by modifying the pro
forma OATT.
228. TAPS maintains that the Commission's application and
interpretation of the Non-Firm Sales definition creates new barriers to
precisely the type of cross-border sales the Commission is trying to
encourage.\152\ TAPS argues that supply limitations resulting from
applying undesignation requirements to sales into RTO day-ahead markets
could needlessly increase prices in such markets and potentially affect
reliability. Those located outside RTO markets, TAPS continues, would
be most reluctant to sell into RTO markets
[[Page 39123]]
during peak conditions, when transmission is scarce and there are
concerns about redesignation in the event the energy is needed for
native load, thus depriving RTOs of supply offers when they need them
the most.
---------------------------------------------------------------------------
\152\ Citing Wis. Pub. Serv. Corp. v. Midwest Indep.
Transmission Sys. Operator, Inc., 120 FERC ] 61,269, at P 58 (2007).
---------------------------------------------------------------------------
229. TAPS further argues that the lack of clarity in the
Commission's application of the Non-Firm Sales definition may
discourage sales into organized markets even in situations where there
is a trivial financial consequence to permissible interruptions that
the Commission could not rationally conclude would pose any
disincentive to recall for network load needs. TAPS states that RTO
scheduling deadlines may result in some short period of liability for
real-time LMPs even where market participants retain rights to change
their bids and schedules. For example, TAPS explains, market
participants submitting offers into MISO's real-time market from
external generators must provide notice prior to 30 minutes before the
operating hour in order to make effective their right to change their
offers in the real-time market, i.e., to interrupt for any or no
reason. TAPS states that the network customer seeking to recall its
interruptible sale would therefore be subject to financial consequences
during the notice period. TAPS questions whether that financial
responsibility is sufficient to bar sales without undesignation.
230. TAPS suggests that the Commission reassess what it was seeking
to achieve through clarification of the non-firm sales that can be made
from network resources without undesignation, remove the definition of
Non-Firm Sales, and enunciate clear and consistent principles for
discerning whether, considering the nature of the delivery obligation,
a sale can be made from a network resource without undesignation. Such
principles, TAPS argues, should not assume that the mere existence of
any financial liability creates improper incentives, thereby giving
undue emphasis to what is likely to be a minor factor affecting a
network customer's ability to interrupt the sale in favor of native
load, assuming the contract permits interruption for any reason or no
reason. TAPS contends that the Commission should expressly permit
short-term sales, such as sales into organized day-ahead and real-time
markets, that involve no obligation to deliver (and can be entered by
virtual traders with nothing to deliver) to be made from a network
resource without undesignation.
231. If the Commission retains the Non-Firm Sale definition, TAPS
asks the Commission to construe it consistently with the firmness of
the delivery obligation and make clear that it takes more than the
liabilities associated with sales into day-ahead, and to eliminate any
doubt same-day, RTO markets to disqualify such interruptible sales from
treatment as Non-Firm Sales. Because of the importance of supporting
short-term competitive markets, TAPS alternatively requests that the
Commission make this clear by creating an additional exception to
section 30.4 of the pro forma OATT, like the new exception for sales
pursuant to Commission-approved reserve sharing agreements, to permit
use of network resources without undesignation for day-ahead and same-
day sales that are subject to interruptions, without regard to the
liabilities associated with such interruptions.
232. At a bare minimum, TAPS argues, the Commission should provide
more realistic guidelines for the level of liability it views as
providing incentives that disqualify an interruptible sale from being
considered a Non-Firm Sale so that concerns about avoiding potential
tariff violations do not discourage transactions that the Commission
intends to permit without undesignation. TAPS suggests, for example,
that the Commission might reasonably conclude that liabilities
restricted to notice periods applicable to the interruption of a sale
do not trigger the need for undesignation. TAPS argues that it is
plainly inconsistent with market realities for the Commission to assume
that any liability for interruption of a third-party sale, no matter
how insignificant, will create incentives incompatible with the use of
network resources for network load.
233. E.ON U.S. agrees with TAPS that excluding sales into the
Midwest ISO market is a disincentive for sellers to participate in that
market because the Commission's undesignation requirements are not
easily adaptable to such market activity. E.ON U.S. also asks the
Commission to revise the definition of Non-Firm Sales to include sales
into organized RTO markets. In the alternative, E.ON U.S. requests that
the Commission clarify that it will consider transmission providers'
modifications to the definition of Non-Firm Sales in order to
accommodate sales into RTO/ISO markets.
Commission Determination
234. The Commission affirms the decision in Order No. 890-A not to
amend the definition of Non-Firm Sales adopted in Order No. 890.\153\
Section 30.4 of the pro forma OATT, as amended in this order, restricts
the operation of a network customer's designated network resources such
that the output of those facilities does not exceed the sum of the
network customer's designated load, non-firm sales, losses, and sales
under a reserve sharing agreement. This prohibits the transmission
provider or a network customer from using a designated resource for
third-party sales that do not fall within one of the specified
categories. At times, the Commission has generally referred to this
prohibition as a limitation on firm third-party sales from designated
network resources.\154\ To be more specific, network customers may not
operate designated network resources except for those purposes
specified in section 30.4.
---------------------------------------------------------------------------
\153\ See Order No. 890-A at P 1016.
\154\ See NOPR at P 422; Order No. 890 at P 1539; Order No. 890-
A at P 951.
---------------------------------------------------------------------------
235. The limitation on the use of designated network resources is
closely related to the restriction on the type of resources that may be
designated for use to serve network or native load. Together, these
rules ensure that only the appropriate amount of network resources is
designated and, in turn, that excessive amounts of transmission
capacity for network and native load uses are not set aside and
therefore made unavailable to others seeking transmission service. We
recognize that there is a trade off between the long-term structural
efficiencies promoted by the network resource rules and the real-time
market efficiencies that would come from allowing alternative, flexible
use of designated network resources. In Order No. 888, the Commission
balanced these considerations and determined that concerns regarding
the over-designation of resources and the reliable operation of the
system supported the more restrictive rules to which TAPS objects.
236. In Order No. 888, the Commission explained that restricting
the ability to designate resources only to those resources that are
owned or committed for purchase provides a financial incentive for
network customers and the transmission provider's merchant function not
to oversubscribe their capacity requirements.\155\ Because a designated
network resource must be owned or committed for purchase and may be
used only for certain purposes, network customers and the transmission
provider's merchant function are encouraged to designate only those
resources that they anticipate needing to serve network load.
Otherwise, costs
[[Page 39124]]
would be incurred to acquire resources that could go unused. These
financial incentives are essential to ensuring just and reasonable
transmission service to all customers since, each time a network
resource is designated, the transmission provider sets aside ATC as
necessary to allow that resource to be used to serve network or native
load. If network customers and the transmission providers' merchant
function were allowed to earn revenues from alternative sales without
appropriate limitations, the financial disincentive to over-designate
network resources would be diminished. This in turn could negatively
impact other customers since an increase in the number of resource
designations can decrease the amount of ATC that is available for
competing uses.
---------------------------------------------------------------------------
\155\ See Order No. 888 at 31,754.
---------------------------------------------------------------------------
237. TAPS fails to address this broader policy consideration and,
instead, focuses solely on the short-term benefits that may result from
relaxing the designation rules. We agree that more flexible use of
designated network resources could increase efficiencies in the short-
term, but conclude that such efficiencies would come at the expense of
long-term efficiency in the operation of the transmission system.
Allowing designated network resources to be used for additional short-
term purposes as proposed by TAPS would undermine competing incentives
not to over-designate resources in the first place and could lead to
transmission capacity being set aside for network and native load use
to the detriment of other customers.\156\
---------------------------------------------------------------------------
\156\ Because rates for network service are calculated on a
load-ratio basis, the amount of resources designated has no impact
on the transmission rate paid by the customer and, therefore, does
not discourage the over-designation of resources by network
customers.
---------------------------------------------------------------------------
238. In light of these competing considerations, the Commission in
Order No. 890 carefully crafted the definition of Non-Firm Sales to
ensure that, pursuant to section 30.4, network resources are not used
to support sales in a way that creates conflicting incentives regarding
the designation and use of network resources.\157\ Petitioners have
failed to demonstrate that elimination or amendment of this definition
is either necessary or appropriate. TAPS contends that the obligation
of a seller to pay the real-time LMP if it fails to deliver in response
to bids in a day-ahead market may be negligible and, therefore, such
sales should be considered non-firm for purposes of the network
resource rules. While that obligation may be minimal in some
circumstances, it may be substantial in others, particularly during
conditions when sellers are most likely to want or need to recall such
power. The sales that TAPS argues are non-firm enough to be made from a
network resource do have financial implications, potentially creating
disincentives to interrupt delivery if capacity is actually needed for
native or network load, even though ATC may have otherwise been set
aside for that use.
---------------------------------------------------------------------------
\157\ See Order No. 890 at P 1691; Order No. 890-A at P 1017.
---------------------------------------------------------------------------
239. We agree with TAPS, however, that the language of the
definition does not accurately capture the clarification provided in
Order No. 890-A that designated network resources may be used to
support third-party sales that permit curtailment without penalty to
serve the seller's network or native load.\158\ There the Commission
stated that such sales fall within the definition of Non-Firm Sales
since the seller would have the right to rely on that capacity in the
event it is needed to serve native load. Upon further consideration, we
conclude that such sales do not fall within the definition of Non-Firm
Sales because they do not permit interruption for any or no reason, as
required by the definition. We therefore grant rehearing of the
determination that such sales fall within the definition of Non-Firm
Sales.
---------------------------------------------------------------------------
\158\ See Order No. 890-A at P 1016.
---------------------------------------------------------------------------
240. We nevertheless affirm the underlying conclusion in Order No.
890-A that designated network resources may be used to support sales
that permit curtailment without penalty to serve the seller's native or
network load and amend section 30.4 of the pro forma OATT to make that
clear. As the Commission explained in Order No. 890-A, those
transactions give the seller the right to rely on the underlying
capacity in the event it is needed to serve native or network
load.\159\ In Order No. 890-A, the Commission characterized this as its
principal concern in restricting sales from designated network
resources to non-firm sales. TAPS misconstrues this statement as
indicating the Commission is not also concerned about competing
incentives created by third-party sales from designated network
resources or the effect of such sales on the calculation of ATC. As we
explain above, that is not the case and, to the extent necessary, we
clarify that the contractual ability of the seller to rely on capacity
to serve native or network load is but one of the concerns underlying
the Commission's policy restricting the type of third-party sales that
can be made from network resources.
---------------------------------------------------------------------------
\159\ See Order No. 890-A at P 1016. From the seller's
perspective, then, the resource satisfies the definition of Network
Resource in section 1.26 of the pro forma OATT because it can be
called upon to meet the seller's load on a non-interruptible basis
during system reliability conditions.
---------------------------------------------------------------------------
241. We acknowledge that, under the Commission's designation
policies, sales that may be curtailed without penalty to serve native
or network load may be designated as a network resource by both the
seller and the buyer.\160\ We also acknowledge that allowing these
sales from designated network resources could be viewed as inconsistent
with the policy considerations that cause us to otherwise limit the
type of sales that may be made from those resources. We conclude,
however, that this exception is necessary to ensure that the seller is
able to access these resources during curtailment conditions, when
power is needed by the seller to meet its load. Curtailments are
triggered by system reliability conditions, and requiring the seller to
redesignate a network resource in order to recall a curtailed delivery
would impede the seller's ability to quickly respond to those
conditions. We note that transmission providers have been directed to
address the effect on ATC of designating and undesignating network
resources as part of the on-going NERC/NAESB standardization
effort.\161\ Any concerns regarding the proper modeling of designations
involving resources that have been sold to others on a curtailable
basis should be addressed through the NERC/NAESB process.
---------------------------------------------------------------------------
\160\ See WPPI, 84 FERC at 61,652 (contracts curtailable by the
seller to preserve service to native load are eligible for
designation as a network resource).
\161\ See Order No. 693 at P 1041.
---------------------------------------------------------------------------
242. We disagree with TAPS that allowing sales that are curtailable
without penalty to be supplied from designated network resources is
inconsistent with Order No. 890. TAPS contends that the Commission
adopted in Order No. 890 the NOPR proposal to clarify that, for the
purposes of applying section 30.4, energy sales that can only be
interrupted to maintain system reliability would be considered firm
sales.\162\ Although the Commission noted that proposal in Order No.
890, it did not specifically adopt it and, instead, simply adopted the
proposed definition of Non-Firm Sale and incorporated that definition
into section 30.4.\163\ Southern then requested clarification of Order
No. 890 on this issue, asking whether sales permitting curtailment
without penalty to serve the
[[Page 39125]]
seller's native load can be treated as non-firm sales under section
30.4.\164\ The Commission ultimately addressed the issue, then, in
Order No. 890-A by stating that such sales could be treated as non-firm
sales.\165\ The Commission corrects that determination above, resolving
the potential inconsistency cited by TAPS.
---------------------------------------------------------------------------
\162\ See NOPR at P 462.
\163\ Compare Order No. 890 at P 1688 with id. P 1692.
\164\ See Order No. 890-A at P 1011.
\165\ See id. P 1016.
---------------------------------------------------------------------------
243. We also disagree that the Commission's treatment of sales
curtailable without penalty to serve native or network load conflicts
with the determination in Order No. 890-A that, under normal
circumstances, unit contingent sales would not fall within the
definition of a Non-Firm Sale because delivery typically can be
interrupted only for the specific reasons identified in the underlying
agreement.\166\ While it is true that sales curtailable without penalty
to serve native or network load may be curtailed only for specified
reasons, i.e., system reliability conditions, it does not follow that
allowing those sales to be made from designated network resources
conflicts with disallowing unit contingent sales. As we explain above,
it is appropriate to allow curtailable sales from designated network
resources because of the particular reliability-related situations
giving rise to the seller's ability and need to curtail deliveries for
the benefit of native or network load.
---------------------------------------------------------------------------
\166\ See id. P 1016.
---------------------------------------------------------------------------
244. We reiterate that the Commission is not insensitive to
concerns about the effect the undesignation policies may have on RTO/
ISO markets. As the Commission explained in Order No. 890-A, RTOs and
ISOs have adopted many variations from the pro forma OATT to facilitate
development of their markets, with some entirely eliminating the
designation/undesignation requirements for network resources.\167\ The
Commission has since specifically directed the Midwest ISO to revise
its OATT to eliminate the requirement that network resources be
undesignated prior to selling into the Midwest ISO markets, finding
that undesignation is not necessary to account for effects on ATC
because those markets are centrally dispatched without regard to
physical transmission rights.\168\
---------------------------------------------------------------------------
\167\ See id. P 1017.
\168\ See Midwest Indep. Sys. Operator, Inc., 123 FERC ] 61,154,
at P 89 (2008).
---------------------------------------------------------------------------
245. We disagree, however, that changes to the pro forma OATT are
necessary to facilitate sales into the organized day-ahead markets from
designated network resources located outside the RTO/ISO regions. Even
if such sales are fully interruptible by the seller, the competing
economic incentives that may arise from failure to deliver support the
requirement to first undesignate the network resource prior to using it
to support such sales. As we explain above, failing to require
undesignation could result in the host transmission provider reducing
ATC by maintaining the same existing transmission commitments for the
seller's use of the designated network resource even though the seller
is otherwise using the resource to support off-system sales.
246. We therefore continue to believe that it is reasonable to
require sellers to undesignate resources being used to supply third-
party sales for which there is liability for interruption except in
those circumstances identified in section 30.4 of the pro forma OATT.
However, we appreciate that the restrictions on the use of designated
network resources can have a negative impact on real-time liquidity by
limiting the flexibility of network customers and the transmission
provider's merchant function. Since adoption of the pro forma OATT, the
Commission has recognized that there may be circumstances in which a
transmission provider believes that the pro forma OATT does not provide
sufficient flexibility and, as a result, transmission providers have
been given the opportunity to propose superior non-rate terms and
conditions to address such concerns.\169\ We encourage network
customers and transmission provider merchant functions to work with
their transmission providers to explore ways to accommodate the more
flexible use of designated network resources suggested by TAPS without
adversely affecting other customers or the reliable operation of the
system.
---------------------------------------------------------------------------
\169\ Order No. 888 at 31,770.
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b. Transmission Customer
247. Section 1.49 of the pro forma OATT defines a Transmission
Customer as ``Any Eligible Customer (or its Designated Agent) that (i)
executes a Service Agreement, or (ii) requests in writing that the
Transmission Provider file with the Commission, a proposed unexecuted
Service Agreement to receive transmission service under Part II of the
Tariff. This term is used in the Part I Common Service Provisions to
include customers receiving transmission service under Part II and Part
III of this Tariff.'' The Commission did not amend this definition in
Order Nos. 890 or 890-A.
Requests for Rehearing and Clarification
248. Southern requests rehearing of the Commission's definition of
Transmission Customer to include an eligible customer with an executed
or proper unexecuted service agreement under Part II or Part III of the
pro forma OATT. Southern contends that the existing reference in the
second sentence of the definition merely relates to how the term is
used in Part I and that the proposed revision is therefore necessary to
avoid the implication that a transmission customer does not include
network customers in other portions of the pro forma OATT.
Commission Determination
249. The Commission did not propose to amend the definition of
Transmission Customer in the NOPR, nor did commenters propose such an
amendment in response to the NOPR. As a result, the definition of
Transmission Customer was not addressed in Order Nos. 890 or 890-A.
Southern's request for rehearing is therefore beyond the scope of this
proceeding.
III. Information Collection Statement
250. The Office of Management and Budget (OMB) regulations require
that OMB approve certain information collection requirements imposed by
an agency.\170\ The revisions to the information collection
requirements for transmission providers adopted in Order No. 890 were
approved under OMB Control Nos. 1902-0233. This order further revises
these requirements in order to more clearly state the obligations
imposed in Order No. 890, but does not substantively alter those
requirements. OMB approval of this order is therefore unnecessary.
However, the Commission will send a copy of this order to OMB for
informational purposes only.
---------------------------------------------------------------------------
\170\ 5 CFR 1320 (2007).
---------------------------------------------------------------------------
IV. Document Availability
251. In addition to publishing the full text of this document in
the Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
252. From FERC's Home Page on the Internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and
[[Page 39126]]
Microsoft Word format for viewing, printing, and/or downloading. To
access this document in eLibrary, type the docket number excluding the
last three digits of this document in the docket number field.
253. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at
public.referenceroom@ferc.gov.
V. Effective Date and Congressional Notification
254. Changes to Order Nos. 890 and 890-A adopted in this order on
rehearing and clarification will become effective September 8, 2008.
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
The following appendices will not appear in the Code of Federal
Regulations:
Appendix A: Petitioners' Acronyms
----------------------------------------------------------------------------------------------------------------
Abbreviation Petitioner names
----------------------------------------------------------------------------------------------------------------
APPA Joint Filers................................................ American Public Power Association, National
Rural Electric Cooperative Association,
Transmission Access Policy Study Group, and
Transmission Dependent Utility Systems.
Cargill.......................................................... Cargill Power Marketers, LLC.
Deseret.......................................................... Desert Generation & Transmission Co-
operative, Inc.
Duke............................................................. Duke Energy Corp.
East Texas Cooperatives.......................................... East Texas Electric Cooperative, Inc.;
Northeast Texas Electric Cooperative, Inc.;
Sam Rayburn Generation and Electric
Cooperative, Inc. and Tex-La Electric
Cooperative of Texas, Inc.
EEI.............................................................. Edison Electric Institute.
Entergy.......................................................... Entergy Services, Inc.
E.ON U.S......................................................... E.ON U.S. LLC.
East Texas Cooperatives.......................................... East Texas Electric Cooperative, Inc.;
Northeast Texas Electric Cooperative, Inc.;
Sam Rayburn Generation and Electric
Cooperative, Inc. and Tex-La Electric
Cooperative of Texas, Inc.
FMPA............................................................. Florida Municipal Power Agency.
Florida Power.................................................... Florida Power & Light Co.
NRECA............................................................ National Rural Electric Cooperative
Association.
NYISO............................................................ New York Independent System Operator.
Pacific Northwest IOUs........................................... Avista Corp., Idaho Power Co., PacifiCorp,
Portland General Electric Co., and Puget
Sound Energy, Inc.
Schedule 20A Service Providers................................... Bangor Hydro-Electric Co., Boston Edison Co.,
Commonwealth Electric Co., and Cambridge
Electric Light Co.
Sempra Global.................................................... Sempra Global.
Southern......................................................... Southern Company Services, Inc.
TranServ......................................................... TranServ International, Inc.
TAPS............................................................. Transmission Access Policy Study Group.
TDU Systems...................................................... Transmission Dependent Utilities Systems.
----------------------------------------------------------------------------------------------------------------
Appendix B--RM05-17-003 & RM05-25-003 (Issued)
Pro Forma Open Access Transmission Tariff
Table of Contents
I. Common Service Provisions
1 Definitions
1.1 Affiliate
1.2 Ancillary Services
1.3 Annual Transmission Costs
1.4 Application
1.5 Commission
1.6 Completed Application
1.7 Control Area
1.8 Curtailment
1.9 Delivering Party
1.10 Designated Agent
1.11 Direct Assignment Facilities
1.12 Eligible Customer
1.13 Facilities Study
1.14 Firm Point-To-Point Transmission Service
1.15 Good Utility Practice
1.16 Interruption
1.17 Load Ratio Share
1.18 Load Shedding
1.19 Long-Term Firm Point-To-Point Transmission Service
1.20 Native Load Customers
1.21 Network Customer
1.22 Network Integration Transmission Service
1.23 Network Load
1.24 Network Operating Agreement
1.25 Network Operating Committee
1.26 Network Resource
1.27 Network Upgrades
1.28 Non-Firm Point-To-Point Transmission Service
1.29 Non-Firm Sale
1.30 Open Access Same-Time Information System (OASIS)
1.31 Part I
1.32 Part II
1.33 Part III
1.34 Parties
1.35 Point(s) of Delivery
1.36 Point(s) of Receipt
1.37 Point-To-Point Transmission Service
1.38 Power Purchaser
1.39 Pre-Confirmed Application
1.40 Receiving Party
1.41 Regional Transmission Group (RTG)
1.42 Reserved Capacity
1.43 Service Agreement
1.44 Service Commencement Date
1.45 Short-Term Firm Point-To-Point Transmission Service
1.46 System Condition
1.47 System Impact Study
1.48 Third-Party Sale
1.49 Transmission Customer
1.50 Transmission Provider
1.51 Transmission Provider's Monthly Transmission System Peak
1.52 Transmission Service
1.53 Transmission System
2 Initial Allocation and Renewal Procedures
2.1 Initial Allocation of Available Transfer Capability
2.2 Reservation Priority For Existing Firm Service Customers
3 Ancillary Services
3.1 Scheduling, System Control and Dispatch Service
3.2 Reactive Supply and Voltage Control from Generation or Other
Sources Service
3.3 Regulation and Frequency Response Service
3.4 Energy Imbalance Service
3.5 Operating Reserve--Spinning Reserve Service
3.6 Operating Reserve--Supplemental Reserve Service
3.7 Generator Imbalance Service
4 Open Access Same-Time Information System (Oasis)
5 Local Furnishing Bonds
5.1 Transmission Providers That Own Facilities Financed by Local
Furnishing Bonds
5.2 Alternative Procedures for Requesting Transmission Service
6 Reciprocity
7 Billing and Payment
7.1 Billing Procedure
[[Page 39127]]
7.2 Interest on Unpaid Balances
7.3 Customer Default
8 Accounting for the Transmission Provider's Use of the Tariff
8.1 Transmission Revenues
8.2 Study Costs and Revenues
9 Regulatory Filings
10 Force Majeure and Indemnification
10.1 Force Majeure
10.2 Indemnification
11 Creditworthiness
12 Dispute Resolution Procedures
12.1 Internal Dispute Resolution Procedures
12.2 External Arbitration Procedures
12.3 Arbitration Decisions
12.4 Costs
12.5 Rights Under the Federal Power Act
II. Point-To-Point Transmission Service
13 Nature of Firm Point-To-Point Transmission Service
13.1 Term
13.2 Reservation Priority
13.3 Use of Firm Transmission Service by the Transmission
Provider
13.4 Service Agreements
13.5 Transmission Customer Obligations for Facility Additions or
Redispatch Costs
13.6 Curtailment of Firm Transmission Service
13.7 Classification of Firm Transmission Service
13.8 Scheduling of Firm Point-To-Point Transmission Service
14 Nature of Non-Firm Point-To-Point Transmission Service
14.1 Term
14.2 Reservation Priority
14.3 Use of Non-Firm Point-To-Point Transmission Service by the
Transmission Provider
14.4 Service Agreements
14.5 Classification of Non-Firm Point-To-Point Transmission
Service
14.6 Scheduling of Non-Firm Point-To-Point Transmission Service
14.7 Curtailment or Interruption of Service
15 Service Availability
15.1 General Conditions
15.2 Determination of Available Transfer Capability
15.3 Initiating Service in the Absence of an Executed Service
Agreement
15.4 Obligation to Provide Transmission Service that Requires
Expansion or Modification of the Transmission System, Redispatch or
Conditional Curtailment
15.5 Deferral of Service
15.6 Other Transmission Service Schedules
15.7 Real Power Losses
16 Transmission Customer Responsibilities
16.1 Conditions Required of Transmission Customers
16.2 Transmission Customer Responsibility for Third-Party
Arrangements
17 Procedures for Arranging Firm Point-To-Point Transmission
Service
17.1 Application
17.2 Completed Application
17.3 Deposit
17.4 Notice of Deficient Application
17.5 Response to a Completed Application
17.6 Execution of Service Agreement
17.7 Extensions for Commencement of Service
18 Procedures for Arranging Non-Firm Point-To-Point Transmission
Service
18.1 Application
18.2 Completed Application
18.3 Reservation of Non-Firm Point-To-Point Transmission Service
18.4 Determination of Available Transfer Capability
19 Additional Study Procedures for Firm Point-To-Point
Transmission Service Requests
19.1 Notice of Need for System Impact Study
19.2 System Impact Study Agreement and Cost Reimbursement
19.3 System Impact Study Procedures
19.4 Facilities Study Procedures
19.5 Facilities Study Modifications
19.6 Due Diligence in Completing New Facilities
19.7 Partial Interim Service
19.8 Expedited Procedures for New Facilities
19.9 Penalties for Failure to Meet Study Deadlines
20 Procedures if the Transmission Provider is Unable To Complete
New Transmission Facilities for Firm Point-To-Point Transmission
Service
20.1 Delays in Construction of New Facilities
20.2 Alternatives to the Original Facility Additions
20.3 Refund Obligation for Unfinished Facility Additions
21 Provisions Relating to Transmission Construction and Services
on the Systems of Other Utilities
21.1 Responsibility for Third-Party System Additions
21.2 Coordination of Third-Party System Additions
22 Changes in Service Specifications
22.1 Modifications On a Non-Firm Basis
22.2 Modification On a Firm Basis
23 Sale or Assignment of Transmission Service
23.1 Procedures for Assignment or Transfer of Service
23.2 Limitations on Assignment or Transfer of Service
23.3 Information on Assignment or Transfer of Service
24 Metering and Power Factor Correction at Receipt and Delivery
Point(s)
24.1 Transmission Customer Obligations
24.2 Transmission Provider Access to Metering Data
24.3 Power Factor
25 Compensation for Transmission Service
26 Stranded Cost Recovery
27 Compensation for New Facilities and Redispatch Costs
III. Network Integration Transmission Service
28 Nature of Network Integration Transmission Service
28.1 Scope of Service
28.2 Transmission Provider Responsibilities
28.3 Network Integration Transmission Service
28.4 Secondary Service
28.5 Real Power Losses
28.6 Restrictions on Use of Service
29 Initiating Service
29.1 Condition Precedent for Receiving Service
29.2 Application Procedures
29.3 Technical Arrangements To Be Completed Prior to
Commencement of Service
29.4 Network Customer Facilities
29.5 Filing of Service Agreement
30 Network Resources
30.1 Designation of Network Resources
30.2 Designation of New Network Resources
30.3 Termination of Network Resources
30.4 Operation of Network Resources
30.5 Network Customer Redispatch Obligation
30.6 Transmission Arrangements for Network Resources Not
Physically Interconnected With the Transmission Provider
30.7 Limitation on Designation of Network Resources
30.8 Use of Interface Capacity by the Network Customer
30.9 Network Customer Owned Transmission Facilities
31 Designation of Network Load
31.1 Network Load
31.2 New Network Loads Connected With the Transmission Provider
31.3 Network Load Not Physically Interconnected With the
Transmission Provider
31.4 New Interconnection Points
31.5 Changes in Service Requests
31.6 Annual Load and Resource Information Updates
32 Additional Study Procedures for Network Integration
Transmission Service Requests
32.1 Notice of Need for System Impact Study
32.2 System Impact Study Agreement and Cost Reimbursement
32.3 System Impact Study Procedures
32.4 Facilities Study Procedures
32.5 Penalties for Failure To Meet Study Deadlines
33 Load Shedding and Curtailments
33.1 Procedures
33.2 Transmission Constraints
33.3 Cost Responsibility for Relieving Transmission Constraints
33.4 Curtailments of Scheduled Deliveries
33.5 Allocation of Curtailments
33.6 Load Shedding
33.7 System Reliability
34 Rates and Charges
34.1 Monthly Demand Charge
34.2 Determination of Network Customer's Monthly Network Load
34.3 Determination of Transmission Provider's Monthly
Transmission System Load
34.4 Redispatch Charge
34.5 Stranded Cost Recovery
35 Operating Arrangements
35.1 Operation under the Network Operating Agreement
[[Page 39128]]
35.2 Network Operating Agreement
35.3 Network Operating Committee
Schedule 1
Scheduling, System Control and Dispatch Service
Schedule 2
Reactive Supply and Voltage Control From Generation Sources
Service
Schedule 3
Regulation and Frequency Response Service
Schedule 4
Energy Imbalance Service
Schedule 5
Operating Reserve-Spinning Reserve Service
Schedule 6
Operating Reserve-Supplemental Reserve Service
Schedule 7
Long-Term Firm and Short-Term Firm Point-To-Point
Schedule 8
Non-Firm Point-To-Point Transmission Service
Schedule 9
Generator Imbalance Service
Attachment A
Form of Service Agreement for Firm Point-To-Point Transmission
Service
Attachment A-1
Form of Service Agreement for the Resale, Reassignment or
Transfer of Point-To-Point Transmission Service
Attachment B
Form oF Service Agreement for Non-Firm Point-To-Point
Transmission Service
Attachment C
Methodology to Assess Available Transfer Capability
Attachment D
Methodology for Completing a System Impact Study
Attachment E
Index Of Point-To-Point Transmission Service Customers
Attachment F
Service Agreement for Network Integration Transmission Service
Attachment G
Network Operating Agreement
Attachment H
Annual Transmission Revenue Requirement for Network Integration
Transmission Service
Attachment I
Index of Network Integration Transmission Service Customers
Attachment J
Procedures for Addressing Parallel Flows
Attachment K
Transmission Planning Process
Attachment L
Creditworthiness Procedures
I. Common Service Provisions
1 Definitions
1.1 Affiliate
With respect to a corporation, partnership or other entity, each
such other corporation, partnership or other entity that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such corporation, partnership or
other entity.
1.2 Ancillary Services
Those services that are necessary to support the transmission of
capacity and energy from resources to loads while maintaining reliable
operation of the Transmission Provider's Transmission System in
accordance with Good Utility Practice.
1.3 Annual Transmission Costs
The total annual cost of the Transmission System for purposes of
Network Integration Transmission Service shall be the amount specified
in Attachment H until amended by the Transmission Provider or modified
by the Commission.
1.4 Application
A request by an Eligible Customer for transmission service pursuant
to the provisions of the Tariff.
1.5 Commission
The Federal Energy Regulatory Commission.
1.6 Completed Application
An Application that satisfies all of the information and other
requirements of the Tariff, including any required deposit.
1.7 Control Area
An electric power system or combination of electric power systems
to which a common automatic generation control scheme is applied in
order to:
1. Match, at all times, the power output of the generators within
the electric power system(s) and capacity and energy purchased from
entities outside the electric power system(s), with the load within the
electric power system(s);
2. Maintain scheduled interchange with other Control Areas, within
the limits of Good Utility Practice;
3. maintain the frequency of the electric power system(s) within
reasonable limits in accordance with Good Utility Practice; and
4. provide sufficient generating capacity to maintain operating
reserves in accordance with Good Utility Practice.
1.8 Curtailment
A reduction in firm or non-firm transmission service in response to
a transfer capability shortage as a result of system reliability
conditions.
1.9 Delivering Party
The entity supplying capacity and energy to be transmitted at
Point(s) of Receipt.
1.10 Designated Agent
Any entity that performs actions or functions on behalf of the
Transmission Provider, an Eligible Customer, or the Transmission
Customer required under the Tariff.
1.11 Direct Assignment Facilities
Facilities or portions of facilities that are constructed by the
Transmission Provider for the sole use/benefit of a particular
Transmission Customer requesting service under the Tariff. Direct
Assignment Facilities shall be specified in the Service Agreement that
governs service to the Transmission Customer and shall be subject to
Commission approval.
1.12 Eligible Customer
i. Any electric utility (including the Transmission Provider and
any power marketer), Federal power marketing agency, or any person
generating electric energy for sale for resale is an Eligible Customer
under the Tariff. Electric energy sold or produced by such entity may
be electric energy produced in the United States, Canada or Mexico.
However, with respect to transmission service that the Commission is
prohibited from ordering by section 212(h) of the Federal Power Act,
such entity is eligible only if the service is provided pursuant to a
state requirement that the Transmission Provider offer the unbundled
transmission service, or pursuant to a voluntary offer of such service
by the Transmission Provider.
ii. Any retail customer taking unbundled transmission service
pursuant to a state requirement that the Transmission Provider offer
the transmission service, or pursuant to a voluntary offer of such
service by the Transmission Provider, is an Eligible Customer under the
Tariff.
1.13 Facilities Study
An engineering study conducted by the Transmission Provider to
determine the required modifications to the Transmission Provider's
Transmission System, including the cost and scheduled completion date
for such modifications, that will be required to provide the requested
transmission service.
1.14 Firm Point-To-Point Transmission Service
Transmission Service under this Tariff that is reserved and/or
scheduled
[[Page 39129]]
between specified Points of Receipt and Delivery pursuant to Part II of
this Tariff.
1.15 Good Utility Practice
Any of the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry during the
relevant time period, or any of the practices, methods and acts which,
in the exercise of reasonable judgment in light of the facts known at
the time the decision was made, could have been expected to accomplish
the desired result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Good Utility Practice is
not intended to be limited to the optimum practice, method, or act to
the exclusion of all others, but rather to be acceptable practices,
methods, or acts generally accepted in the region, including those
practices required by Federal Power Act section 215(a)(4).
1.16 Interruption
A reduction in non-firm transmission service due to economic
reasons pursuant to section 14.7.
1.17 Load Ratio Share
Ratio of a Transmission Customer's Network Load to the Transmission
Provider's total load computed in accordance with sections 34.2 and
34.3 of the Network Integration Transmission Service under Part III of
the Tariff and calculated on a rolling twelve month basis.
1.18 Load Shedding
The systematic reduction of system demand by temporarily decreasing
load in response to transmission system or area capacity shortages,
system instability, or voltage control considerations under Part III of
the Tariff.
1.19 Long-Term Firm Point-To-Point Transmission Service
Firm Point-To-Point Transmission Service under Part II of the
Tariff with a term of one year or more.
1.20 Native Load Customers
The wholesale and retail power customers of the Transmission
Provider on whose behalf the Transmission Provider, by statute,
franchise, regulatory requirement, or contract, has undertaken an
obligation to construct and operate the Transmission Provider's system
to meet the reliable electric needs of such customers.
1.21 Network Customer
An entity receiving transmission service pursuant to the terms of
the Transmission Provider's Network Integration Transmission Service
under Part III of the Tariff.
1.22 Network Integration Transmission Service
The transmission service provided under Part III of the Tariff.
1.23 Network Load
The load that a Network Customer designates for Network Integration
Transmission Service under Part III of the Tariff. The Network
Customer's Network Load shall include all load served by the output of
any Network Resources designated by the Network Customer. A Network
Customer may elect to designate less than its total load as Network
Load but may not designate only part of the load at a discrete Point of
Delivery. Where an Eligible Customer has elected not to designate a
particular load at discrete points of delivery as Network Load, the
Eligible Customer is responsible for making separate arrangements under
Part II of the Tariff for any Point-To-Point Transmission Service that
may be necessary for such non-designated load.
1.24 Network Operating Agreement
An executed agreement that contains the terms and conditions under
which the Network Customer shall operate its facilities and the
technical and operational matters associated with the implementation of
Network Integration Transmission Service under Part III of the Tariff.
1.25 Network Operating Committee
A group made up of representatives from the Network Customer(s) and
the Transmission Provider established to coordinate operating criteria
and other technical considerations required for implementation of
Network Integration Transmission Service under Part III of this Tariff.
1.26 Network Resource
Any designated generating resource owned, purchased or leased by a
Network Customer under the Network Integration Transmission Service
Tariff. Network Resources do not include any resource, or any portion
thereof, that is committed for sale to third parties or otherwise
cannot be called upon to meet the Network Customer's Network Load on a
non-interruptible basis, except for purposes of fulfilling obligations
under a reserve sharing program.
1.27 Network Upgrades
Modifications or additions to transmission-related facilities that
are integrated with and support the Transmission Provider's overall
Transmission System for the general benefit of all users of such
Transmission System.
1.28 Non-Firm Point-To-Point Transmission Service
Point-To-Point Transmission Service under the Tariff that is
reserved and scheduled on an as-available basis and is subject to
Curtailment or Interruption as set forth in Section 14.7 under Part II
of this Tariff. Non-Firm Point-To-Point Transmission Service is
available on a stand-alone basis for periods ranging from one hour to
one month.
1.29 Non-Firm Sale
An energy sale for which receipt or delivery may be interrupted for
any reason or no reason, without liability on the part of either the
buyer or seller.
1.30 Open Access Same-Time Information System (OASIS)
The information system and standards of conduct contained in Part
37 of the Commission's regulations and all additional requirements
implemented by subsequent Commission orders dealing with OASIS.
1.31 Part I
Tariff Definitions and Common Service Provisions contained in
Sections 2 through 12.
1.32 Part II
Tariff Sections 13 through 27 pertaining to Point-To-Point
Transmission Service in conjunction with the applicable Common Service
Provisions of Part I and appropriate Schedules and Attachments.
1.33 Part III
Tariff Sections 28 through 35 pertaining to Network Integration
Transmission Service in conjunction with the applicable Common Service
Provisions of Part I and appropriate Schedules and Attachments.
1.34 Parties
The Transmission Provider and the Transmission Customer receiving
service under the Tariff.
1.35 Point(s) of Delivery
Point(s) on the Transmission Provider's Transmission System where
capacity and energy transmitted by the Transmission Provider will be
made available to the Receiving Party under Part II of the Tariff. The
Point(s) of Delivery shall be specified in the Service Agreement for
Long-Term Firm Point-To-Point Transmission Service.
[[Page 39130]]
1.36 Point(s) of Receipt
Point(s) of interconnection on the Transmission Provider's
Transmission System where capacity and energy will be made available to
the Transmission Provider by the Delivering Party under Part II of the
Tariff. The Point(s) of Receipt shall be specified in the Service
Agreement for Long-Term Firm Point-To-Point Transmission Service.
1.37 Point-To-Point Transmission Service
The reservation and transmission of capacity and energy on either a
firm or non-firm basis from the Point(s) of Receipt to the Point(s) of
Delivery under Part II of the Tariff.
1.38 Power Purchaser
The entity that is purchasing the capacity and energy to be
transmitted under the Tariff.
1.39 Pre-Confirmed Application
An Application that commits the Eligible Customer to execute a
Service Agreement upon receipt of notification that the Transmission
Provider can provide the requested Transmission Service.
1.40 Receiving Party
The entity receiving the capacity and energy transmitted by the
Transmission Provider to Point(s) of Delivery.
1.41 Regional Transmission Group (RTG)
A voluntary organization of transmission owners, transmission users
and other entities approved by the Commission to efficiently coordinate
transmission planning (and expansion), operation and use on a regional
(and interregional) basis.
1.42 Reserved Capacity
The maximum amount of capacity and energy that the Transmission
Provider agrees to transmit for the Transmission Customer over the
Transmission Provider's Transmission System between the Point(s) of
Receipt and the Point(s) of Delivery under Part II of the Tariff.
Reserved Capacity shall be expressed in terms of whole megawatts on a
sixty (60) minute interval (commencing on the clock hour) basis.
1.43 Service Agreement
The initial agreement and any amendments or supplements thereto
entered into by the Transmission Customer and the Transmission Provider
for service under the Tariff.
1.44 Service Commencement Date
The date the Transmission Provider begins to provide service
pursuant to the terms of an executed Service Agreement, or the date the
Transmission Provider begins to provide service in accordance with
Section 15.3 or Section 29.1 under the Tariff.
1.45 Short-Term Firm Point-To-Point Transmission Service
Firm Point-To-Point Transmission Service under Part II of the
Tariff with a term of less than one year.
1.46 System Condition
A specified condition on the Transmission Provider's system or on a
neighboring system, such as a constrained transmission element or
flowgate, that may trigger Curtailment of Long-Term Firm Point-to-Point
Transmission Service using the curtailment priority pursuant to Section
13.6. Such conditions must be identified in the Transmission Customer's
Service Agreement.
1.47 System Impact Study
An assessment by the Transmission Provider of (i) the adequacy of
the Transmission System to accommodate a request for either Firm Point-
To-Point Transmission Service or Network Integration Transmission
Service and (ii) whether any additional costs may be incurred in order
to provide transmission service.
1.48 Third-Party Sale
Any sale for resale in interstate commerce to a Power Purchaser
that is not designated as part of Network Load under the Network
Integration Transmission Service.
1.49 Transmission Customer
Any Eligible Customer (or its Designated Agent) that (i) executes a
Service Agreement, or (ii) requests in writing that the Transmission
Provider file with the Commission, a proposed unexecuted Service
Agreement to receive transmission service under Part II of the Tariff.
This term is used in the Part I Common Service Provisions to include
customers receiving transmission service under Part II and Part III of
this Tariff.
1.50 Transmission Provider
The public utility (or its Designated Agent) that owns, controls,
or operates facilities used for the transmission of electric energy in
interstate commerce and provides transmission service under the Tariff.
1.51 Transmission Provider's Monthly Transmission System Peak
The maximum firm usage of the Transmission Provider's Transmission
System in a calendar month.
1.52 Transmission Service
Point-To-Point Transmission Service provided under Part II of the
Tariff on a firm and non-firm basis.
1.53 Transmission System
The facilities owned, controlled or operated by the Transmission
Provider that are used to provide transmission service under Part II
and Part III of the Tariff.
2 Initial Allocation and Renewal Procedures
2.1 Initial Allocation of Available Transfer Capability
For purposes of determining whether existing capability on the
Transmission Provider's Transmission System is adequate to accommodate
a request for firm service under this Tariff, all Completed
Applications for new firm transmission service received during the
initial sixty (60) day period commencing with the effective date of the
Tariff will be deemed to have been filed simultaneously. A lottery
system conducted by an independent party shall be used to assign
priorities for Completed Applications filed simultaneously. All
Completed Applications for firm transmission service received after the
initial sixty (60) day period shall be assigned a priority pursuant to
Section 13.2.
2.2 Reservation Priority for Existing Firm Service Customers
Existing firm service customers (wholesale requirements and
transmission-only, with a contract term of five years or more), have
the right to continue to take transmission service from the
Transmission Provider when the contract expires, rolls over or is
renewed. This transmission reservation priority is independent of
whether the existing customer continues to purchase capacity and energy
from the Transmission Provider or elects to purchase capacity and
energy from another supplier. If at the end of the contract term, the
Transmission Provider's Transmission System cannot accommodate all of
the requests for transmission service, the existing firm service
customer must agree to accept a contract term at least equal to a
competing request by any new Eligible Customer and to pay the current
just and reasonable rate, as approved by the Commission, for such
service; provided
[[Page 39131]]
that, the firm service customer shall have a right of first refusal at
the end of such service only if the new contract is for five years or
more. The existing firm service customer must provide notice to the
Transmission Provider whether it will exercise its right of first
refusal no less than one year prior to the expiration date of its
transmission service agreement. This transmission reservation priority
for existing firm service customers is an ongoing right that may be
exercised at the end of all firm contract terms of five years or
longer. Service agreements subject to a right of first refusal entered
into prior to [the date of the Transmission Provider's filing adopting
the reformed rollover language herein in compliance with Order No. 890]
or associated with a transmission service request received prior to
July 13, 2007, unless terminated, will become subject to the five year/
one year requirement on the first rollover date after [the date of the
Transmission Provider's filing adopting the reformed rollover language
herein in compliance with Order No. 890]; provided that, the one-year
notice requirement shall apply to such service agreements with five
years or more left in their terms as of the [date of the Transmission
Provider's filing adopting the reformed rollover language herein in
compliance with Order No. 890].
3 Ancillary Services
Ancillary Services are needed with transmission service to maintain
reliability within and among the Control Areas affected by the
transmission service. The Transmission Provider is required to provide
(or offer to arrange with the local Control Area operator as discussed
below), and the Transmission Customer is required to purchase, the
following Ancillary Services (i) Scheduling, System Control and
Dispatch, and (ii) Reactive Supply and Voltage Control from Generation
or Other Sources.
The Transmission Provider is required to offer to provide (or offer
to arrange with the local Control Area operator as discussed below) the
following Ancillary Services only to the Transmission Customer serving
load within the Transmission Provider's Control Area (i) Regulation and
Frequency Response, (ii) Energy Imbalance, (iii) Operating Reserve--
Spinning, and (iv) Operating Reserve--Supplemental. The Transmission
Customer serving load within the Transmission Provider's Control Area
is required to acquire these Ancillary Services, whether from the
Transmission Provider, from a third party, or by self-supply.
The Transmission Provider is required to provide (or offer to
arrange with the local Control Area Operator as discussed below), to
the extent it is physically feasible to do so from its resources or
from resources available to it, Generator Imbalance Service when
Transmission Service is used to deliver energy from a generator located
within its Control Area. The Transmission Customer using Transmission
Service to deliver energy from a generator located within the
Transmission Provider's Control Area is required to acquire Generator
Imbalance Service, whether from the Transmission Provider, from a third
party, or by self-supply.
The Transmission Customer may not decline the Transmission
Provider's offer of Ancillary Services unless it demonstrates that it
has acquired the Ancillary Services from another source. The
Transmission Customer must list in its Application which Ancillary
Services it will purchase from the Transmission Provider. A
Transmission Customer that exceeds its firm reserved capacity at any
Point of Receipt or Point of Delivery or an Eligible Customer that uses
Transmission Service at a Point of Receipt or Point of Delivery that it
has not reserved is required to pay for all of the Ancillary Services
identified in this section that were provided by the Transmission
Provider associated with the unreserved service. The Transmission
Customer or Eligible Customer will pay for Ancillary Services based on
the amount of transmission service it used but did not reserve.
If the Transmission Provider is a public utility providing
transmission service but is not a Control Area operator, it may be
unable to provide some or all of the Ancillary Services. In this case,
the Transmission Provider can fulfill its obligation to provide
Ancillary Services by acting as the Transmission Customer's agent to
secure these Ancillary Services from the Control Area operator. The
Transmission Customer may elect to (i) have the Transmission Provider
act as its agent, (ii) secure the Ancillary Services directly from the
Control Area operator, or (iii) secure the Ancillary Services
(discussed in Schedules 3, 4, 5, 6 and 9) from a third party or by
self-supply when technically feasible.
The Transmission Provider shall specify the rate treatment and all
related terms and conditions in the event of an unauthorized use of
Ancillary Services by the Transmission Customer.
The specific Ancillary Services, prices and/or compensation methods
are described on the Schedules that are attached to and made a part of
the Tariff. Three principal requirements apply to discounts for
Ancillary Services provided by the Transmission Provider in conjunction
with its provision of transmission service as follows: (1) Any offer of
a discount made by the Transmission Provider must be announced to all
Eligible Customers solely by posting on the OASIS, (2) any customer-
initiated requests for discounts (including requests for use by one's
wholesale merchant or an Affiliate's use) must occur solely by posting
on the OASIS, and (3) once a discount is negotiated, details must be
immediately posted on the OASIS. A discount agreed upon for an
Ancillary Service must be offered for the same period to all Eligible
Customers on the Transmission Provider's system. Sections 3.1 through
3.7 below list the seven Ancillary Services.
3.1 Scheduling, System Control and Dispatch Service
The rates and/or methodology are described in Schedule 1.
3.2 Reactive Supply and Voltage Control From Generation or Other
Sources Service
The rates and/or methodology are described in Schedule 2.
3.3 Regulation and Frequency Response Service
Where applicable the rates and/or methodology are described in
Schedule 3.
3.4 Energy Imbalance Service
Where applicable the rates and/or methodology are described in
Schedule 4.
3.5 Operating Reserve--Spinning Reserve Service
Where applicable the rates and/or methodology are described in
Schedule 5.
3.6 Operating Reserve--Supplemental Reserve Service
Where applicable the rates and/or methodology are described in
Schedule 6.
3.7 Generator Imbalance Service
Where applicable the rates and/or methodology are described in
Schedule 9.
4 Open Access Same-Time Information System (OASIS)
Terms and conditions regarding Open Access Same-Time Information
System and standards of conduct are set forth in 18 CFR part 37 of the
Commission's
[[Page 39132]]
regulations (Open Access Same-Time Information System and Standards of
Conduct for Public Utilities) and 18 CFR part 38 of the Commission's
regulations (Business Practice Standards and Communication Protocols
for Public Utilities). In the event available transfer capability as
posted on the OASIS is insufficient to accommodate a request for firm
transmission service, additional studies may be required as provided by
this Tariff pursuant to Sections 19 and 32.
The Transmission Provider shall post on OASIS and its public Web
site an electronic link to all rules, standards and practices that (i)
relate to the terms and conditions of transmission service, (ii) are
not subject to a North American Energy Standards Board (NAESB)
copyright restriction, and (iii) are not otherwise included in this
Tariff. The Transmission Provider shall post on OASIS and on its public
Web site an electronic link to the NAESB Web site where any rules,
standards and practices that are protected by copyright may be
obtained. The Transmission Provider shall also post on OASIS and its
public Web site an electronic link to a statement of the process by
which the Transmission Provider shall add, delete or otherwise modify
the rules, standards and practices that are not included in this
tariff. Such process shall set forth the means by which the
Transmission Provider shall provide reasonable advance notice to
Transmission Customers and Eligible Customers of any such additions,
deletions or modifications, the associated effective date, and any
additional implementation procedures that the Transmission Provider
deems appropriate.
5 Local Furnishing Bonds
5.1 Transmission Providers That Own Facilities Financed by Local
Furnishing Bonds
This provision is applicable only to Transmission Providers that
have financed facilities for the local furnishing of electric energy
with tax-exempt bonds, as described in Section 142(f) of the Internal
Revenue Code (``local furnishing bonds''). Notwithstanding any other
provision of this Tariff, the Transmission Provider shall not be
required to provide transmission service to any Eligible Customer
pursuant to this Tariff if the provision of such transmission service
would jeopardize the tax-exempt status of any local furnishing bond(s)
used to finance the Transmission Provider's facilities that would be
used in providing such transmission service.
5.2 Alternative Procedures for Requesting Transmission Service
(i) If the Transmission Provider determines that the provision of
transmission service requested by an Eligible Customer would jeopardize
the tax-exempt status of any local furnishing bond(s) used to finance
its facilities that would be used in providing such transmission
service, it shall advise the Eligible Customer within thirty (30) days
of receipt of the Completed Application.
(ii) If the Eligible Customer thereafter renews its request for the
same transmission service referred to in (i) by tendering an
application under Section 211 of the Federal Power Act, the
Transmission Provider, within ten (10) days of receiving a copy of the
Section 211 application, will waive its rights to a request for service
under Section 213(a) of the Federal Power Act and to the issuance of a
proposed order under Section 212(c) of the Federal Power Act. The
Commission, upon receipt of the Transmission Provider's waiver of its
rights to a request for service under Section 213(a) of the Federal
Power Act and to the issuance of a proposed order under Section 212(c)
of the Federal Power Act, shall issue an order under Section 211 of the
Federal Power Act. Upon issuance of the order under Section 211 of the
Federal Power Act, the Transmission Provider shall be required to
provide the requested transmission service in accordance with the terms
and conditions of this Tariff.
6 Reciprocity
A Transmission Customer receiving transmission service under this
Tariff agrees to provide comparable transmission service that it is
capable of providing to the Transmission Provider on similar terms and
conditions over facilities used for the transmission of electric energy
owned, controlled or operated by the Transmission Customer and over
facilities used for the transmission of electric energy owned,
controlled or operated by the Transmission Customer's corporate
Affiliates. A Transmission Customer that is a member of, or takes
transmission service from, a power pool, Regional Transmission Group,
Regional Transmission Organization (RTO), Independent System Operator
(ISO) or other transmission organization approved by the Commission for
the operation of transmission facilities also agrees to provide
comparable transmission service to the transmission-owning members of
such power pool and Regional Transmission Group, RTO, ISO or other
transmission organization on similar terms and conditions over
facilities used for the transmission of electric energy owned,
controlled or operated by the Transmission Customer and over facilities
used for the transmission of electric energy owned, controlled or
operated by the Transmission Customer's corporate Affiliates.
This reciprocity requirement applies not only to the Transmission
Customer that obtains transmission service under the Tariff, but also
to all parties to a transaction that involves the use of transmission
service under the Tariff, including the power seller, buyer and any
intermediary, such as a power marketer. This reciprocity requirement
also applies to any Eligible Customer that owns, controls or operates
transmission facilities that uses an intermediary, such as a power
marketer, to request transmission service under the Tariff. If the
Transmission Customer does not own, control or operate transmission
facilities, it must include in its Application a sworn statement of one
of its duly authorized officers or other representatives that the
purpose of its Application is not to assist an Eligible Customer to
avoid the requirements of this provision.
7 Billing and Payment
7.1 Billing Procedure
Within a reasonable time after the first day of each month, the
Transmission Provider shall submit an invoice to the Transmission
Customer for the charges for all services furnished under the Tariff
during the preceding month. The invoice shall be paid by the
Transmission Customer within twenty (20) days of receipt. All payments
shall be made in immediately available funds payable to the
Transmission Provider, or by wire transfer to a bank named by the
Transmission Provider.
7.2 Interest on Unpaid Balances
Interest on any unpaid amounts (including amounts placed in escrow)
shall be calculated in accordance with the methodology specified for
interest on refunds in the Commission's regulations at 18 CFR
35.19a(a)(2)(iii). Interest on delinquent amounts shall be calculated
from the due date of the bill to the date of payment. When payments are
made by mail, bills shall be considered as having been paid on the date
of receipt by the Transmission Provider.
7.3 Customer Default
In the event the Transmission Customer fails, for any reason other
than a billing dispute as described below, to
[[Page 39133]]
make payment to the Transmission Provider on or before the due date as
described above, and such failure of payment is not corrected within
thirty (30) calendar days after the Transmission Provider notifies the
Transmission Customer to cure such failure, a default by the
Transmission Customer shall be deemed to exist. Upon the occurrence of
a default, the Transmission Provider may initiate a proceeding with the
Commission to terminate service but shall not terminate service until
the Commission so approves any such request. In the event of a billing
dispute between the Transmission Provider and the Transmission
Customer, the Transmission Provider will continue to provide service
under the Service Agreement as long as the Transmission Customer (i)
continues to make all payments not in dispute, and (ii) pays into an
independent escrow account the portion of the invoice in dispute,
pending resolution of such dispute. If the Transmission Customer fails
to meet these two requirements for continuation of service, then the
Transmission Provider may provide notice to the Transmission Customer
of its intention to suspend service in sixty (60) days, in accordance
with Commission policy.
8 Accounting for the Transmission Provider's Use of the Tariff
The Transmission Provider shall record the following amounts, as
outlined below.
8.1 Transmission Revenues
Include in a separate operating revenue account or subaccount the
revenues it receives from Transmission Service when making Third-Party
Sales under Part II of the Tariff.
8.2 Study Costs and Revenues
Include in a separate transmission operating expense account or
subaccount, costs properly chargeable to expense that are incurred to
perform any System Impact Studies or Facilities Studies which the
Transmission Provider conducts to determine if it must construct new
transmission facilities or upgrades necessary for its own uses,
including making Third-Party Sales under the Tariff; and include in a
separate operating revenue account or subaccount the revenues received
for System Impact Studies or Facilities Studies performed when such
amounts are separately stated and identified in the Transmission
Customer's billing under the Tariff.
9 Regulatory Filings
Nothing contained in the Tariff or any Service Agreement shall be
construed as affecting in any way the right of the Transmission
Provider to unilaterally make application to the Commission for a
change in rates, terms and conditions, charges, classification of
service, Service Agreement, rule or regulation under Section 205 of the
Federal Power Act and pursuant to the Commission's rules and
regulations promulgated thereunder.
Nothing contained in the Tariff or any Service Agreement shall be
construed as affecting in any way the ability of any Party receiving
service under the Tariff to exercise its rights under the Federal Power
Act and pursuant to the Commission's rules and regulations promulgated
thereunder.
10 Force Majeure and Indemnification
10.1 Force Majeure
An event of Force Majeure means any act of God, labor disturbance,
act of the public enemy, war, insurrection, riot, fire, storm or flood,
explosion, breakage or accident to machinery or equipment, any
Curtailment, order, regulation or restriction imposed by governmental
military or lawfully established civilian authorities, or any other
cause beyond a Party's control. A Force Majeure event does not include
an act of negligence or intentional wrongdoing. Neither the
Transmission Provider nor the Transmission Customer will be considered
in default as to any obligation under this Tariff if prevented from
fulfilling the obligation due to an event of Force Majeure. However, a
Party whose performance under this Tariff is hindered by an event of
Force Majeure shall make all reasonable efforts to perform its
obligations under this Tariff.
10.2 Indemnification
The Transmission Customer shall at all times indemnify, defend, and
save the Transmission Provider harmless from, any and all damages,
losses, claims, including claims and actions relating to injury to or
death of any person or damage to property, demands, suits, recoveries,
costs and expenses, court costs, attorney fees, and all other
obligations by or to third parties, arising out of or resulting from
the Transmission Provider's performance of its obligations under this
Tariff on behalf of the Transmission Customer, except in cases of
negligence or intentional wrongdoing by the Transmission Provider.
11 Creditworthiness
The Transmission Provider will specify its Creditworthiness
procedures in Attachment L.
12 Dispute Resolution Procedures
12.1 Internal Dispute Resolution Procedures
Any dispute between a Transmission Customer and the Transmission
Provider involving transmission service under the Tariff (excluding
applications for rate changes or other changes to the Tariff, or to any
Service Agreement entered into under the Tariff, which shall be
presented directly to the Commission for resolution) shall be referred
to a designated senior representative of the Transmission Provider and
a senior representative of the Transmission Customer for resolution on
an informal basis as promptly as practicable. In the event the
designated representatives are unable to resolve the dispute within
thirty (30) days [or such other period as the Parties may agree upon]
by mutual agreement, such dispute may be submitted to arbitration and
resolved in accordance with the arbitration procedures set forth below.
12.2 External Arbitration Procedures
Any arbitration initiated under the Tariff shall be conducted
before a single neutral arbitrator appointed by the Parties. If the
Parties fail to agree upon a single arbitrator within ten (10) days of
the referral of the dispute to arbitration, each Party shall choose one
arbitrator who shall sit on a three-member arbitration panel. The two
arbitrators so chosen shall within twenty (20) days select a third
arbitrator to chair the arbitration panel. In either case, the
arbitrators shall be knowledgeable in electric utility matters,
including electric transmission and bulk power issues, and shall not
have any current or past substantial business or financial
relationships with any party to the arbitration (except prior
arbitration). The arbitrator(s) shall provide each of the Parties an
opportunity to be heard and, except as otherwise provided herein, shall
generally conduct the arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and any
applicable Commission regulations or Regional Transmission Group rules.
12.3 Arbitration Decisions
Unless otherwise agreed, the arbitrator(s) shall render a decision
within ninety (90) days of appointment and shall notify the Parties in
writing of
[[Page 39134]]
such decision and the reasons therefor. The arbitrator(s) shall be
authorized only to interpret and apply the provisions of the Tariff and
any Service Agreement entered into under the Tariff and shall have no
power to modify or change any of the above in any manner. The decision
of the arbitrator(s) shall be final and binding upon the Parties, and
judgment on the award may be entered in any court having jurisdiction.
The decision of the arbitrator(s) may be appealed solely on the grounds
that the conduct of the arbitrator(s), or the decision itself, violated
the standards set forth in the Federal Arbitration Act and/or the
Administrative Dispute Resolution Act. The final decision of the
arbitrator must also be filed with the Commission if it affects
jurisdictional rates, terms and conditions of service or facilities.
12.4 Costs
Each Party shall be responsible for its own costs incurred during
the arbitration process and for the following costs, if applicable:
1. The cost of the arbitrator chosen by the Party to sit on the
three member panel and one half of the cost of the third arbitrator
chosen; or
2. One half the cost of the single arbitrator jointly chosen by the
Parties.
12.5 Rights Under The Federal Power Act
Nothing in this section shall restrict the rights of any party to
file a Complaint with the Commission under relevant provisions of the
Federal Power Act.
II. Point-To-Point Transmission Service
Preamble
The Transmission Provider will provide Firm and Non-Firm Point-To-
Point Transmission Service pursuant to the applicable terms and
conditions of this Tariff. Point-To-Point Transmission Service is for
the receipt of capacity and energy at designated Point(s) of Receipt
and the transfer of such capacity and energy to designated Point(s) of
Delivery.
13 Nature of Firm Point-To-Point Transmission Service
13.1 Term
The minimum term of Firm Point-To-Point Transmission Service shall
be one day and the maximum term shall be specified in the Service
Agreement.
13.2 Reservation Priority
(i) Long-Term Firm Point-To-Point Transmission Service shall be
available on a first-come, first-served basis, i.e., in the
chronological sequence in which each Transmission Customer has
requested service.
(ii) Reservations for Short-Term Firm Point-To-Point Transmission
Service will be conditional based upon the length of the requested
transaction or reservation. However, Pre-Confirmed Applications for
Short-Term Point-To-Point Transmission Service will receive priority
over earlier-submitted requests that are not Pre-Confirmed and that
have equal or shorter duration. Among requests or reservations with the
same duration and, as relevant, pre-confirmation status (pre-confirmed,
confirmed, or not confirmed), priority will be given to an Eligible
Customer's request or reservation that offers the highest price,
followed by the date and time of the request or reservation.
(iii) If the Transmission System becomes oversubscribed, requests
for service may preempt competing reservations up to the following
conditional reservation deadlines: One day before the commencement of
daily service, one week before the commencement of weekly service, and
one month before the commencement of monthly service. Before the
conditional reservation deadline, if available transfer capability is
insufficient to satisfy all requests and reservations, an Eligible
Customer with a reservation for shorter term service or equal duration
service and lower price has the right of first refusal to match any
longer term request or equal duration service with a higher price
before losing its reservation priority. A longer term competing request
for Short-Term Firm Point-To-Point Transmission Service will be granted
if the Eligible Customer with the right of first refusal does not agree
to match the competing request within 24 hours (or earlier if necessary
to comply with the scheduling deadlines provided in section 13.8) from
being notified by the Transmission Provider of a longer-term competing
request for Short-Term Firm Point-To-Point Transmission Service. When a
longer duration request preempts multiple shorter duration
reservations, the shorter duration reservations shall have simultaneous
opportunities to exercise the right of first refusal. Duration, price
and time of response will be used to determine the order by which the
multiple shorter duration reservations will be able to exercise the
right of first refusal. After the conditional reservation deadline,
service will commence pursuant to the terms of Part II of the Tariff.
(iv) Firm Point-To-Point Transmission Service will always have a
reservation priority over Non-Firm Point-To-Point Transmission Service
under the Tariff. All Long-Term Firm Point-To-Point Transmission
Service will have equal reservation priority with Native Load Customers
and Network Customers. Reservation priorities for existing firm service
customers are provided in Section 2.2.
13.3 Use of Firm Transmission Service by the Transmission Provider
The Transmission Provider will be subject to the rates, terms and
conditions of Part II of the Tariff when making Third-Party Sales under
(i) agreements executed on or after September 8, 2008 or (ii)
agreements executed prior to the aforementioned date that the
Commission requires to be unbundled, by the date specified by the
Commission. The Transmission Provider will maintain separate
accounting, pursuant to Section 8, for any use of the Point-To-Point
Transmission Service to make Third-Party Sales.
13.4 Service Agreements
The Transmission Provider shall offer a standard form Firm Point-
To-Point Transmission Service Agreement (Attachment A) to an Eligible
Customer when it submits a Completed Application for Long-Term Firm
Point-To-Point Transmission Service. The Transmission Provider shall
offer a standard form Firm Point-To-Point Transmission Service
Agreement (Attachment A) to an Eligible Customer when it first submits
a Completed Application for Short-Term Firm Point-To-Point Transmission
Service pursuant to the Tariff. Executed Service Agreements that
contain the information required under the Tariff shall be filed with
the Commission in compliance with applicable Commission regulations. An
Eligible Customer that uses Transmission Service at a Point of Receipt
or Point of Delivery that it has not reserved and that has not executed
a Service Agreement will be deemed, for purposes of assessing any
appropriate charges and penalties, to have executed the appropriate
Service Agreement. The Service Agreement shall, when applicable,
specify any conditional curtailment options selected by the
Transmission Customer. Where the Service Agreement contains conditional
curtailment options and is subject to a biennial reassessment as
described in Section 15.4, the Transmission Provider shall provide the
Transmission Customer notice of any changes to the curtailment
conditions no less than 90 days prior to the date for imposition of new
curtailment conditions. Concurrent with such notice, the Transmission
Provider shall provide the Transmission
[[Page 39135]]
Customer with the reassessment study and a narrative description of the
study, including the reasons for changes to the number of hours per
year or System Conditions under which conditional curtailment may
occur.
13.5 Transmission Customer Obligations for Facility Additions or
Redispatch Costs
In cases where the Transmission Provider determines that the
Transmission System is not capable of providing Firm Point-To-Point
Transmission Service without (1) degrading or impairing the reliability
of service to Native Load Customers, Network Customers and other
Transmission Customers taking Firm Point-To-Point Transmission Service,
or (2) interfering with the Transmission Provider's ability to meet
prior firm contractual commitments to others, the Transmission Provider
will be obligated to expand or upgrade its Transmission System pursuant
to the terms of Section 15.4. The Transmission Customer must agree to
compensate the Transmission Provider for any necessary transmission
facility additions pursuant to the terms of Section 27. To the extent
the Transmission Provider can relieve any system constraint by
redispatching the Transmission Provider's resources, it shall do so,
provided that the Eligible Customer agrees to compensate the
Transmission Provider pursuant to the terms of Section 27 and agrees to
either (i) compensate the Transmission Provider for any necessary
transmission facility additions or (ii) accept the service subject to a
biennial reassessment by the Transmission Provider of redispatch
requirements as described in Section 15.4. Any redispatch, Network
Upgrade or Direct Assignment Facilities costs to be charged to the
Transmission Customer on an incremental basis under the Tariff will be
specified in the Service Agreement prior to initiating service.
13.6 Curtailment of Firm Transmission Service
In the event that a Curtailment on the Transmission Provider's
Transmission System, or a portion thereof, is required to maintain
reliable operation of such system and the system directly and
indirectly interconnected with Transmission Provider's Transmission
System, Curtailments will be made on a non-discriminatory basis to the
transaction(s) that effectively relieve the constraint. Transmission
Provider may elect to implement such Curtailments pursuant to the
Transmission Loading Relief procedures specified in Attachment J. If
multiple transactions require Curtailment, to the extent practicable
and consistent with Good Utility Practice, the Transmission Provider
will curtail service to Network Customers and Transmission Customers
taking Firm Point-To-Point Transmission Service on a basis comparable
to the curtailment of service to the Transmission Provider's Native
Load Customers. All Curtailments will be made on a non-discriminatory
basis, however, Non-Firm Point-To-Point Transmission Service shall be
subordinate to Firm Transmission Service. Long-Term Firm Point-To-Point
Service subject to conditions described in Section 15.4 shall be
curtailed with secondary service in cases where the conditions apply,
but otherwise will be curtailed on a pro rata basis with other Firm
Transmission Service. When the Transmission Provider determines that an
electrical emergency exists on its Transmission System and implements
emergency procedures to Curtail Firm Transmission Service, the
Transmission Customer shall make the required reductions upon request
of the Transmission Provider. However, the Transmission Provider
reserves the right to Curtail, in whole or in part, any Firm
Transmission Service provided under the Tariff when, in the
Transmission Provider's sole discretion, an emergency or other
unforeseen condition impairs or degrades the reliability of its
Transmission System. The Transmission Provider will notify all affected
Transmission Customers in a timely manner of any scheduled
Curtailments.
13.7 Classification of Firm Transmission Service
(a) The Transmission Customer taking Firm Point-To-Point
Transmission Service may (1) change its Receipt and Delivery Points to
obtain service on a non-firm basis consistent with the terms of Section
22.1 or (2) request a modification of the Points of Receipt or Delivery
on a firm basis pursuant to the terms of Section 22.2.
(b) The Transmission Customer may purchase transmission service to
make sales of capacity and energy from multiple generating units that
are on the Transmission Provider's Transmission System. For such a
purchase of transmission service, the resources will be designated as
multiple Points of Receipt, unless the multiple generating units are at
the same generating plant in which case the units would be treated as a
single Point of Receipt.
(c) The Transmission Provider shall provide firm deliveries of
capacity and energy from the Point(s) of Receipt to the Point(s) of
Delivery. Each Point of Receipt at which firm transmission capacity is
reserved by the Transmission Customer shall be set forth in the Firm
Point-To-Point Service Agreement for Long-Term Firm Transmission
Service along with a corresponding capacity reservation associated with
each Point of Receipt. Points of Receipt and corresponding capacity
reservations shall be as mutually agreed upon by the Parties for Short-
Term Firm Transmission. Each Point of Delivery at which firm transfer
capability is reserved by the Transmission Customer shall be set forth
in the Firm Point-To-Point Service Agreement for Long-Term Firm
Transmission Service along with a corresponding capacity reservation
associated with each Point of Delivery. Points of Delivery and
corresponding capacity reservations shall be as mutually agreed upon by
the Parties for Short-Term Firm Transmission. The greater of either (1)
the sum of the capacity reservations at the Point(s) of Receipt, or (2)
the sum of the capacity reservations at the Point(s) of Delivery shall
be the Transmission Customer's Reserved Capacity. The Transmission
Customer will be billed for its Reserved Capacity under the terms of
Schedule 7. The Transmission Customer may not exceed its firm capacity
reserved at each Point of Receipt and each Point of Delivery except as
otherwise specified in Section 22. The Transmission Provider shall
specify the rate treatment and all related terms and conditions
applicable in the event that a Transmission Customer (including Third-
Party Sales by the Transmission Provider) exceeds its firm reserved
capacity at any Point of Receipt or Point of Delivery or uses
Transmission Service at a Point of Receipt or Point of Delivery that it
has not reserved.
13.8 Scheduling of Firm Point-To-Point Transmission Service
Schedules for the Transmission Customer's Firm Point-To-Point
Transmission Service must be submitted to the Transmission Provider no
later than 10 a.m. [or a reasonable time that is generally accepted in
the region and is consistently adhered to by the Transmission Provider]
of the day prior to commencement of such service. Schedules submitted
after 10 a.m. will be accommodated, if practicable. Hour-to-hour
schedules of any capacity and energy that is to be delivered must be
stated in increments of 1,000 kW per hour [or a reasonable increment
that is generally accepted in the region and is consistently adhered to
by the Transmission Provider]. Transmission Customers within the
Transmission Provider's service area with multiple requests for
Transmission Service at a
[[Page 39136]]
Point of Receipt, each of which is under 1,000 kW per hour, may
consolidate their service requests at a common point of receipt into
units of 1,000 kW per hour for scheduling and billing purposes.
Scheduling changes will be permitted up to twenty (20) minutes [or a
reasonable time that is generally accepted in the region and is
consistently adhered to by the Transmission Provider] before the start
of the next clock hour provided that the Delivering Party and Receiving
Party also agree to the schedule modification. The Transmission
Provider will furnish to the Delivering Party's system operator, hour-
to-hour schedules equal to those furnished by the Receiving Party
(unless reduced for losses) and shall deliver the capacity and energy
provided by such schedules. Should the Transmission Customer,
Delivering Party or Receiving Party revise or terminate any schedule,
such party shall immediately notify the Transmission Provider, and the
Transmission Provider shall have the right to adjust accordingly the
schedule for capacity and energy to be received and to be delivered.
14 Nature of Non-Firm Point-To-Point Transmission Service
14.1 Term
Non-Firm Point-To-Point Transmission Service will be available for
periods ranging from one (1) hour to one (1) month. However, a
Purchaser of Non-Firm Point-To-Point Transmission Service will be
entitled to reserve a sequential term of service (such as a sequential
monthly term without having to wait for the initial term to expire
before requesting another monthly term) so that the total time period
for which the reservation applies is greater than one month, subject to
the requirements of Section 18.3.
14.2 Reservation Priority
Non-Firm Point-To-Point Transmission Service shall be available
from transfer capability in excess of that needed for reliable service
to Native Load Customers, Network Customers and other Transmission
Customers taking Long-Term and Short-Term Firm Point-To-Point
Transmission Service. A higher priority will be assigned first to
requests or reservations with a longer duration of service and second
to Pre-Confirmed Applications. In the event the Transmission System is
constrained, competing requests of the same Pre-Confirmation status and
equal duration will be prioritized based on the highest price offered
by the Eligible Customer for the Transmission Service. Eligible
Customers that have already reserved shorter term service have the
right of first refusal to match any longer term request before being
preempted. A longer term competing request for Non-Firm Point-To-Point
Transmission Service will be granted if the Eligible Customer with the
right of first refusal does not agree to match the competing request:
(a) Immediately for hourly Non-Firm Point-To-Point Transmission Service
after notification by the Transmission Provider; and, (b) within 24
hours (or earlier if necessary to comply with the scheduling deadlines
provided in section 14.6) for Non-Firm Point-To-Point Transmission
Service other than hourly transactions after notification by the
Transmission Provider. Transmission service for Network Customers from
resources other than designated Network Resources will have a higher
priority than any Non-Firm Point-To-Point Transmission Service. Non-
Firm Point-To-Point Transmission Service over secondary Point(s) of
Receipt and Point(s) of Delivery will have the lowest reservation
priority under the Tariff.
14.3 Use of Non-Firm Point-To-Point Transmission Service by the
Transmission Provider
The Transmission Provider will be subject to the rates, terms and
conditions of Part II of the Tariff when making Third-Party Sales under
(i) agreements executed on or after September 8, 2008 or (ii)
agreements executed prior to the aforementioned date that the
Commission requires to be unbundled, by the date specified by the
Commission. The Transmission Provider will maintain separate
accounting, pursuant to Section 8, for any use of Non-Firm Point-To-
Point Transmission Service to make Third-Party Sales.
14.4 Service Agreements
The Transmission Provider shall offer a standard form Non-Firm
Point-To-Point Transmission Service Agreement (Attachment B) to an
Eligible Customer when it first submits a Completed Application for
Non-Firm Point-To-Point Transmission Service pursuant to the Tariff.
Executed Service Agreements that contain the information required under
the Tariff shall be filed with the Commission in compliance with
applicable Commission regulations.
14.5 Classification of Non-Firm Point-To-Point Transmission Service
Non-Firm Point-To-Point Transmission Service shall be offered under
terms and conditions contained in Part II of the Tariff. The
Transmission Provider undertakes no obligation under the Tariff to plan
its Transmission System in order to have sufficient capacity for Non-
Firm Point-To-Point Transmission Service. Parties requesting Non-Firm
Point-To-Point Transmission Service for the transmission of firm power
do so with the full realization that such service is subject to
availability and to Curtailment or Interruption under the terms of the
Tariff. The Transmission Provider shall specify the rate treatment and
all related terms and conditions applicable in the event that a
Transmission Customer (including Third-Party Sales by the Transmission
Provider) exceeds its non-firm capacity reservation. Non-Firm Point-To-
Point Transmission Service shall include transmission of energy on an
hourly basis and transmission of scheduled short-term capacity and
energy on a daily, weekly or monthly basis, but not to exceed one
month's reservation for any one Application, under Schedule 8.
14.6 Scheduling of Non-Firm Point-To-Point Transmission Service
Schedules for Non-Firm Point-To-Point Transmission Service must be
submitted to the Transmission Provider no later than 2 p.m. [or a
reasonable time that is generally accepted in the region and is
consistently adhered to by the Transmission Provider] of the day prior
to commencement of such service. Schedules submitted after 2 p.m. will
be accommodated, if practicable. Hour-to-hour schedules of energy that
is to be delivered must be stated in increments of 1,000 kW per hour
[or a reasonable increment that is generally accepted in the region and
is consistently adhered to by the Transmission Provider]. Transmission
Customers within the Transmission Provider's service area with multiple
requests for Transmission Service at a Point of Receipt, each of which
is under 1,000 kW per hour, may consolidate their schedules at a common
Point of Receipt into units of 1,000 kW per hour. Scheduling changes
will be permitted up to twenty (20) minutes [or a reasonable time that
is generally accepted in the region and is consistently adhered to by
the Transmission Provider] before the start of the next clock hour
provided that the Delivering Party and Receiving Party also agree to
the schedule modification. The Transmission Provider will furnish to
the Delivering Party's system operator, hour-to-hour schedules equal to
those furnished by the Receiving Party (unless reduced for losses) and
shall deliver the capacity and energy provided by such schedules.
Should the Transmission Customer, Delivering
[[Page 39137]]
Party or Receiving Party revise or terminate any schedule, such party
shall immediately notify the Transmission Provider, and the
Transmission Provider shall have the right to adjust accordingly the
schedule for capacity and energy to be received and to be delivered.
14.7 Curtailment or Interruption of Service
The Transmission Provider reserves the right to Curtail, in whole
or in part, Non-Firm Point-To-Point Transmission Service provided under
the Tariff for reliability reasons when an emergency or other
unforeseen condition threatens to impair or degrade the reliability of
its Transmission System or the systems directly and indirectly
interconnected with Transmission Provider's Transmission System.
Transmission Provider may elect to implement such Curtailments pursuant
to the Transmission Loading Relief procedures specified in Attachment
J. The Transmission Provider reserves the right to Interrupt, in whole
or in part, Non-Firm Point-To-Point Transmission Service provided under
the Tariff for economic reasons in order to accommodate (1) a request
for Firm Transmission Service, (2) a request for Non-Firm Point-To-
Point Transmission Service of greater duration, (3) a request for Non-
Firm Point-To-Point Transmission Service of equal duration with a
higher price, (4) transmission service for Network Customers from non-
designated resources, or (5) transmission service for Firm Point-to-
Point Transmission Service during conditional curtailment periods as
described in Section 15.4. The Transmission Provider also will
discontinue or reduce service to the Transmission Customer to the
extent that deliveries for transmission are discontinued or reduced at
the Point(s) of Receipt. Where required, Curtailments or Interruptions
will be made on a non-discriminatory basis to the transaction(s) that
effectively relieve the constraint, however, Non-Firm Point-To-Point
Transmission Service shall be subordinate to Firm Transmission Service.
If multiple transactions require Curtailment or Interruption, to the
extent practicable and consistent with Good Utility Practice,
Curtailments or Interruptions will be made to transactions of the
shortest term (e.g., hourly non-firm transactions will be Curtailed or
Interrupted before daily non-firm transactions and daily non-firm
transactions will be Curtailed or Interrupted before weekly non-firm
transactions). Transmission service for Network Customers from
resources other than designated Network Resources will have a higher
priority than any Non-Firm Point-To-Point Transmission Service under
the Tariff. Non-Firm Point-To-Point Transmission Service over secondary
Point(s) of Receipt and Point(s) of Delivery will have a lower priority
than any Non-Firm Point-To-Point Transmission Service under the Tariff.
The Transmission Provider will provide advance notice of Curtailment or
Interruption where such notice can be provided consistent with Good
Utility Practice.
15 Service Availability
15.1 General Conditions
The Transmission Provider will provide Firm and Non-Firm Point-To-
Point Transmission Service over, on or across its Transmission System
to any Transmission Customer that has met the requirements of Section
16.
15.2 Determination of Available Transfer Capability
A description of the Transmission Provider's specific methodology
for assessing available transfer capability posted on the Transmission
Provider's OASIS (Section 4) is contained in Attachment C of the
Tariff. In the event sufficient transfer capability may not exist to
accommodate a service request, the Transmission Provider will respond
by performing a System Impact Study.
15.3 Initiating Service in the Absence of an Executed Service Agreement
If the Transmission Provider and the Transmission Customer
requesting Firm or Non-Firm Point-To-Point Transmission Service cannot
agree on all the terms and conditions of the Point-To-Point Service
Agreement, the Transmission Provider shall file with the Commission,
within thirty (30) days after the date the Transmission Customer
provides written notification directing the Transmission Provider to
file, an unexecuted Point-To-Point Service Agreement containing terms
and conditions deemed appropriate by the Transmission Provider for such
requested Transmission Service. The Transmission Provider shall
commence providing Transmission Service subject to the Transmission
Customer agreeing to (i) compensate the Transmission Provider at
whatever rate the Commission ultimately determines to be just and
reasonable, and (ii) comply with the terms and conditions of the Tariff
including posting appropriate security deposits in accordance with the
terms of Section 17.3.
15.4 Obligation To Provide Transmission Service That Requires Expansion
or Modification of the Transmission System, Redispatch or Conditional
Curtailment
(a) If the Transmission Provider determines that it cannot
accommodate a Completed Application for Firm Point-To-Point
Transmission Service because of insufficient capability on its
Transmission System, the Transmission Provider will use due diligence
to expand or modify its Transmission System to provide the requested
Firm Transmission Service, consistent with its planning obligations in
Attachment K, provided the Transmission Customer agrees to compensate
the Transmission Provider for such costs pursuant to the terms of
Section 27. The Transmission Provider will conform to Good Utility
Practice and its planning obligations in Attachment K, in determining
the need for new facilities and in the design and construction of such
facilities. The obligation applies only to those facilities that the
Transmission Provider has the right to expand or modify.
(b) If the Transmission Provider determines that it cannot
accommodate a Completed Application for Long-Term Firm Point-To-Point
Transmission Service because of insufficient capability on its
Transmission System, the Transmission Provider will use due diligence
to provide redispatch from its own resources until (i) Network Upgrades
are completed for the Transmission Customer, (ii) the Transmission
Provider determines through a biennial reassessment that it can no
longer reliably provide the redispatch, or (iii) the Transmission
Customer terminates the service because of redispatch changes resulting
from the reassessment. A Transmission Provider shall not unreasonably
deny self-provided redispatch or redispatch arranged by the
Transmission Customer from a third party resource.
(c) If the Transmission Provider determines that it cannot
accommodate a Completed Application for Long-Term Firm Point-To-Point
Transmission Service because of insufficient capability on its
Transmission System, the Transmission Provider will offer the Firm
Transmission Service with the condition that the Transmission Provider
may curtail the service prior to the curtailment of other Firm
Transmission Service for a specified number of hours per year or during
System Condition(s). If the Transmission Customer accepts the service,
the Transmission Provider will use due diligence to provide the service
until (i) Network Upgrades are
[[Page 39138]]
completed for the Transmission Customer, (ii) the Transmission Provider
determines through a biennial reassessment that it can no longer
reliably provide such service, or (iii) the Transmission Customer
terminates the service because the reassessment increased the number of
hours per year of conditional curtailment or changed the System
Conditions.
15.5 Deferral of Service
The Transmission Provider may defer providing service until it
completes construction of new transmission facilities or upgrades
needed to provide Firm Point-To-Point Transmission Service whenever the
Transmission Provider determines that providing the requested service
would, without such new facilities or upgrades, impair or degrade
reliability to any existing firm services.
15.6 Other Transmission Service Schedules
Eligible Customers receiving transmission service under other
agreements on file with the Commission may continue to receive
transmission service under those agreements until such time as those
agreements may be modified by the Commission.
15.7 Real Power Losses
Real Power Losses are associated with all transmission service. The
Transmission Provider is not obligated to provide Real Power Losses.
The Transmission Customer is responsible for replacing losses
associated with all transmission service as calculated by the
Transmission Provider. The applicable Real Power Loss factors are as
follows: [To be completed by the Transmission Provider].
16 Transmission Customer Responsibilities
16.1 Conditions Required of Transmission Customers
Point-To-Point Transmission Service shall be provided by the
Transmission Provider only if the following conditions are satisfied by
the Transmission Customer:
(a) The Transmission Customer has pending a Completed Application
for service;
(b) The Transmission Customer meets the creditworthiness criteria
set forth in Section 11;
(c) The Transmission Customer will have arrangements in place for
any other transmission service necessary to effect the delivery from
the generating source to the Transmission Provider prior to the time
service under Part II of the Tariff commences;
(d) The Transmission Customer agrees to pay for any facilities
constructed and chargeable to such Transmission Customer under Part II
of the Tariff, whether or not the Transmission Customer takes service
for the full term of its reservation;
(e) The Transmission Customer provides the information required by
the Transmission Provider's planning process established in Attachment
K; and
(f) The Transmission Customer has executed a Point-To-Point Service
Agreement or has agreed to receive service pursuant to Section 15.3.
16.2 Transmission Customer Responsibility for Third-Party Arrangements
Any scheduling arrangements that may be required by other electric
systems shall be the responsibility of the Transmission Customer
requesting service. The Transmission Customer shall provide, unless
waived by the Transmission Provider, notification to the Transmission
Provider identifying such systems and authorizing them to schedule the
capacity and energy to be transmitted by the Transmission Provider
pursuant to Part II of the Tariff on behalf of the Receiving Party at
the Point of Delivery or the Delivering Party at the Point of Receipt.
However, the Transmission Provider will undertake reasonable efforts to
assist the Transmission Customer in making such arrangements, including
without limitation, providing any information or data required by such
other electric system pursuant to Good Utility Practice.
17 Procedures for Arranging Firm Point-To-Point Transmission Service
17.1 Application
A request for Firm Point-To-Point Transmission Service for periods
of one year or longer must contain a written Application to:
[Transmission Provider Name and Address], at least sixty (60) days in
advance of the calendar month in which service is to commence. The
Transmission Provider will consider requests for such firm service on
shorter notice when feasible. Requests for firm service for periods of
less than one year shall be subject to expedited procedures that shall
be negotiated between the Parties within the time constraints provided
in Section 17.5. All Firm Point-To-Point Transmission Service requests
should be submitted by entering the information listed below on the
Transmission Provider's OASIS. Prior to implementation of the
Transmission Provider's OASIS, a Completed Application may be submitted
by (i) transmitting the required information to the Transmission
Provider by telefax, or (ii) providing the information by telephone
over the Transmission Provider's time recorded telephone line. Each of
these methods will provide a time-stamped record for establishing the
priority of the Application.
17.2 Completed Application
A Completed Application shall provide all of the information
included in 18 CFR 2.20 including but not limited to the following:
(i) The identity, address, telephone number and facsimile number of
the entity requesting service;
(ii) A statement that the entity requesting service is, or will be
upon commencement of service, an Eligible Customer under the Tariff;
(iii) The location of the Point(s) of Receipt and Point(s) of
Delivery and the identities of the Delivering Parties and the Receiving
Parties;
(iv) The location of the generating facility(ies) supplying the
capacity and energy and the location of the load ultimately served by
the capacity and energy transmitted. The Transmission Provider will
treat this information as confidential except to the extent that
disclosure of this information is required by this Tariff, by
regulatory or judicial order, for reliability purposes pursuant to Good
Utility Practice or pursuant to RTG transmission information sharing
agreements. The Transmission Provider shall treat this information
consistent with the standards of conduct contained in Part 37 of the
Commission's regulations;
(v) A description of the supply characteristics of the capacity and
energy to be delivered;
(vi) An estimate of the capacity and energy expected to be
delivered to the Receiving Party;
(vii) The Service Commencement Date and the term of the requested
Transmission Service;
(viii) The transmission capacity requested for each Point of
Receipt and each Point of Delivery on the Transmission Provider's
Transmission System; customers may combine their requests for service
in order to satisfy the minimum transmission capacity requirement;
(ix) A statement indicating that, if the Eligible Customer submits
a Pre-Confirmed Application, the Eligible Customer will execute a
Service Agreement upon receipt of notification that the Transmission
Provider can provide the requested Transmission Service; and
[[Page 39139]]
(x) Any additional information required by the Transmission
Provider's planning process established in Attachment K.
The Transmission Provider shall treat this information consistent
with the standards of conduct contained in Part 37 of the Commission's
regulations.
17.3 Deposit
A Completed Application for Firm Point-To-Point Transmission
Service also shall include a deposit of either one month's charge for
Reserved Capacity or the full charge for Reserved Capacity for service
requests of less than one month. If the Application is rejected by the
Transmission Provider because it does not meet the conditions for
service as set forth herein, or in the case of requests for service
arising in connection with losing bidders in a Request For Proposals
(RFP), said deposit shall be returned with interest less any reasonable
costs incurred by the Transmission Provider in connection with the
review of the losing bidder's Application. The deposit also will be
returned with interest less any reasonable costs incurred by the
Transmission Provider if the Transmission Provider is unable to
complete new facilities needed to provide the service. If an
Application is withdrawn or the Eligible Customer decides not to enter
into a Service Agreement for Firm Point-To-Point Transmission Service,
the deposit shall be refunded in full, with interest, less reasonable
costs incurred by the Transmission Provider to the extent such costs
have not already been recovered by the Transmission Provider from the
Eligible Customer. The Transmission Provider will provide to the
Eligible Customer a complete accounting of all costs deducted from the
refunded deposit, which the Eligible Customer may contest if there is a
dispute concerning the deducted costs. Deposits associated with
construction of new facilities are subject to the provisions of Section
19. If a Service Agreement for Firm Point-To-Point Transmission Service
is executed, the deposit, with interest, will be returned to the
Transmission Customer upon expiration or termination of the Service
Agreement for Firm Point-To-Point Transmission Service. Applicable
interest shall be computed in accordance with the Commission's
regulations at 18 CFR 35.19a(a)(2)(iii), and shall be calculated from
the day the deposit check is credited to the Transmission Provider's
account.
17.4 Notice of Deficient Application
If an Application fails to meet the requirements of the Tariff, the
Transmission Provider shall notify the entity requesting service within
fifteen (15) days of receipt of the reasons for such failure. The
Transmission Provider will attempt to remedy minor deficiencies in the
Application through informal communications with the Eligible Customer.
If such efforts are unsuccessful, the Transmission Provider shall
return the Application, along with any deposit, with interest. Upon
receipt of a new or revised Application that fully complies with the
requirements of Part II of the Tariff, the Eligible Customer shall be
assigned a new priority consistent with the date of the new or revised
Application.
17.5 Response to a Completed Application
Following receipt of a Completed Application for Firm Point-To-
Point Transmission Service, the Transmission Provider shall make a
determination of available transfer capability as required in Section
15.2. The Transmission Provider shall notify the Eligible Customer as
soon as practicable, but not later than thirty (30) days after the date
of receipt of a Completed Application either (i) if it will be able to
provide service without performing a System Impact Study or (ii) if
such a study is needed to evaluate the impact of the Application
pursuant to Section 19.1. Responses by the Transmission Provider must
be made as soon as practicable to all completed applications (including
applications by its own merchant function) and the timing of such
responses must be made on a non-discriminatory basis.
17.6 Execution of Service Agreement
Whenever the Transmission Provider determines that a System Impact
Study is not required and that the service can be provided, it shall
notify the Eligible Customer as soon as practicable but no later than
thirty (30) days after receipt of the Completed Application. Where a
System Impact Study is required, the provisions of Section 19 will
govern the execution of a Service Agreement. Failure of an Eligible
Customer to execute and return the Service Agreement or request the
filing of an unexecuted service agreement pursuant to Section 15.3,
within fifteen (15) days after it is tendered by the Transmission
Provider will be deemed a withdrawal and termination of the Application
and any deposit submitted shall be refunded with interest. Nothing
herein limits the right of an Eligible Customer to file another
Application after such withdrawal and termination.
17.7 Extensions for Commencement of Service
The Transmission Customer can obtain, subject to availability, up
to five (5) one-year extensions for the commencement of service. The
Transmission Customer may postpone service by paying a non-refundable
annual reservation fee equal to one-month's charge for Firm
Transmission Service for each year or fraction thereof within 15 days
of notifying the Transmission Provider it intends to extend the
commencement of service. If during any extension for the commencement
of service an Eligible Customer submits a Completed Application for
Firm Transmission Service, and such request can be satisfied only by
releasing all or part of the Transmission Customer's Reserved Capacity,
the original Reserved Capacity will be released unless the following
condition is satisfied. Within thirty (30) days, the original
Transmission Customer agrees to pay the Firm Point-To-Point
transmission rate for its Reserved Capacity concurrent with the new
Service Commencement Date. In the event the Transmission Customer
elects to release the Reserved Capacity, the reservation fees or
portions thereof previously paid will be forfeited.
18 Procedures for Arranging Non-Firm Point-To-Point Transmission
Service
18.1 Application
Eligible Customers seeking Non-Firm Point-To-Point Transmission
Service must submit a Completed Application to the Transmission
Provider. Applications should be submitted by entering the information
listed below on the Transmission Provider's OASIS. Prior to
implementation of the Transmission Provider's OASIS, a Completed
Application may be submitted by (i) transmitting the required
information to the Transmission Provider by telefax, or (ii) providing
the information by telephone over the Transmission Provider's time
recorded telephone line. Each of these methods will provide a time-
stamped record for establishing the service priority of the
Application.
18.2 Completed Application
A Completed Application shall provide all of the information
included in 18 CFR 2.20 including but not limited to the following:
(i) The identity, address, telephone number and facsimile number of
the entity requesting service;
[[Page 39140]]
(ii) A statement that the entity requesting service is, or will be
upon commencement of service, an Eligible Customer under the Tariff;
(iii) The Point(s) of Receipt and the Point(s) of Delivery;
(iv) The maximum amount of capacity requested at each Point of
Receipt and Point of Delivery; and
(v) The proposed dates and hours for initiating and terminating
transmission service hereunder.
In addition to the information specified above, when required to
properly evaluate system conditions, the Transmission Provider also may
ask the Transmission Customer to provide the following:
(vi) The electrical location of the initial source of the power to
be transmitted pursuant to the Transmission Customer's request for
service; and
(vii) The electrical location of the ultimate load.
The Transmission Provider will treat this information in (vi) and
(vii) as confidential at the request of the Transmission Customer
except to the extent that disclosure of this information is required by
this Tariff, by regulatory or judicial order, for reliability purposes
pursuant to Good Utility Practice, or pursuant to RTG transmission
information sharing agreements. The Transmission Provider shall treat
this information consistent with the standards of conduct contained in
Part 37 of the Commission's regulations.
(viii) A statement indicating that, if the Eligible Customer
submits a Pre-Confirmed Application, the Eligible Customer will execute
a Service Agreement upon receipt of notification that the Transmission
Provider can provide the requested Transmission Service.
18.3 Reservation of Non-Firm Point-to-Point Transmission Service
Requests for monthly service shall be submitted no earlier than
sixty (60) days before service is to commence; requests for weekly
service shall be submitted no earlier than fourteen (14) days before
service is to commence, requests for daily service shall be submitted
no earlier than two (2) days before service is to commence, and
requests for hourly service shall be submitted no earlier than noon the
day before service is to commence. Requests for service received later
than 2 p.m. prior to the day service is scheduled to commence will be
accommodated if practicable [or such reasonable times that are
generally accepted in the region and are consistently adhered to by the
Transmission Provider].
18.4 Determination of Available Transfer Capability
Following receipt of a tendered schedule the Transmission Provider
will make a determination on a non-discriminatory basis of available
transfer capability pursuant to Section 15.2. Such determination shall
be made as soon as reasonably practicable after receipt, but not later
than the following time periods for the following terms of service (i)
thirty (30) minutes for hourly service, (ii) thirty (30) minutes for
daily service, (iii) four (4) hours for weekly service, and (iv) two
(2) days for monthly service. [Or such reasonable times that are
generally accepted in the region and are consistently adhered to by the
Transmission Provider].
19 Additional Study Procedures for Firm Point-to-Point Transmission
Service Requests
19.1 Notice of Need for System Impact Study
After receiving a request for service, the Transmission Provider
shall determine on a non-discriminatory basis whether a System Impact
Study is needed. A description of the Transmission Provider's
methodology for completing a System Impact Study is provided in
Attachment D. If the Transmission Provider determines that a System
Impact Study is necessary to accommodate the requested service, it
shall so inform the Eligible Customer, as soon as practicable. Once
informed, the Eligible Customer shall timely notify the Transmission
Provider if it elects to have the Transmission Provider study
redispatch or conditional curtailment as part of the System Impact
Study. If notification is provided prior to tender of the System Impact
Study Agreement, the Eligible Customer can avoid the costs associated
with the study of these options. The Transmission Provider shall within
thirty (30) days of receipt of a Completed Application, tender a System
Impact Study Agreement pursuant to which the Eligible Customer shall
agree to reimburse the Transmission Provider for performing the
required System Impact Study. For a service request to remain a
Completed Application, the Eligible Customer shall execute the System
Impact Study Agreement and return it to the Transmission Provider
within fifteen (15) days. If the Eligible Customer elects not to
execute the System Impact Study Agreement, its application shall be
deemed withdrawn and its deposit, pursuant to Section 17.3, shall be
returned with interest.
19.2 System Impact Study Agreement and Cost Reimbursement
(i) The System Impact Study Agreement will clearly specify the
Transmission Provider's estimate of the actual cost, and time for
completion of the System Impact Study. The charge shall not exceed the
actual cost of the study. In performing the System Impact Study, the
Transmission Provider shall rely, to the extent reasonably practicable,
on existing transmission planning studies. The Eligible Customer will
not be assessed a charge for such existing studies; however, the
Eligible Customer will be responsible for charges associated with any
modifications to existing planning studies that are reasonably
necessary to evaluate the impact of the Eligible Customer's request for
service on the Transmission System.
(ii) If in response to multiple Eligible Customers requesting
service in relation to the same competitive solicitation, a single
System Impact Study is sufficient for the Transmission Provider to
accommodate the requests for service, the costs of that study shall be
pro-rated among the Eligible Customers.
(iii) For System Impact Studies that the Transmission Provider
conducts on its own behalf, the Transmission Provider shall record the
cost of the System Impact Studies pursuant to Section 20.
19.3 System Impact Study Procedures
Upon receipt of an executed System Impact Study Agreement, the
Transmission Provider will use due diligence to complete the required
System Impact Study within a sixty (60) day period. The System Impact
Study shall identify (1) any system constraints, identified with
specificity by transmission element or flowgate, (2) redispatch options
(when requested by an Eligible Customer) including an estimate of the
cost of redispatch, (3) conditional curtailment options (when requested
by an Eligible Customer) including the number of hours per year and the
System Conditions during which conditional curtailment may occur, and
(4) additional Direct Assignment Facilities or Network Upgrades
required to provide the requested service. For customers requesting the
study of redispatch options, the System Impact Study shall (1) identify
all resources located within the Transmission Provider's Control Area
that can significantly contribute toward relieving the system
constraint and (2) provide a measurement of each
[[Page 39141]]
resource's impact on the system constraint. If the Transmission
Provider possesses information indicating that any resource outside its
Control Area could relieve the constraint, it shall identify each such
resource in the System Impact Study. In the event that the Transmission
Provider is unable to complete the required System Impact Study within
such time period, it shall so notify the Eligible Customer and provide
an estimated completion date along with an explanation of the reasons
why additional time is required to complete the required studies. A
copy of the completed System Impact Study and related work papers shall
be made available to the Eligible Customer as soon as the System Impact
Study is complete. The Transmission Provider will use the same due
diligence in completing the System Impact Study for an Eligible
Customer as it uses when completing studies for itself. The
Transmission Provider shall notify the Eligible Customer immediately
upon completion of the System Impact Study if the Transmission System
will be adequate to accommodate all or part of a request for service or
that no costs are likely to be incurred for new transmission facilities
or upgrades. In order for a request to remain a Completed Application,
within fifteen (15) days of completion of the System Impact Study the
Eligible Customer must execute a Service Agreement or request the
filing of an unexecuted Service Agreement pursuant to Section 15.3, or
the Application shall be deemed terminated and withdrawn.
19.4 Facilities Study Procedures
If a System Impact Study indicates that additions or upgrades to
the Transmission System are needed to supply the Eligible Customer's
service request, the Transmission Provider, within thirty (30) days of
the completion of the System Impact Study, shall tender to the Eligible
Customer a Facilities Study Agreement pursuant to which the Eligible
Customer shall agree to reimburse the Transmission Provider for
performing the required Facilities Study. For a service request to
remain a Completed Application, the Eligible Customer shall execute the
Facilities Study Agreement and return it to the Transmission Provider
within fifteen (15) days. If the Eligible Customer elects not to
execute the Facilities Study Agreement, its application shall be deemed
withdrawn and its deposit, pursuant to Section 17.3, shall be returned
with interest. Upon receipt of an executed Facilities Study Agreement,
the Transmission Provider will use due diligence to complete the
required Facilities Study within a sixty (60) day period. If the
Transmission Provider is unable to complete the Facilities Study in the
allotted time period, the Transmission Provider shall notify the
Transmission Customer and provide an estimate of the time needed to
reach a final determination along with an explanation of the reasons
that additional time is required to complete the study. When completed,
the Facilities Study will include a good faith estimate of (i) the cost
of Direct Assignment Facilities to be charged to the Transmission
Customer, (ii) the Transmission Customer's appropriate share of the
cost of any required Network Upgrades as determined pursuant to the
provisions of Part II of the Tariff, and (iii) the time required to
complete such construction and initiate the requested service. The
Transmission Customer shall provide the Transmission Provider with a
letter of credit or other reasonable form of security acceptable to the
Transmission Provider equivalent to the costs of new facilities or
upgrades consistent with commercial practices as established by the
Uniform Commercial Code. The Transmission Customer shall have thirty
(30) days to execute a Service Agreement or request the filing of an
unexecuted Service Agreement and provide the required letter of credit
or other form of security or the request will no longer be a Completed
Application and shall be deemed terminated and withdrawn.
19.5 Facilities Study Modifications
Any change in design arising from inability to site or construct
facilities as proposed will require development of a revised good faith
estimate. New good faith estimates also will be required in the event
of new statutory or regulatory requirements that are effective before
the completion of construction or other circumstances beyond the
control of the Transmission Provider that significantly affect the
final cost of new facilities or upgrades to be charged to the
Transmission Customer pursuant to the provisions of Part II of the
Tariff.
19.6 Due Diligence in Completing New Facilities
The Transmission Provider shall use due diligence to add necessary
facilities or upgrade its Transmission System within a reasonable time.
The Transmission Provider will not upgrade its existing or planned
Transmission System in order to provide the requested Firm Point-To-
Point Transmission Service if doing so would impair system reliability
or otherwise impair or degrade existing firm service.
19.7 Partial Interim Service
If the Transmission Provider determines that it will not have
adequate transfer capability to satisfy the full amount of a Completed
Application for Firm Point-To-Point Transmission Service, the
Transmission Provider nonetheless shall be obligated to offer and
provide the portion of the requested Firm Point-To-Point Transmission
Service that can be accommodated without addition of any facilities and
through redispatch. However, the Transmission Provider shall not be
obligated to provide the incremental amount of requested Firm Point-To-
Point Transmission Service that requires the addition of facilities or
upgrades to the Transmission System until such facilities or upgrades
have been placed in service.
19.8 Expedited Procedures for New Facilities
In lieu of the procedures set forth above, the Eligible Customer
shall have the option to expedite the process by requesting the
Transmission Provider to tender at one time, together with the results
of required studies, an ``Expedited Service Agreement'' pursuant to
which the Eligible Customer would agree to compensate the Transmission
Provider for all costs incurred pursuant to the terms of the Tariff. In
order to exercise this option, the Eligible Customer shall request in
writing an expedited Service Agreement covering all of the above-
specified items within thirty (30) days of receiving the results of the
System Impact Study identifying needed facility additions or upgrades
or costs incurred in providing the requested service. While the
Transmission Provider agrees to provide the Eligible Customer with its
best estimate of the new facility costs and other charges that may be
incurred, such estimate shall not be binding and the Eligible Customer
must agree in writing to compensate the Transmission Provider for all
costs incurred pursuant to the provisions of the Tariff. The Eligible
Customer shall execute and return such an Expedited Service Agreement
within fifteen (15) days of its receipt or the Eligible Customer's
request for service will cease to be a Completed Application and will
be deemed terminated and withdrawn.
19.9 Penalties for Failure To Meet Study Deadlines
Sections 19.3 and 19.4 require a Transmission Provider to use due
diligence to meet 60-day study completion deadlines for System Impact
Studies and Facilities Studies.
[[Page 39142]]
(i) The Transmission Provider is required to file a notice with the
Commission in the event that more than twenty (20) percent of non-
Affiliates' System Impact Studies and Facilities Studies completed by
the Transmission Provider in any two consecutive calendar quarters are
not completed within the 60-day study completion deadlines. Such notice
must be filed within thirty (30) days of the end of the calendar
quarter triggering the notice requirement.
(ii) For the purposes of calculating the percent of non-Affiliates'
System Impact Studies and Facilities Studies processed outside of the
60-day study completion deadlines, the Transmission Provider shall
consider all System Impact Studies and Facilities Studies that it
completes for non-Affiliates during the calendar quarter. The
percentage should be calculated by dividing the number of those studies
which are completed on time by the total number of completed studies.
The Transmission Provider may provide an explanation in its
notification filing to the Commission if it believes there are
extenuating circumstances that prevented it from meeting the 60-day
study completion deadlines.
(iii) The Transmission Provider is subject to an operational
penalty if it completes ten (10) percent or more of non-Affiliates'
System Impact Studies and Facilities Studies outside of the 60-day
study completion deadlines for each of the two calendar quarters
immediately following the quarter that triggered its notification
filing to the Commission. The operational penalty will be assessed for
each calendar quarter for which an operational penalty applies,
starting with the calendar quarter immediately following the quarter
that triggered the Transmission Provider's notification filing to the
Commission. The operational penalty will continue to be assessed each
quarter until the Transmission Provider completes at least ninety (90)
percent of all non-Affiliates' System Impact Studies and Facilities
Studies within the 60-day deadline.
(iv) For penalties assessed in accordance with subsection (iii)
above, the penalty amount for each System Impact Study or Facilities
Study shall be equal to $500 for each day the Transmission Provider
takes to complete that study beyond the 60-day deadline.
20 Procedures if the Transmission Provider Is Unable To Complete New
Transmission Facilities for Firm Point-to-Point Transmission Service
20.1 Delays in Construction of New Facilities
If any event occurs that will materially affect the time for
completion of new facilities, or the ability to complete them, the
Transmission Provider shall promptly notify the Transmission Customer.
In such circumstances, the Transmission Provider shall within thirty
(30) days of notifying the Transmission Customer of such delays,
convene a technical meeting with the Transmission Customer to evaluate
the alternatives available to the Transmission Customer. The
Transmission Provider also shall make available to the Transmission
Customer studies and work papers related to the delay, including all
information that is in the possession of the Transmission Provider that
is reasonably needed by the Transmission Customer to evaluate any
alternatives.
20.2 Alternatives to the Original Facility Additions
When the review process of Section 20.1 determines that one or more
alternatives exist to the originally planned construction project, the
Transmission Provider shall present such alternatives for consideration
by the Transmission Customer. If, upon review of any alternatives, the
Transmission Customer desires to maintain its Completed Application
subject to construction of the alternative facilities, it may request
the Transmission Provider to submit a revised Service Agreement for
Firm Point-To-Point Transmission Service. If the alternative approach
solely involves Non-Firm Point-To-Point Transmission Service, the
Transmission Provider shall promptly tender a Service Agreement for
Non-Firm Point-To-Point Transmission Service providing for the service.
In the event the Transmission Provider concludes that no reasonable
alternative exists and the Transmission Customer disagrees, the
Transmission Customer may seek relief under the dispute resolution
procedures pursuant to Section 12 or it may refer the dispute to the
Commission for resolution.
20.3 Refund Obligation for Unfinished Facility Additions
If the Transmission Provider and the Transmission Customer mutually
agree that no other reasonable alternatives exist and the requested
service cannot be provided out of existing capability under the
conditions of Part II of the Tariff, the obligation to provide the
requested Firm Point-To-Point Transmission Service shall terminate and
any deposit made by the Transmission Customer shall be returned with
interest pursuant to Commission regulations 35.19a(a)(2)(iii). However,
the Transmission Customer shall be responsible for all prudently
incurred costs by the Transmission Provider through the time
construction was suspended.
21 Provisions Relating to Transmission Construction and Services on the
Systems of Other Utilities
21.1 Responsibility for Third-Party System Additions
The Transmission Provider shall not be responsible for making
arrangements for any necessary engineering, permitting, and
construction of transmission or distribution facilities on the
system(s) of any other entity or for obtaining any regulatory approval
for such facilities. The Transmission Provider will undertake
reasonable efforts to assist the Transmission Customer in obtaining
such arrangements, including without limitation, providing any
information or data required by such other electric system pursuant to
Good Utility Practice.
21.2 Coordination of Third-Party System Additions
In circumstances where the need for transmission facilities or
upgrades is identified pursuant to the provisions of Part II of the
Tariff, and if such upgrades further require the addition of
transmission facilities on other systems, the Transmission Provider
shall have the right to coordinate construction on its own system with
the construction required by others. The Transmission Provider, after
consultation with the Transmission Customer and representatives of such
other systems, may defer construction of its new transmission
facilities, if the new transmission facilities on another system cannot
be completed in a timely manner. The Transmission Provider shall notify
the Transmission Customer in writing of the basis for any decision to
defer construction and the specific problems which must be resolved
before it will initiate or resume construction of new facilities.
Within sixty (60) days of receiving written notification by the
Transmission Provider of its intent to defer construction pursuant to
this section, the Transmission Customer may challenge the decision in
accordance with the dispute resolution procedures
[[Page 39143]]
pursuant to Section 12 or it may refer the dispute to the Commission
for resolution.
22 Changes in Service Specifications
22.1 Modifications on a Non-Firm Basis
The Transmission Customer taking Firm Point-To-Point Transmission
Service may request the Transmission Provider to provide transmission
service on a non-firm basis over Receipt and Delivery Points other than
those specified in the Service Agreement (``Secondary Receipt and
Delivery Points''), in amounts not to exceed its firm capacity
reservation, without incurring an additional Non-Firm Point-To-Point
Transmission Service charge or executing a new Service Agreement,
subject to the following conditions.
(a) Service provided over Secondary Receipt and Delivery Points
will be non-firm only, on an as-available basis and will not displace
any firm or non-firm service reserved or scheduled by third-parties
under the Tariff or by the Transmission Provider on behalf of its
Native Load Customers.
(b) The sum of all Firm and non-firm Point-To-Point Transmission
Service provided to the Transmission Customer at any time pursuant to
this section shall not exceed the Reserved Capacity in the relevant
Service Agreement under which such services are provided.
(c) The Transmission Customer shall retain its right to schedule
Firm Point-To-Point Transmission Service at the Receipt and Delivery
Points specified in the relevant Service Agreement in the amount of its
original capacity reservation.
(d) Service over Secondary Receipt and Delivery Points on a non-
firm basis shall not require the filing of an Application for Non-Firm
Point-To-Point Transmission Service under the Tariff. However, all
other requirements of Part II of the Tariff (except as to transmission
rates) shall apply to transmission service on a non-firm basis over
Secondary Receipt and Delivery Points.
22.2 Modification on a Firm Basis
Any request by a Transmission Customer to modify Receipt and
Delivery Points on a firm basis shall be treated as a new request for
service in accordance with Section 17 hereof, except that such
Transmission Customer shall not be obligated to pay any additional
deposit if the capacity reservation does not exceed the amount reserved
in the existing Service Agreement. While such new request is pending,
the Transmission Customer shall retain its priority for service at the
existing firm Receipt and Delivery Points specified in its Service
Agreement.
23 Sale or Assignment of Transmission Service
23.1 Procedures for Assignment or Transfer of Service
Subject to Commission approval of any necessary filings, a
Transmission Customer may sell, assign, or transfer all or a portion of
its rights under its Service Agreement, but only to another Eligible
Customer (the Assignee). The Transmission Customer that sells, assigns
or transfers its rights under its Service Agreement is hereafter
referred to as the Reseller. Compensation to Resellers shall not exceed
the higher of (i) the original rate paid by the Reseller, (ii) the
Transmission Provider's maximum rate on file at the time of the
assignment, or (iii) the Reseller's opportunity cost capped at the
Transmission Provider's cost of expansion; provided that, for service
prior to October 1, 2010, compensation to Resellers shall be at rates
established by agreement between the Reseller and the Assignee.
The Assignee must execute a service agreement with the Transmission
Provider governing reassignments of transmission service prior to the
date on which the reassigned service commences. The Transmission
Provider shall charge the Reseller, as appropriate, at the rate stated
in the Reseller's Service Agreement with the Transmission Provider or
the associated OASIS schedule and credit the Reseller with the price
reflected in the Assignee's Service Agreement with the Transmission
Provider or the associated OASIS schedule; provided that, such credit
shall be reversed in the event of non-payment by the Assignee. If the
Assignee does not request any change in the Point(s) of Receipt or the
Point(s) of Delivery, or a change in any other term or condition set
forth in the original Service Agreement, the Assignee will receive the
same services as did the Reseller and the priority of service for the
Assignee will be the same as that of the Reseller. The Assignee will be
subject to all terms and conditions of this Tariff. If the Assignee
requests a change in service, the reservation priority of service will
be determined by the Transmission Provider pursuant to Section 13.2.
23.2 Limitations on Assignment or Transfer of Service
If the Assignee requests a change in the Point(s) of Receipt or
Point(s) of Delivery, or a change in any other specifications set forth
in the original Service Agreement, the Transmission Provider will
consent to such change subject to the provisions of the Tariff,
provided that the change will not impair the operation and reliability
of the Transmission Provider's generation, transmission, or
distribution systems. The Assignee shall compensate the Transmission
Provider for performing any System Impact Study needed to evaluate the
capability of the Transmission System to accommodate the proposed
change and any additional costs resulting from such change. The
Reseller shall remain liable for the performance of all obligations
under the Service Agreement, except as specifically agreed to by the
Transmission Provider and the Reseller through an amendment to the
Service Agreement.
23.3 Information on Assignment or Transfer of Service
In accordance with Section 4, all sales or assignments of capacity
must be conducted through or otherwise posted on the Transmission
Provider's OASIS on or before the date the reassigned service commences
and are subject to Section 23.1. Resellers may also use the
Transmission Provider's OASIS to post transmission capacity available
for resale.
24 Metering and Power Factor Correction at Receipt and Delivery
Points(s)
24.1 Transmission Customer Obligations
Unless otherwise agreed, the Transmission Customer shall be
responsible for installing and maintaining compatible metering and
communications equipment to accurately account for the capacity and
energy being transmitted under Part II of the Tariff and to communicate
the information to the Transmission Provider. Such equipment shall
remain the property of the Transmission Customer.
24.2 Transmission Provider Access to Metering Data
The Transmission Provider shall have access to metering data, which
may reasonably be required to facilitate measurements and billing under
the Service Agreement.
24.3 Power Factor
Unless otherwise agreed, the Transmission Customer is required to
maintain a power factor within the same range as the Transmission
Provider pursuant to Good Utility Practices. The
[[Page 39144]]
power factor requirements are specified in the Service Agreement where
applicable.
25 Compensation for Transmission Service
Rates for Firm and Non-Firm Point-To-Point Transmission Service are
provided in the Schedules appended to the Tariff: Firm Point-To-Point
Transmission Service (Schedule 7); and Non-Firm Point-To-Point
Transmission Service (Schedule 8). The Transmission Provider shall use
Part II of the Tariff to make its Third-Party Sales. The Transmission
Provider shall account for such use at the applicable Tariff rates,
pursuant to Section 8.
26 Stranded Cost Recovery
The Transmission Provider may seek to recover stranded costs from
the Transmission Customer pursuant to this Tariff in accordance with
the terms, conditions and procedures set forth in FERC Order No. 888.
However, the Transmission Provider must separately file any specific
proposed stranded cost charge under Section 205 of the Federal Power
Act.
27 Compensation for New Facilities and Redispatch Costs
Whenever a System Impact Study performed by the Transmission
Provider in connection with the provision of Firm Point-To-Point
Transmission Service identifies the need for new facilities, the
Transmission Customer shall be responsible for such costs to the extent
consistent with Commission policy. Whenever a System Impact Study
performed by the Transmission Provider identifies capacity constraints
that may be relieved by redispatching the Transmission Provider's
resources to eliminate such constraints, the Transmission Customer
shall be responsible for the redispatch costs to the extent consistent
with Commission policy.
III. Network Integration Transmission Service
Preamble
The Transmission Provider will provide Network Integration
Transmission Service pursuant to the applicable terms and conditions
contained in the Tariff and Service Agreement. Network Integration
Transmission Service allows the Network Customer to integrate,
economically dispatch and regulate its current and planned Network
Resources to serve its Network Load in a manner comparable to that in
which the Transmission Provider utilizes its Transmission System to
serve its Native Load Customers. Network Integration Transmission
Service also may be used by the Network Customer to deliver economy
energy purchases to its Network Load from non-designated resources on
an as-available basis without additional charge. Transmission service
for sales to non-designated loads will be provided pursuant to the
applicable terms and conditions of Part II of the Tariff.
28 Nature of Network Integration Transmission Service
28.1 Scope of Service
Network Integration Transmission Service is a transmission service
that allows Network Customers to efficiently and economically utilize
their Network Resources (as well as other non-designated generation
resources) to serve their Network Load located in the Transmission
Provider's Control Area and any additional load that may be designated
pursuant to Section 31.3 of the Tariff. The Network Customer taking
Network Integration Transmission Service must obtain or provide
Ancillary Services pursuant to Section 3.
28.2 Transmission Provider Responsibilities
The Transmission Provider will plan, construct, operate and
maintain its Transmission System in accordance with Good Utility
Practice and its planning obligations in Attachment K in order to
provide the Network Customer with Network Integration Transmission
Service over the Transmission Provider's Transmission System. The
Transmission Provider, on behalf of its Native Load Customers, shall be
required to designate resources and loads in the same manner as any
Network Customer under Part III of this Tariff. This information must
be consistent with the information used by the Transmission Provider to
calculate available transfer capability. The Transmission Provider
shall include the Network Customer's Network Load in its Transmission
System planning and shall, consistent with Good Utility Practice and
Attachment K, endeavor to construct and place into service sufficient
transfer capability to deliver the Network Customer's Network Resources
to serve its Network Load on a basis comparable to the Transmission
Provider's delivery of its own generating and purchased resources to
its Native Load Customers.
28.3 Network Integration Transmission Service
The Transmission Provider will provide firm transmission service
over its Transmission System to the Network Customer for the delivery
of capacity and energy from its designated Network Resources to service
its Network Loads on a basis that is comparable to the Transmission
Provider's use of the Transmission System to reliably serve its Native
Load Customers.
28.4 Secondary Service
The Network Customer may use the Transmission Provider's
Transmission System to deliver energy to its Network Loads from
resources that have not been designated as Network Resources. Such
energy shall be transmitted, on an as-available basis, at no additional
charge. Secondary service shall not require the filing of an
Application for Network Integration Transmission Service under the
Tariff. However, all other requirements of Part III of the Tariff
(except for transmission rates) shall apply to secondary service.
Deliveries from resources other than Network Resources will have a
higher priority than any Non-Firm Point-To-Point Transmission Service
under Part II of the Tariff.
28.5 Real Power Losses
Real Power Losses are associated with all transmission service. The
Transmission Provider is not obligated to provide Real Power Losses.
The Network Customer is responsible for replacing losses associated
with all transmission service as calculated by the Transmission
Provider. The applicable Real Power Loss factors are as follows: [To be
completed by the Transmission Provider].
28.6 Restrictions on Use of Service
The Network Customer shall not use Network Integration Transmission
Service for (i) sales of capacity and energy to non-designated loads,
or (ii) direct or indirect provision of transmission service by the
Network Customer to third parties. All Network Customers taking Network
Integration Transmission Service shall use Point-To-Point Transmission
Service under Part II of the Tariff for any Third-Party Sale which
requires use of the Transmission Provider's Transmission System. The
Transmission Provider shall specify any appropriate charges and
penalties and all related terms and conditions applicable in the event
that a Network Customer uses Network Integration Transmission Service
or secondary service pursuant to Section
[[Page 39145]]
28.4 to facilitate a wholesale sale that does not serve a Network Load.
29 Initiating Service
29.1 Condition Precedent for Receiving Service
Subject to the terms and conditions of Part III of the Tariff, the
Transmission Provider will provide Network Integration Transmission
Service to any Eligible Customer, provided that (i) the Eligible
Customer completes an Application for service as provided under Part
III of the Tariff, (ii) the Eligible Customer and the Transmission
Provider complete the technical arrangements set forth in Sections 29.3
and 29.4, (iii) the Eligible Customer executes a Service Agreement
pursuant to Attachment F for service under Part III of the Tariff or
requests in writing that the Transmission Provider file a proposed
unexecuted Service Agreement with the Commission, and (iv) the Eligible
Customer executes a Network Operating Agreement with the Transmission
Provider pursuant to Attachment G, or requests in writing that the
Transmission Provider file a proposed unexecuted Network Operating
Agreement.
29.2 Application Procedures
An Eligible Customer requesting service under Part III of the
Tariff must submit an Application, with a deposit approximating the
charge for one month of service, to the Transmission Provider as far as
possible in advance of the month in which service is to commence.
Unless subject to the procedures in Section 2, Completed Applications
for Network Integration Transmission Service will be assigned a
priority according to the date and time the Application is received,
with the earliest Application receiving the highest priority.
Applications should be submitted by entering the information listed
below on the Transmission Provider's OASIS. Prior to implementation of
the Transmission Provider's OASIS, a Completed Application may be
submitted by (i) transmitting the required information to the
Transmission Provider by telefax, or (ii) providing the information by
telephone over the Transmission Provider's time recorded telephone
line. Each of these methods will provide a time-stamped record for
establishing the service priority of the Application. A Completed
Application shall provide all of the information included in 18 CFR
2.20 including but not limited to the following:
(i) The identity, address, telephone number and facsimile number of
the party requesting service;
(ii) A statement that the party requesting service is, or will be
upon commencement of service, an Eligible Customer under the Tariff;
(iii) A description of the Network Load at each delivery point.
This description should separately identify and provide the Eligible
Customer's best estimate of the total loads to be served at each
transmission voltage level, and the loads to be served from each
Transmission Provider substation at the same transmission voltage
level. The description should include a ten (10) year forecast of
summer and winter load and resource requirements beginning with the
first year after the service is scheduled to commence;
(iv) The amount and location of any interruptible loads included in
the Network Load. This shall include the summer and winter capacity
requirements for each interruptible load (had such load not been
interruptible), that portion of the load subject to interruption, the
conditions under which an interruption can be implemented and any
limitations on the amount and frequency of interruptions. An Eligible
Customer should identify the amount of interruptible customer load (if
any) included in the 10 year load forecast provided in response to
(iii) above;
(v) A description of Network Resources (current and 10-year
projection). For each on-system Network Resource, such description
shall include:
Unit size and amount of capacity from that unit to be
designated as Network Resource
VAR capability (both leading and lagging) of all
generators
Operating restrictions
--Any periods of restricted operations throughout the year
--Maintenance schedules
--Minimum loading level of unit
--Normal operating level of unit
--Any must-run unit designations required for system reliability or
contract reasons
Approximate variable generating cost ($/MWH) for
redispatch computations
Arrangements governing sale and delivery of power to third
parties from generating facilities located in the Transmission Provider
Control Area, where only a portion of unit output is designated as a
Network Resource;
For each off-system Network Resource, such description shall
include:
Identification of the Network Resource as an off-system
resource
Amount of power to which the customer has rights
Identification of the control area from which the power
will originate
Delivery point(s) to the Transmission Provider's
Transmission System
Transmission arrangements on the external transmission
system(s)
Operating restrictions, if any
--Any periods of restricted operations throughout the year
--Maintenance schedules
--Minimum loading level of unit
--Normal operating level of unit
--Any must-run unit designations required for system reliability or
contract reasons
Approximate variable generating cost ($/MWH) for
redispatch computations;
(vi) Description of Eligible Customer's transmission system:
Load flow and stability data, such as real and reactive
parts of the load, lines, transformers, reactive devices and load type,
including normal and emergency ratings of all transmission equipment in
a load flow format compatible with that used by the Transmission
Provider
Operating restrictions needed for reliability
Operating guides employed by system operators
Contractual restrictions or committed uses of the Eligible
Customer's transmission system, other than the Eligible Customer's
Network Loads and Resources
Location of Network Resources described in subsection (v)
above
10 year projection of system expansions or upgrades
Transmission System maps that include any proposed
expansions or upgrades
Thermal ratings of Eligible Customer's Control Area ties
with other Control Areas;
(vii) Service Commencement Date and the term of the requested
Network Integration Transmission Service. The minimum term for Network
Integration Transmission Service is one year;
(viii) A statement signed by an authorized officer from or agent of
the Network Customer attesting that all of the network resources listed
pursuant to Section 29.2(v) satisfy the following conditions: (1) The
Network Customer owns the resource, has committed to purchase
generation pursuant to an executed contract, or has committed to
purchase generation where execution of a contract is contingent upon
the
[[Page 39146]]
availability of transmission service under Part III of the Tariff; and
(2) the Network Resources do not include any resources, or any portion
thereof, that are committed for sale to non-designated third party load
or otherwise cannot be called upon to meet the Network Customer's
Network Load on a non-interruptible basis, except for purposes of
fulfilling obligations under a reserve sharing program; and
(ix) Any additional information required of the Transmission
Customer as specified in the Transmission Provider's planning process
established in Attachment K.
Unless the Parties agree to a different time frame, the
Transmission Provider must acknowledge the request within ten (10) days
of receipt. The acknowledgement must include a date by which a
response, including a Service Agreement, will be sent to the Eligible
Customer. If an Application fails to meet the requirements of this
section, the Transmission Provider shall notify the Eligible Customer
requesting service within fifteen (15) days of receipt and specify the
reasons for such failure. Wherever possible, the Transmission Provider
will attempt to remedy deficiencies in the Application through informal
communications with the Eligible Customer. If such efforts are
unsuccessful, the Transmission Provider shall return the Application
without prejudice to the Eligible Customer filing a new or revised
Application that fully complies with the requirements of this section.
The Eligible Customer will be assigned a new priority consistent with
the date of the new or revised Application. The Transmission Provider
shall treat this information consistent with the standards of conduct
contained in Part 37 of the Commission's regulations.
29.3 Technical Arrangements to be Completed Prior to Commencement of
Service
Network Integration Transmission Service shall not commence until
the Transmission Provider and the Network Customer, or a third party,
have completed installation of all equipment specified under the
Network Operating Agreement consistent with Good Utility Practice and
any additional requirements reasonably and consistently imposed to
ensure the reliable operation of the Transmission System. The
Transmission Provider shall exercise reasonable efforts, in
coordination with the Network Customer, to complete such arrangements
as soon as practicable taking into consideration the Service
Commencement Date.
29.4 Network Customer Facilities
The provision of Network Integration Transmission Service shall be
conditioned upon the Network Customer's constructing, maintaining and
operating the facilities on its side of each delivery point or
interconnection necessary to reliably deliver capacity and energy from
the Transmission Provider's Transmission System to the Network
Customer. The Network Customer shall be solely responsible for
constructing or installing all facilities on the Network Customer's
side of each such delivery point or interconnection.
29.5 Filing of Service Agreement
The Transmission Provider will file Service Agreements with the
Commission in compliance with applicable Commission regulations.
30 Network Resources
30.1 Designation of Network Resources
Network Resources shall include all generation owned, purchased or
leased by the Network Customer designated to serve Network Load under
the Tariff. Network Resources may not include resources, or any portion
thereof, that are committed for sale to non-designated third party load
or otherwise cannot be called upon to meet the Network Customer's
Network Load on a non-interruptible basis, except for purposes of
fulfilling obligations under a reserve sharing program. Any owned or
purchased resources that were serving the Network Customer's loads
under firm agreements entered into on or before the Service
Commencement Date shall initially be designated as Network Resources
until the Network Customer terminates the designation of such
resources.
30.2 Designation of New Network Resources
The Network Customer may designate a new Network Resource by
providing the Transmission Provider with as much advance notice as
practicable. A designation of a new Network Resource must be made
through the Transmission Provider's OASIS by a request for modification
of service pursuant to an Application under Section 29. This request
must include a statement that the new network resource satisfies the
following conditions: (1) The Network Customer owns the resource, has
committed to purchase generation pursuant to an executed contract, or
has committed to purchase generation where execution of a contract is
contingent upon the availability of transmission service under Part III
of the Tariff; and (2) The Network Resources do not include any
resources, or any portion thereof, that are committed for sale to non-
designated third party load or otherwise cannot be called upon to meet
the Network Customer's Network Load on a non-interruptible basis,
except for purposes of fulfilling obligations under a reserve sharing
program. The Network Customer's request will be deemed deficient if it
does not include this statement and the Transmission Provider will
follow the procedures for a deficient application as described in
Section 29.2 of the Tariff.
30.3 Termination of Network Resources
The Network Customer may terminate the designation of all or part
of a generating resource as a Network Resource by providing
notification to the Transmission Provider through OASIS as soon as
reasonably practicable, but not later than the firm scheduling deadline
for the period of termination. Any request for termination of Network
Resource status must be submitted on OASIS, and should indicate whether
the request is for indefinite or temporary termination. A request for
indefinite termination of Network Resource status must indicate the
date and time that the termination is to be effective, and the
identification and capacity of the resource(s) or portions thereof to
be indefinitely terminated. A request for temporary termination of
Network Resource status must include the following:
(i) Effective date and time of temporary termination;
(ii) Effective date and time of redesignation, following period of
temporary termination;
(iii) Identification and capacity of resource(s) or portions
thereof to be temporarily terminated;
(iv) Resource description and attestation for redesignating the
network resource following the temporary termination, in accordance
with Section 30.2; and
(v) Identification of any related transmission service requests to
be evaluated concomitantly with the request for temporary termination,
such that the requests for undesignation and the request for these
related transmission service requests must be approved or denied as a
single request. The evaluation of these related transmission service
requests must take into account the termination of the network
resources identified in (iii) above, as well as all competing
transmission service requests of higher priority.
As part of a temporary termination, a Network Customer may only
redesignate
[[Page 39147]]
the same resource that was originally designated, or a portion thereof.
Requests to redesignate a different resource and/or a resource with
increased capacity will be deemed deficient and the Transmission
Provider will follow the procedures for a deficient application as
described in Section 29.2 of the Tariff.
30.4 Operation of Network Resources
The Network Customer shall not operate its designated Network
Resources located in the Network Customer's or Transmission Provider's
Control Area such that the output of those facilities exceeds its
designated Network Load, plus Non-Firm Sales delivered pursuant to Part
II of the Tariff, plus losses, plus power sales under a reserve sharing
program, plus sales that permit curtailment without penalty to serve
its designated Network Load. This limitation shall not apply to changes
in the operation of a Transmission Customer's Network Resources at the
request of the Transmission Provider to respond to an emergency or
other unforeseen condition which may impair or degrade the reliability
of the Transmission System. For all Network Resources not physically
connected with the Transmission Provider's Transmission System, the
Network Customer may not schedule delivery of energy in excess of the
Network Resource's capacity, as specified in the Network Customer's
Application pursuant to Section 29, unless the Network Customer
supports such delivery within the Transmission Provider's Transmission
System by either obtaining Point-to-Point Transmission Service or
utilizing secondary service pursuant to Section 28.4. The Transmission
Provider shall specify the rate treatment and all related terms and
conditions applicable in the event that a Network Customer's schedule
at the delivery point for a Network Resource not physically
interconnected with the Transmission Provider's Transmission System
exceeds the Network Resource's designated capacity, excluding energy
delivered using secondary service or Point-to-Point Transmission
Service.
30.5 Network Customer Redispatch Obligation
As a condition to receiving Network Integration Transmission
Service, the Network Customer agrees to redispatch its Network
Resources as requested by the Transmission Provider pursuant to Section
33.2. To the extent practical, the redispatch of resources pursuant to
this section shall be on a least cost, non-discriminatory basis between
all Network Customers, and the Transmission Provider.
30.6 Transmission Arrangements for Network Resources Not Physically
Interconnected With the Transmission Provider
The Network Customer shall be responsible for any arrangements
necessary to deliver capacity and energy from a Network Resource not
physically interconnected with the Transmission Provider's Transmission
System. The Transmission Provider will undertake reasonable efforts to
assist the Network Customer in obtaining such arrangements, including
without limitation, providing any information or data required by such
other entity pursuant to Good Utility Practice.
30.7 Limitation on Designation of Network Resources
The Network Customer must demonstrate that it owns or has committed
to purchase generation pursuant to an executed contract in order to
designate a generating resource as a Network Resource. Alternatively,
the Network Customer may establish that execution of a contract is
contingent upon the availability of transmission service under Part III
of the Tariff.
30.8 Use of Interface Capacity by the Network Customer
There is no limitation upon a Network Customer's use of the
Transmission Provider's Transmission System at any particular interface
to integrate the Network Customer's Network Resources (or substitute
economy purchases) with its Network Loads. However, a Network
Customer's use of the Transmission Provider's total interface capacity
with other transmission systems may not exceed the Network Customer's
Load.
30.9 Network Customer Owned Transmission Facilities
The Network Customer that owns existing transmission facilities
that are integrated with the Transmission Provider's Transmission
System may be eligible to receive consideration either through a
billing credit or some other mechanism. In order to receive such
consideration the Network Customer must demonstrate that its
transmission facilities are integrated into the plans or operations of
the Transmission Provider, to serve its power and transmission
customers. For facilities added by the Network Customer subsequent to
[the effective date of a Final Rule in RM05-25-000], the Network
Customer shall receive credit for such transmission facilities added if
such facilities are integrated into the operations of the Transmission
Provider's facilities; provided however, the Network Customer's
transmission facilities shall be presumed to be integrated if such
transmission facilities, if owned by the Transmission Provider, would
be eligible for inclusion in the Transmission Provider's annual
transmission revenue requirement as specified in Attachment H.
Calculation of any credit under this subsection shall be addressed in
either the Network Customer's Service Agreement or any other agreement
between the Parties.
31 Designation of Network Load
31.1 Network Load
The Network Customer must designate the individual Network Loads on
whose behalf the Transmission Provider will provide Network Integration
Transmission Service. The Network Loads shall be specified in the
Service Agreement.
31.2 New Network Loads Connected With the Transmission Provider
The Network Customer shall provide the Transmission Provider with
as much advance notice as reasonably practicable of the designation of
new Network Load that will be added to its Transmission System. A
designation of new Network Load must be made through a modification of
service pursuant to a new Application. The Transmission Provider will
use due diligence to install any transmission facilities required to
interconnect a new Network Load designated by the Network Customer. The
costs of new facilities required to interconnect a new Network Load
shall be determined in accordance with the procedures provided in
Section 32.4 and shall be charged to the Network Customer in accordance
with Commission policies.
31.3 Network Load Not Physically Interconnected With the Transmission
Provider
This section applies to both initial designation pursuant to
Section 31.1 and the subsequent addition of new Network Load not
physically interconnected with the Transmission Provider. To the extent
that the Network Customer desires to obtain transmission service for a
load outside the Transmission Provider's Transmission System, the
Network Customer shall have the option of (1) electing to include the
entire load as Network Load for all purposes under Part III of the
Tariff and designating Network Resources in connection with such
additional Network Load, or (2) excluding that
[[Page 39148]]
entire load from its Network Load and purchasing Point-To-Point
Transmission Service under Part II of the Tariff. To the extent that
the Network Customer gives notice of its intent to add a new Network
Load as part of its Network Load pursuant to this section the request
must be made through a modification of service pursuant to a new
Application.
31.4 New Interconnection Points
To the extent the Network Customer desires to add a new Delivery
Point or interconnection point between the Transmission Provider's
Transmission System and a Network Load, the Network Customer shall
provide the Transmission Provider with as much advance notice as
reasonably practicable.
31.5 Changes in Service Requests
Under no circumstances shall the Network Customer's decision to
cancel or delay a requested change in Network Integration Transmission
Service (e.g. the addition of a new Network Resource or designation of
a new Network Load) in any way relieve the Network Customer of its
obligation to pay the costs of transmission facilities constructed by
the Transmission Provider and charged to the Network Customer as
reflected in the Service Agreement. However, the Transmission Provider
must treat any requested change in Network Integration Transmission
Service in a non-discriminatory manner.
31.6 Annual Load and Resource Information Updates
The Network Customer shall provide the Transmission Provider with
annual updates of Network Load and Network Resource forecasts
consistent with those included in its Application for Network
Integration Transmission Service under Part III of the Tariff
including, but not limited to, any information provided under section
29.2(ix) pursuant to the Transmission Provider's planning process in
Attachment K. The Network Customer also shall provide the Transmission
Provider with timely written notice of material changes in any other
information provided in its Application relating to the Network
Customer's Network Load, Network Resources, its transmission system or
other aspects of its facilities or operations affecting the
Transmission Provider's ability to provide reliable service.
32 Additional Study Procedures for Network Integration Transmission
Service Requests
32.1 Notice of Need for System Impact Study
After receiving a request for service, the Transmission Provider
shall determine on a non-discriminatory basis whether a System Impact
Study is needed. A description of the Transmission Provider's
methodology for completing a System Impact Study is provided in
Attachment D. If the Transmission Provider determines that a System
Impact Study is necessary to accommodate the requested service, it
shall so inform the Eligible Customer, as soon as practicable. In such
cases, the Transmission Provider shall, within thirty (30) days of
receipt of a Completed Application, tender a System Impact Study
Agreement pursuant to which the Eligible Customer shall agree to
reimburse the Transmission Provider for performing the required System
Impact Study. For a service request to remain a Completed Application,
the Eligible Customer shall execute the System Impact Study Agreement
and return it to the Transmission Provider within fifteen (15) days. If
the Eligible Customer elects not to execute the System Impact Study
Agreement, its Application shall be deemed withdrawn and its deposit
shall be returned with interest.
32.2 System Impact Study Agreement and Cost Reimbursement
(i) The System Impact Study Agreement will clearly specify the
Transmission Provider's estimate of the actual cost, and time for
completion of the System Impact Study. The charge shall not exceed the
actual cost of the study. In performing the System Impact Study, the
Transmission Provider shall rely, to the extent reasonably practicable,
on existing transmission planning studies. The Eligible Customer will
not be assessed a charge for such existing studies; however, the
Eligible Customer will be responsible for charges associated with any
modifications to existing planning studies that are reasonably
necessary to evaluate the impact of the Eligible Customer's request for
service on the Transmission System.
(ii) If in response to multiple Eligible Customers requesting
service in relation to the same competitive solicitation, a single
System Impact Study is sufficient for the Transmission Provider to
accommodate the service requests, the costs of that study shall be pro-
rated among the Eligible Customers.
(iii) For System Impact Studies that the Transmission Provider
conducts on its own behalf, the Transmission Provider shall record the
cost of the System Impact Studies pursuant to Section 8.
32.3 System Impact Study Procedures
Upon receipt of an executed System Impact Study Agreement, the
Transmission Provider will use due diligence to complete the required
System Impact Study within a sixty (60) day period. The System Impact
Study shall identify (1) any system constraints, identified with
specificity by transmission element or flowgate, (2) redispatch options
(when requested by an Eligible Customer) including, to the extent
possible, an estimate of the cost of redispatch, (3) available options
for installation of automatic devices to curtail service (when
requested by an Eligible Customer), and (4) additional Direct
Assignment Facilities or Network Upgrades required to provide the
requested service. For customers requesting the study of redispatch
options, the System Impact Study shall (1) identify all resources
located within the Transmission Provider's Control Area that can
significantly contribute toward relieving the system constraint and (2)
provide a measurement of each resource's impact on the system
constraint. If the Transmission Provider possesses information
indicating that any resource outside its Control Area could relieve the
constraint, it shall identify each such resource in the System Impact
Study. In the event that the Transmission Provider is unable to
complete the required System Impact Study within such time period, it
shall so notify the Eligible Customer and provide an estimated
completion date along with an explanation of the reasons why additional
time is required to complete the required studies. A copy of the
completed System Impact Study and related work papers shall be made
available to the Eligible Customer as soon as the System Impact Study
is complete. The Transmission Provider will use the same due diligence
in completing the System Impact Study for an Eligible Customer as it
uses when completing studies for itself. The Transmission Provider
shall notify the Eligible Customer immediately upon completion of the
System Impact Study if the Transmission System will be adequate to
accommodate all or part of a request for service or that no costs are
likely to be incurred for new transmission facilities or upgrades. In
order for a request to remain a Completed Application, within fifteen
(15) days of completion of the System
[[Page 39149]]
Impact Study the Eligible Customer must execute a Service Agreement or
request the filing of an unexecuted Service Agreement, or the
Application shall be deemed terminated and withdrawn.
32.4 Facilities Study Procedures
If a System Impact Study indicates that additions or upgrades to
the Transmission System are needed to supply the Eligible Customer's
service request, the Transmission Provider, within thirty (30) days of
the completion of the System Impact Study, shall tender to the Eligible
Customer a Facilities Study Agreement pursuant to which the Eligible
Customer shall agree to reimburse the Transmission Provider for
performing the required Facilities Study. For a service request to
remain a Completed Application, the Eligible Customer shall execute the
Facilities Study Agreement and return it to the Transmission Provider
within fifteen (15) days. If the Eligible Customer elects not to
execute the Facilities Study Agreement, its Application shall be deemed
withdrawn and its deposit shall be returned with interest. Upon receipt
of an executed Facilities Study Agreement, the Transmission Provider
will use due diligence to complete the required Facilities Study within
a sixty (60) day period. If the Transmission Provider is unable to
complete the Facilities Study in the allotted time period, the
Transmission Provider shall notify the Eligible Customer and provide an
estimate of the time needed to reach a final determination along with
an explanation of the reasons that additional time is required to
complete the study. When completed, the Facilities Study will include a
good faith estimate of (i) the cost of Direct Assignment Facilities to
be charged to the Eligible Customer, (ii) the Eligible Customer's
appropriate share of the cost of any required Network Upgrades, and
(iii) the time required to complete such construction and initiate the
requested service. The Eligible Customer shall provide the Transmission
Provider with a letter of credit or other reasonable form of security
acceptable to the Transmission Provider equivalent to the costs of new
facilities or upgrades consistent with commercial practices as
established by the Uniform Commercial Code. The Eligible Customer shall
have thirty (30) days to execute a Service Agreement or request the
filing of an unexecuted Service Agreement and provide the required
letter of credit or other form of security or the request no longer
will be a Completed Application and shall be deemed terminated and
withdrawn.
32.5 Penalties for Failure To Meet Study Deadlines
Section 19.9 defines penalties that apply for failure to meet the
60-day study completion due diligence deadlines for System Impact
Studies and Facilities Studies under Part II of the Tariff. These same
requirements and penalties apply to service under Part III of the
Tariff.
33 Load Shedding and Curtailments
33.1 Procedures
Prior to the Service Commencement Date, the Transmission Provider
and the Network Customer shall establish Load Shedding and Curtailment
procedures pursuant to the Network Operating Agreement with the
objective of responding to contingencies on the Transmission System and
on systems directly and indirectly interconnected with Transmission
Provider's Transmission System. The Parties will implement such
programs during any period when the Transmission Provider determines
that a system contingency exists and such procedures are necessary to
alleviate such contingency. The Transmission Provider will notify all
affected Network Customers in a timely manner of any scheduled
Curtailment.
33.2 Transmission Constraints
During any period when the Transmission Provider determines that a
transmission constraint exists on the Transmission System, and such
constraint may impair the reliability of the Transmission Provider's
system, the Transmission Provider will take whatever actions,
consistent with Good Utility Practice, that are reasonably necessary to
maintain the reliability of the Transmission Provider's system. To the
extent the Transmission Provider determines that the reliability of the
Transmission System can be maintained by redispatching resources, the
Transmission Provider will initiate procedures pursuant to the Network
Operating Agreement to redispatch all Network Resources and the
Transmission Provider's own resources on a least-cost basis without
regard to the ownership of such resources. Any redispatch under this
section may not unduly discriminate between the Transmission Provider's
use of the Transmission System on behalf of its Native Load Customers
and any Network Customer's use of the Transmission System to serve its
designated Network Load.
33.3 Cost Responsibility for Relieving Transmission Constraints
Whenever the Transmission Provider implements least-cost redispatch
procedures in response to a transmission constraint, the Transmission
Provider and Network Customers will each bear a proportionate share of
the total redispatch cost based on their respective Load Ratio Shares.
33.4 Curtailments of Scheduled Deliveries
If a transmission constraint on the Transmission Provider's
Transmission System cannot be relieved through the implementation of
least-cost redispatch procedures and the Transmission Provider
determines that it is necessary to Curtail scheduled deliveries, the
Parties shall Curtail such schedules in accordance with the Network
Operating Agreement or pursuant to the Transmission Loading Relief
procedures specified in Attachment J.
33.5 Allocation of Curtailments
The Transmission Provider shall, on a non-discriminatory basis,
Curtail the transaction(s) that effectively relieve the constraint.
However, to the extent practicable and consistent with Good Utility
Practice, any Curtailment will be shared by the Transmission Provider
and Network Customer in proportion to their respective Load Ratio
Shares. The Transmission Provider shall not direct the Network Customer
to Curtail schedules to an extent greater than the Transmission
Provider would Curtail the Transmission Provider's schedules under
similar circumstances.
33.6 Load Shedding
To the extent that a system contingency exists on the Transmission
Provider's Transmission System and the Transmission Provider determines
that it is necessary for the Transmission Provider and the Network
Customer to shed load, the Parties shall shed load in accordance with
previously established procedures under the Network Operating
Agreement.
33.7 System Reliability
Notwithstanding any other provisions of this Tariff, the
Transmission Provider reserves the right, consistent with Good Utility
Practice and on a not unduly discriminatory basis, to Curtail Network
Integration Transmission Service without liability on the Transmission
Provider's part for the purpose of making necessary adjustments to,
changes in, or repairs on its lines, substations and facilities, and in
cases where the continuance of Network
[[Page 39150]]
Integration Transmission Service would endanger persons or property. In
the event of any adverse condition(s) or disturbance(s) on the
Transmission Provider's Transmission System or on any other system(s)
directly or indirectly interconnected with the Transmission Provider's
Transmission System, the Transmission Provider, consistent with Good
Utility Practice, also may Curtail Network Integration Transmission
Service in order to (i) limit the extent or damage of the adverse
condition(s) or disturbance(s), (ii) prevent damage to generating or
transmission facilities, or (iii) expedite restoration of service. The
Transmission Provider will give the Network Customer as much advance
notice as is practicable in the event of such Curtailment. Any
Curtailment of Network Integration Transmission Service will be not
unduly discriminatory relative to the Transmission Provider's use of
the Transmission System on behalf of its Native Load Customers. The
Transmission Provider shall specify the rate treatment and all related
terms and conditions applicable in the event that the Network Customer
fails to respond to established Load Shedding and Curtailment
procedures.
34 Rates and Charges
The Network Customer shall pay the Transmission Provider for any
Direct Assignment Facilities, Ancillary Services, and applicable study
costs, consistent with Commission policy, along with the following:
34.1 Monthly Demand Charge
The Network Customer shall pay a monthly Demand Charge, which shall
be determined by multiplying its Load Ratio Share times one twelfth (1/
12) of the Transmission Provider's Annual Transmission Revenue
Requirement specified in Schedule H.
34.2 Determination of Network Customer's Monthly Network Load
The Network Customer's monthly Network Load is its hourly load
(including its designated Network Load not physically interconnected
with the Transmission Provider under Section 31.3) coincident with the
Transmission Provider's Monthly Transmission System Peak.
34.3 Determination of Transmission Provider's Monthly Transmission
System Load
The Transmission Provider's monthly Transmission System load is the
Transmission Provider's Monthly Transmission System Peak minus the
coincident peak usage of all Firm Point-To-Point Transmission Service
customers pursuant to Part II of this Tariff plus the Reserved Capacity
of all Firm Point-To-Point Transmission Service customers.
34.4 Redispatch Charge
The Network Customer shall pay a Load Ratio Share of any redispatch
costs allocated between the Network Customer and the Transmission
Provider pursuant to Section 33. To the extent that the Transmission
Provider incurs an obligation to the Network Customer for redispatch
costs in accordance with Section 33, such amounts shall be credited
against the Network Customer's bill for the applicable month.
34.5 Stranded Cost Recovery
The Transmission Provider may seek to recover stranded costs from
the Network Customer pursuant to this Tariff in accordance with the
terms, conditions and procedures set forth in FERC Order No. 888.
However, the Transmission Provider must separately file any proposal to
recover stranded costs under Section 205 of the Federal Power Act.
35 Operating Arrangements
35.1 Operation under the Network Operating Agreement
The Network Customer shall plan, construct, operate and maintain
its facilities in accordance with Good Utility Practice and in
conformance with the Network Operating Agreement.
35.2 Network Operating Agreement
The terms and conditions under which the Network Customer shall
operate its facilities and the technical and operational matters
associated with the implementation of Part III of the Tariff shall be
specified in the Network Operating Agreement. The Network Operating
Agreement shall provide for the Parties to (i) operate and maintain
equipment necessary for integrating the Network Customer within the
Transmission Provider's Transmission System (including, but not limited
to, remote terminal units, metering, communications equipment and
relaying equipment), (ii) transfer data between the Transmission
Provider and the Network Customer (including, but not limited to, heat
rates and operational characteristics of Network Resources, generation
schedules for units outside the Transmission Provider's Transmission
System, interchange schedules, unit outputs for redispatch required
under Section 33, voltage schedules, loss factors and other real time
data), (iii) use software programs required for data links and
constraint dispatching, (iv) exchange data on forecasted loads and
resources necessary for long-term planning, and (v) address any other
technical and operational considerations required for implementation of
Part III of the Tariff, including scheduling protocols. The Network
Operating Agreement will recognize that the Network Customer shall
either (i) operate as a Control Area under applicable guidelines of the
Electric Reliability Organization (ERO) as defined in 18 CFR 39.1, (ii)
satisfy its Control Area requirements, including all necessary
Ancillary Services, by contracting with the Transmission Provider, or
(iii) satisfy its Control Area requirements, including all necessary
Ancillary Services, by contracting with another entity, consistent with
Good Utility Practice, which satisfies the applicable reliability
guidelines of the ERO. The Transmission Provider shall not unreasonably
refuse to accept contractual arrangements with another entity for
Ancillary Services. The Network Operating Agreement is included in
Attachment G.
35.3 Network Operating Committee
A Network Operating Committee (Committee) shall be established to
coordinate operating criteria for the Parties' respective
responsibilities under the Network Operating Agreement. Each Network
Customer shall be entitled to have at least one representative on the
Committee. The Committee shall meet from time to time as need requires,
but no less than once each calendar year.
Schedule 1--Scheduling, System Control and Dispatch Service
This service is required to schedule the movement of power through,
out of, within, or into a Control Area. This service can be provided
only by the operator of the Control Area in which the transmission
facilities used for transmission service are located. Scheduling,
System Control and Dispatch Service is to be provided directly by the
Transmission Provider (if the Transmission Provider is the Control Area
operator) or indirectly by the Transmission Provider making
arrangements with the Control Area operator that performs this service
for the Transmission Provider's Transmission System. The Transmission
Customer must purchase this service from the Transmission Provider or
the Control Area operator. The charges for Scheduling, System Control
and Dispatch Service are to be based on the rates set forth below. To
the extent the Control Area operator performs this
[[Page 39151]]
service for the Transmission Provider, charges to the Transmission
Customer are to reflect only a pass-through of the costs charged to the
Transmission Provider by that Control Area operator.
Schedule 2--Reactive Supply and Voltage Control From Generation or
Other Sources Service
In order to maintain transmission voltages on the Transmission
Provider's transmission facilities within acceptable limits, generation
facilities and non-generation resources capable of providing this
service that are under the control of the control area operator are
operated to produce (or absorb) reactive power. Thus, Reactive Supply
and Voltage Control from Generation or Other Sources Service must be
provided for each transaction on the Transmission Provider's
transmission facilities. The amount of Reactive Supply and Voltage
Control from Generation or Other Sources Service that must be supplied
with respect to the Transmission Customer's transaction will be
determined based on the reactive power support necessary to maintain
transmission voltages within limits that are generally accepted in the
region and consistently adhered to by the Transmission Provider.
Reactive Supply and Voltage Control from Generation or Other
Sources Service is to be provided directly by the Transmission Provider
(if the Transmission Provider is the Control Area operator) or
indirectly by the Transmission Provider making arrangements with the
Control Area operator that performs this service for the Transmission
Provider's Transmission System. The Transmission Customer must purchase
this service from the Transmission Provider or the Control Area
operator. The charges for such service will be based on the rates set
forth below. To the extent the Control Area operator performs this
service for the Transmission Provider, charges to the Transmission
Customer are to reflect only a pass-through of the costs charged to the
Transmission Provider by the Control Area operator.
Schedule 3--Regulation and Frequency Response Service
Regulation and Frequency Response Service is necessary to provide
for the continuous balancing of resources (generation and interchange)
with load and for maintaining scheduled Interconnection frequency at
sixty cycles per second (60 Hz). Regulation and Frequency Response
Service is accomplished by committing on-line generation whose output
is raised or lowered (predominantly through the use of automatic
generating control equipment) and by other non-generation resources
capable of providing this service as necessary to follow the moment-by-
moment changes in load. The obligation to maintain this balance between
resources and load lies with the Transmission Provider (or the Control
Area operator that performs this function for the Transmission
Provider). The Transmission Provider must offer this service when the
transmission service is used to serve load within its Control Area. The
Transmission Customer must either purchase this service from the
Transmission Provider or make alternative comparable arrangements to
satisfy its Regulation and Frequency Response Service obligation. The
amount of and charges for Regulation and Frequency Response Service are
set forth below. To the extent the Control Area operator performs this
service for the Transmission Provider, charges to the Transmission
Customer are to reflect only a pass-through of the costs charged to the
Transmission Provider by that Control Area operator.
Schedule 4--Energy Imbalance Service
Energy Imbalance Service is provided when a difference occurs
between the scheduled and the actual delivery of energy to a load
located within a Control Area over a single hour. The Transmission
Provider must offer this service when the transmission service is used
to serve load within its Control Area. The Transmission Customer must
either purchase this service from the Transmission Provider or make
alternative comparable arrangements, which may include use of non-
generation resources capable of providing this service, to satisfy its
Energy Imbalance Service obligation. To the extent the Control Area
operator performs this service for the Transmission Provider, charges
to the Transmission Customer are to reflect only a pass-through of the
costs charged to the Transmission Provider by that Control Area
operator. The Transmission Provider may charge a Transmission Customer
a penalty for either hourly energy imbalances under this Schedule or a
penalty for hourly generator imbalances under Schedule 9 for imbalances
occurring during the same hour, but not both unless the imbalances
aggravate rather than offset each other.
The Transmission Provider shall establish charges for energy
imbalance based on the deviation bands as follows: (i) Deviations
within +/-1.5 percent (with a minimum of 2 MW) of the scheduled
transaction to be applied hourly to any energy imbalance that occurs as
a result of the Transmission Customer's scheduled transaction(s) will
be netted on a monthly basis and settled financially, at the end of the
month, at 100 percent of incremental or decremental cost; (ii)
deviations greater than +/-1.5 percent up to 7.5 percent (or greater
than 2 MW up to 10 MW) of the scheduled transaction to be applied
hourly to any energy imbalance that occurs as a result of the
Transmission Customer's scheduled transaction(s) will be settled
financially, at the end of each month, at 110 percent of incremental
cost or 90 percent of decremental cost, and (iii) deviations greater
than +/-7.5 percent (or 10 MW) of the scheduled transaction to be
applied hourly to any energy imbalance that occurs as a result of the
Transmission Customer's scheduled transaction(s) will be settled
financially, at the end of each month, at 125 percent of incremental
cost or 75 percent of decremental cost.
For purposes of this Schedule, incremental cost and decremental
cost represent the Transmission Provider's actual average hourly cost
of the last 10 MW dispatched for any purpose, e.g., to supply the
Transmission Provider's Native Load Customers, correct imbalances, or
make off-system sales, based on the replacement cost of fuel, unit heat
rates, start-up costs (including any commitment and redispatch costs),
incremental operation and maintenance costs, and purchased and
interchange power costs and taxes, as applicable.
Schedule 5--Operating Reserve--Spinning Reserve Service
Spinning Reserve Service is needed to serve load immediately in the
event of a system contingency. Spinning Reserve Service may be provided
by generating units that are on-line and loaded at less than maximum
output and by non-generation resources capable of providing this
service. The Transmission Provider must offer this service when the
transmission service is used to serve load within its Control Area. The
Transmission Customer must either purchase this service from the
Transmission Provider or make alternative comparable arrangements to
satisfy its Spinning Reserve Service obligation. The amount of and
charges for Spinning Reserve Service are set forth below. To the extent
the Control Area operator performs this service for the Transmission
Provider, charges to the Transmission Customer are to reflect only a
pass-through of the costs charged to the Transmission Provider by that
Control Area operator.
[[Page 39152]]
Schedule 6--Operating Reserve--Supplemental Reserve Service
Supplemental Reserve Service is needed to serve load in the event
of a system contingency; however, it is not available immediately to
serve load but rather within a short period of time. Supplemental
Reserve Service may be provided by generating units that are on-line
but unloaded, by quick-start generation or by interruptible load or
other non-generation resources capable of providing this service. The
Transmission Provider must offer this service when the transmission
service is used to serve load within its Control Area. The Transmission
Customer must either purchase this service from the Transmission
Provider or make alternative comparable arrangements to satisfy its
Supplemental Reserve Service obligation. The amount of and charges for
Supplemental Reserve Service are set forth below. To the extent the
Control Area operator performs this service for the Transmission
Provider, charges to the Transmission Customer are to reflect only a
pass-through of the costs charged to the Transmission Provider by that
Control Area operator.
Schedule 7--Long-Term Firm and Short-Term Firm Point-to-Point
Transmission Service
The Transmission Customer shall compensate the Transmission
Provider each month for Reserved Capacity at the sum of the applicable
charges set forth below:
(1) Yearly delivery: one-twelfth of the demand charge of $------/KW
of Reserved Capacity per year.
(2) Monthly delivery: $------/KW of Reserved Capacity per month.
(3) Weekly delivery: $------/KW of Reserved Capacity per week.
(4) Daily delivery: $------/KW of Reserved Capacity per day.
The total demand charge in any week, pursuant to a reservation for
Daily delivery, shall not exceed the rate specified in section (3)
above times the highest amount in kilowatts of Reserved Capacity in any
day during such week.
(5) Discounts: Three principal requirements apply to discounts for
transmission service as follows (1) Any offer of a discount made by the
Transmission Provider must be announced to all Eligible Customers
solely by posting on the OASIS, (2) any customer-initiated requests for
discounts (including requests for use by one's wholesale merchant or an
Affiliate's use) must occur solely by posting on the OASIS, and (3)
once a discount is negotiated, details must be immediately posted on
the OASIS. For any discount agreed upon for service on a path, from
point(s) of receipt to point(s) of delivery, the Transmission Provider
must offer the same discounted transmission service rate for the same
time period to all Eligible Customers on all unconstrained transmission
paths that go to the same point(s) of delivery on the Transmission
System.
(6) Resales: The rates and rules governing charges and discounts
stated above shall not apply to resales of transmission service,
compensation for which shall be governed by section 23.1 of the Tariff.
Schedule 8--Non-Firm Point-to-Point Transmission Service
The Transmission Customer shall compensate the Transmission
Provider for Non-Firm Point-To-Point Transmission Service up to the sum
of the applicable charges set forth below:
(1) Monthly delivery: $------/KW of Reserved Capacity per month.
(2) Weekly delivery: $------/KW of Reserved Capacity per week.
(3) Daily delivery: $------/KW of Reserved Capacity per day.
The total demand charge in any week, pursuant to a reservation for
Daily delivery, shall not exceed the rate specified in section (2)
above times the highest amount in kilowatts of Reserved Capacity in any
day during such week.
(4) Hourly delivery: The basic charge shall be that agreed upon by
the Parties at the time this service is reserved and in no event shall
exceed $------/MWH. The total demand charge in any day, pursuant to a
reservation for Hourly delivery, shall not exceed the rate specified in
section (3) above times the highest amount in kilowatts of Reserved
Capacity in any hour during such day. In addition, the total demand
charge in any week, pursuant to a reservation for Hourly or Daily
delivery, shall not exceed the rate specified in section (2) above
times the highest amount in kilowatts of Reserved Capacity in any hour
during such week.
(5) Discounts: Three principal requirements apply to discounts for
transmission service as follows (1) Any offer of a discount made by the
Transmission Provider must be announced to all Eligible Customers
solely by posting on the OASIS, (2) any customer-initiated requests for
discounts (including requests for use by one's wholesale merchant or an
Affiliate's use) must occur solely by posting on the OASIS, and (3)
once a discount is negotiated, details must be immediately posted on
the OASIS. For any discount agreed upon for service on a path, from
point(s) of receipt to point(s) of delivery, the Transmission Provider
must offer the same discounted transmission service rate for the same
time period to all Eligible Customers on all unconstrained transmission
paths that go to the same point(s) of delivery on the Transmission
System.
(6) Resales: The rates and rules governing charges and discounts
stated above shall not apply to resales of transmission service,
compensation for which shall be governed by section 23.1 of the Tariff.
Schedule 9--Generator Imbalance Service
Generator Imbalance Service is provided when a difference occurs
between the output of a generator located in the Transmission
Provider's Control Area and a delivery schedule from that generator to
(1) another Control Area or (2) a load within the Transmission
Provider's Control Area over a single hour. The Transmission Provider
must offer this service, to the extent it is physically feasible to do
so from its resources or from resources available to it, when
Transmission Service is used to deliver energy from a generator located
within its Control Area. The Transmission Customer must either purchase
this service from the Transmission Provider or make alternative
comparable arrangements, which may include use of non-generation
resources capable of providing this service, to satisfy its Generator
Imbalance Service obligation. To the extent the Control Area operator
performs this service for the Transmission Provider, charges to the
Transmission Customer are to reflect only a pass-through of the costs
charged to the Transmission Provider by that Control Area Operator. The
Transmission Provider may charge a Transmission Customer a penalty for
either hourly generator imbalances under this Schedule or a penalty for
hourly energy imbalances under Schedule 4 for imbalances occurring
during the same hour, but not both unless the imbalances aggravate
rather than offset each other.
The Transmission Provider shall establish charges for generator
imbalance based on the deviation bands as follows: (i) Deviations
within +/-1.5 percent (with a minimum of 2 MW) of the scheduled
transaction to be applied hourly to any generator imbalance that occurs
as a result of the Transmission Customer's scheduled transaction(s)
will be netted on a monthly basis and settled financially, at the end
of each month, at 100 percent of incremental or decremental cost, (ii)
deviations greater than +/-1.5 percent up to 7.5 percent (or greater
than 2 MW up to 10 MW) of
[[Page 39153]]
the scheduled transaction to be applied hourly to any generator
imbalance that occurs as a result of the Transmission Customer's
scheduled transaction(s) will be settled financially, at the end of
each month, at 110 percent of incremental cost or 90 percent of
decremental cost, and (iii) deviations greater than +/-7.5 percent (or
10 MW) of the scheduled transaction to be applied hourly to any
generator imbalance that occurs as a result of the Transmission
Customer's scheduled transaction(s) will be settled at 125 percent of
incremental cost or 75 percent of decremental cost, except that an
intermittent resource will be exempt from this deviation band and will
pay the deviation band charges for all deviations greater than the
larger of 1.5 percent or 2 MW. An intermittent resource, for the
limited purpose of this Schedule is an electric generator that is not
dispatchable and cannot store its fuel source and therefore cannot
respond to changes in system demand or respond to transmission security
constraints.
Notwithstanding the foregoing, deviations from scheduled
transactions in order to respond to directives by the Transmission
Provider, a balancing authority, or a reliability coordinator shall not
be subject to the deviation bands identified above and, instead, shall
be settled financially, at the end of the month, at 100 percent of
incremental and decremental cost. Such directives may include
instructions to correct frequency decay, respond to a reserve sharing
event, or change output to relieve congestion.
For purposes of this Schedule, incremental cost and decremental
cost represent the Transmission Provider's actual average hourly cost
of the last 10 MW dispatched for any purpose, e.g., to supply the
Transmission Provider's Native Load Customers, correct imbalances, or
make off-system sales, based on the replacement cost of fuel, unit heat
rates, start-up costs (including any commitment and redispatch costs),
incremental operation and maintenance costs, and purchased and
interchange power costs and taxes, as applicable.
Attachment A--Form of Service Agreement for Firm Point-To-Point
Transmission Service
1.0 This Service Agreement, dated as of ------------, is entered into,
by and between ------------ (the Transmission Provider), and ----------
-- (``Transmission Customer'').
2.0 The Transmission Customer has been determined by the Transmission
Provider to have a Completed Application for Firm Point-To-Point
Transmission Service under the Tariff.
3.0 The Transmission Customer has provided to the Transmission Provider
an Application deposit in accordance with the provisions of Section
17.3 of the Tariff.
4.0 Service under this agreement shall commence on the later of (l) the
requested service commencement date, or (2) the date on which
construction of any Direct Assignment Facilities and/or Network
Upgrades are completed, or (3) such other date as it is permitted to
become effective by the Commission. Service under this agreement shall
terminate on such date as mutually agreed upon by the parties.
5.0 The Transmission Provider agrees to provide and the Transmission
Customer agrees to take and pay for Firm Point-To-Point Transmission
Service in accordance with the provisions of Part II of the Tariff and
this Service Agreement.
6.0 Any notice or request made to or by either Party regarding this
Service Agreement shall be made to the representative of the other
Party as indicated below.
Transmission Provider:
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Transmission Customer:
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7.0 The Tariff is incorporated herein and made a part hereof.
In witness whereof, the Parties have caused this Service Agreement to
be executed by their respective authorized officials.
Transmission Provider:
By:--------------------------------------------------------------------
Name------------------------------------------------------------------
Title------------------------------------------------------------------
Date-------------------------------------------------------------------
Transmission Customer:
By:--------------------------------------------------------------------
Name------------------------------------------------------------------
Title------------------------------------------------------------------
Date-------------------------------------------------------------------
Specifications for Long-Term Firm Point-To-Point Transmission Service
1.0 Term of Transaction:-----------------------------------------------
Start Date:------------------------------------------------------------
Termination Date:------------------------------------------------------
2.0 Description of capacity and energy to be transmitted by
Transmission Provider including the electric Control Area in which the
transaction originates.
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3.0 Point(s) of Receipt:-----------------------------------------------
Delivering Party:------------------------------------------------------
4.0 Point(s) of Delivery:----------------------------------------------
Receiving Party:-------------------------------------------------------
5.0 Maximum amount of capacity and energy to be transmitted (Reserved
Capacity):-------------------------------------------------------------
6.0 Designation of party(ies) subject to reciprocal service obligation:
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7.0 Name(s) of any Intervening Systems providing transmission service:
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8.0 Service under this Agreement may be subject to some combination of
the charges detailed below. (The appropriate charges for individual
transactions will be determined in accordance with the terms and
conditions of the Tariff.)
8.1 Transmission Charge:-----------------------------------------------
8.2 System Impact and/or Facilities Study Charge(s):-------------------
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8.3 Direct Assignment Facilities Charge:-------------------------------
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8.4 Ancillary Services Charges:----------------------------------------
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Attachment A-1--Form of Service Agreement for the Resale, Reassignment
or Transfer of Point-To-Point Transmission Service
1.0 This Service Agreement, dated as of ------------, is entered into,
by and between ------------ (the Transmission Provider), and ----------
-- (the Assignee).
2.0 The Assignee has been determined by the Transmission Provider to be
an Eligible Customer under the Tariff pursuant to which the
transmission service rights to be transferred were originally obtained.
3.0 The terms and conditions for the transaction entered into under
this Service Agreement shall be subject to the terms and conditions of
Part II of the Transmission Provider's Tariff, except for those terms
and conditions negotiated by the Reseller of the reassigned
transmission capacity (pursuant to Section 23.1 of this Tariff) and the
Assignee, to include: contract effective and termination dates, the
amount of reassigned capacity or energy, point(s) of receipt and
delivery.
[[Page 39154]]
Changes by the Assignee to the Reseller's Points of Receipt and Points
of Delivery will be subject to the provisions of Section 23.2 of this
Tariff.
4.0 The Transmission Provider shall credit the Reseller for the price
reflected in the Assignee's Service Agreement or the associated OASIS
schedule.
5.0 Any notice or request made to or by either Party regarding this
Service Agreement shall be made to the representative of the other
Party as indicated below.
Transmission Provider:
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Assignee:
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6.0 The Tariff is incorporated herein and made a part hereof.
In witness whereof, the Parties have caused this Service Agreement to
be executed by their respective authorized officials.
Transmission Provider:
By:--------------------------------------------------------------------
Name
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Date
Assignee:
By:--------------------------------------------------------------------
Name
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Date
Specifications For The Resale, Reassignment Or Transfer of Long-Term
Firm Point-To-Point Transmission Service
1.0 Term of Transaction:-----------------------------------------------
Start Date:------------------------------------------------------------
Termination Date:------------------------------------------------------
2.0 Description of capacity and energy to be transmitted by
Transmission Provider including the electric Control Area in which the
transaction originates.
-----------------------------------------------------------------------
3.0 Point(s) of Receipt:-----------------------------------------------
Delivering Party:------------------------------------------------------
4.0 Point(s) of Delivery:----------------------------------------------
Receiving Party:-------------------------------------------------------
5.0 Maximum amount of reassigned capacity:-----------------------------
6.0 Designation of party(ies) subject to reciprocal service obligation:
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7.0 Name(s) of any Intervening Systems providing transmission service:
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8.0 Service under this Agreement may be subject to some combination of
the charges detailed below. (The appropriate charges for individual
transactions will be determined in accordance with the terms and
conditions of the Tariff.)
8.1 Transmission Charge:-----------------------------------------------
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8.2 System Impact and/or Facilities Study Charge(s):
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8.3 Direct Assignment Facilities Charge:
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8.4 Ancillary Services Charges:----------------------------------------
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9.0 Name of Reseller of the reassigned transmission capacity:
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Attachment B--Form of Service Agreement for Non-Firm Point-To-Point
Transmission Service
1.0 This Service Agreement, dated as of ----, is entered into, by and
between ---- (the Transmission Provider), and ---- (Transmission
Customer).
2.0 The Transmission Customer has been determined by the Transmission
Provider to be a Transmission Customer under Part II of the Tariff and
has filed a Completed Application for Non-Firm Point-To-Point
Transmission Service in accordance with Section 18.2 of the Tariff.
3.0 Service under this Agreement shall be provided by the Transmission
Provider upon request by an authorized representative of the
Transmission Customer.
4.0 The Transmission Customer agrees to supply information the
Transmission Provider deems reasonably necessary in accordance with
Good Utility Practice in order for it to provide the requested service.
5.0 The Transmission Provider agrees to provide and the Transmission
Customer agrees to take and pay for Non-Firm Point-To-Point
Transmission Service in accordance with the provisions of Part II of
the Tariff and this Service Agreement.
6.0 Any notice or request made to or by either Party regarding this
Service Agreement shall be made to the representative of the other
Party as indicated below.
Transmission Provider:
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Transmission Customer:
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7.0 The Tariff is incorporated herein and made a part hereof.
In witness whereof, the Parties have caused this Service Agreement to
be executed by their respective authorized officials.
Transmission Provider:
By:--------------------------------------------------------------------
Name
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Date
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Transmission Customer:
By:--------------------------------------------------------------------
Name
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Date
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Attachment C--Methodology To Assess Available Transfer Capability
The Transmission Provider must include, at a minimum, the following
information concerning its ATC calculation methodology:
(1) A detailed description of the specific mathematical algorithm
used to calculate firm and non-firm ATC (and AFC, if applicable) for
its scheduling horizon (same day and real-time), operating horizon (day
ahead and pre-schedule) and planning horizon (beyond the operating
horizon);
(2) A process flow diagram that illustrates the various steps
through which ATC/AFC is calculated; and
(3) A detailed explanation of how each of the ATC components is
calculated for both the operating and planning horizons.
(a) For TTC, a Transmission Provider shall: (i) Explain its
definition of TTC; (ii) explain its TTC calculation methodology; (iii)
list the databases used in its TTC assessments; and (iv) explain the
assumptions used in its TTC assessments regarding load levels,
generation dispatch, and modeling of planned and contingency outages.
(b) For ETC, a Transmission Provider shall explain: (i) Its
definition of ETC;
[[Page 39155]]
(ii) the calculation methodology used to determine the transmission
capacity to be set aside for native load (including network load), and
non-OATT customers (including, if applicable, an explanation of
assumptions on the selection of generators that are modeled in
service); (iii) how point-to-point transmission service requests are
incorporated; (iv) how rollover rights are accounted for; (v) its
processes for ensuring that non-firm capacity is released properly
(e.g., when real-time schedules replace the associated transmission
service requests in its real-time calculations); and (vi) describe the
step-by-step modeling study methodology and criteria for adding or
eliminating flowgates (permanent and temporary).
(c) If a Transmission Provider uses an AFC methodology to calculate
ATC, it shall: (i) Explain its definition of AFC; (ii) explain its AFC
calculation methodology; (iii) explain its process for converting AFC
into ATC for OASIS posting; (iv) list the databases used in its AFC
assessments; and (v) explain the assumptions used in its AFC
assessments regarding load levels, generation dispatch, and modeling of
planned and contingency outages.
(d) For TRM, a Transmission Provider shall explain: (i) Its
definition of TRM; (ii) its TRM calculation methodology (e.g., its
assumptions on load forecast errors, forecast errors in system topology
or distribution factors and loop flow sources); (iii) the databases
used in its TRM assessments; (iv) the conditions under which the
Transmission Provider uses TRM. A Transmission Provider that does not
set aside transfer capability for TRM must so state.
(e) For CBM, the Transmission Provider shall state a specific and
self-contained narrative explanation of its CBM practice, including:
(i) An identification of the entity who performs the resource adequacy
analysis for CBM determination; (ii) the methodology used to perform
generation reliability assessments (e.g., probabilistic or
deterministic); (iii) an explanation of whether the assessment method
reflects a specific regional practice; (iv) the assumptions used in
this assessment; and (v) the basis for the selection of paths on which
CBM is set aside.
(f) In addition, for CBM, a Transmission Provider shall: (i)
Explain its definition of CBM; (ii) list the databases used in its CBM
calculations; and (iii) demonstrate that there is no double-counting of
contingency outages when performing CBM, TTC, and TRM calculations.
(g) The Transmission Provider shall explain its procedures for
allowing the use of CBM during emergencies (with an explanation of what
constitutes an emergency, the entities that are permitted to use CBM
during emergencies and the procedures which must be followed by the
transmission providers' merchant function and other load-serving
entities when they need to access CBM). If the Transmission Provider's
practice is not to set aside transfer capability for CBM, it shall so
state.
Attachment D--Methodology for Completing a System Impact Study
To be filed by the Transmission Provider
Attachment E--Index of Point-To-Point Transmission Service Customers
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Customer
Date of Service Agreement----------------------------------------------
Attachment F--Service Agreement for Network Integration Transmission
Service
To be filed by the Transmission Provider
Attachment G-- Network Operating Agreement
To be filed by the Transmission Provider
Attachment H--Annual Transmission Revenue Requirement for Network
Integration Transmission Service
1. The Annual Transmission Revenue Requirement for purposes of the
Network Integration Transmission Service shall be----------------------
2. The amount in (1) shall be effective until amended by the
Transmission Provider or modified by the Commission.
Attachment I--Index of Network Integration Transmission Service
Customers
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Customer
Date of Service Agreement----------------------------------------------
Attachment J--Procedures for Addressing Parallel Flows
To be filed by the Transmission Provider
Attachment K--Transmission Planning Process
The Transmission Provider shall establish a coordinated, open and
transparent planning process with its Network and Firm Point-to-Point
Transmission Customers and other interested parties, including the
coordination of such planning with interconnected systems within its
region, to ensure that the Transmission System is planned to meet the
needs of both the Transmission Provider and its Network and Firm Point-
to-Point Transmission Customers on a comparable and nondiscriminatory
basis. The Transmission Provider's coordinated, open and transparent
planning process shall be provided as an attachment to the Transmission
Provider's Tariff.
The Transmission Provider's planning process shall satisfy the
following nine principles, as defined in the Final Rule in Docket No.
RM05-25-000: Coordination, openness, transparency, information
exchange, comparability, dispute resolution, regional participation,
economic planning studies, and cost allocation for new projects. The
planning process shall also provide a mechanism for the recovery and
allocation of planning costs consistent with the Final Rule in Docket
No. RM05-25-000.
The Transmission Provider's planning process must include
sufficient detail to enable Transmission Customers to understand:
(i) The process for consulting with customers and neighboring
transmission providers;
(ii) The notice procedures and anticipated frequency of meetings;
(iii) The methodology, criteria, and processes used to develop
transmission plans;
(iv) The method of disclosure of criteria, assumptions and data
underlying transmission system plans;
(v) The obligations of and methods for customers to submit data to
the transmission provider;
(vi) The dispute resolution process;
(vii) The transmission provider's study procedures for economic
upgrades to address congestion or the integration of new resources; and
(viii) The relevant cost allocation procedures or principles.
Attachment L--Creditworthiness Procedures
For the purpose of determining the ability of the Transmission
Customer to meet its obligations related to service hereunder, the
Transmission Provider may require reasonable credit review procedures.
This review shall be made in accordance with standard commercial
practices and must specify quantitative and qualitative criteria to
determine the level of secured and unsecured credit.
[[Page 39156]]
The Transmission Provider may require the Transmission Customer to
provide and maintain in effect during the term of the Service
Agreement, an unconditional and irrevocable letter of credit as
security to meet its responsibilities and obligations under the Tariff,
or an alternative form of security proposed by the Transmission
Customer and acceptable to the Transmission Provider and consistent
with commercial practices established by the Uniform Commercial Code
that protects the Transmission Provider against the risk of non-
payment.
Additionally, the Transmission Provider must include, at a minimum,
the following information concerning its creditworthiness procedures:
(1) A summary of the procedure for determining the level of secured
and unsecured credit;
(2) A list of the acceptable types of collateral/security;
(3) A procedure for providing customers with reasonable notice of
changes in credit levels and collateral requirements;
(4) A procedure for providing customers, upon request, a written
explanation for any change in credit levels or collateral requirements;
(5) A reasonable opportunity to contest determinations of credit
levels or collateral requirements; and
(6) A reasonable opportunity to post additional collateral,
including curing any non-creditworthy determination.
[FR Doc. E8-14948 Filed 7-7-08; 8:45 am]
BILLING CODE 6717-01-P