Media October-December 2004
News Release: December 15, 2004 | View Printable PDF Version |
Docket Numbers: PA04-11, PA04-13, and RM01-10-003 (Order No. 2004-C) |
FERC audits fault practices of 2 Arizona utilities;
Commission clarifies, reaffirms standards of conduct
The Federal Energy Regulatory Commission today found two Arizona
utilities in violation of agency rules on transmission service
and ordered monetary and procedural corrections, and in one case
called for the utility to refund $4 million for unauthorized use
of point-to-point transmission service.
The Commission found that on numerous occasions Arizona Public Service (APS)
departed from procedures required by its tariff, including failure to: (1)
arrange for necessary point-to-point transmission service when making off-system
sales;
(2) correctly post transmission paths for the Phoenix Valley 230 kilovolt
system on the APS Open-Access Same-Time Information System (OASIS); (3) post
all transmission
outages and scheduled transmission curtailments on its OASIS; and (4) make
timely filings with the Commission when deviating from its Standards of Conduct
rules.
As a result of its unauthorized use of point-to-point transmission service,
the Commission directed APS to pay $4 million, $1.25 million of which will
be made to low income energy assistance programs in Arizona. The remaining
$2.75 million will be used to upgrade the utility's West Phoenix-Lincoln Street
230-kV transmission system with high-capacity composite conductors to better
serve
customers. The Commission cautioned APS that it may not recover any of these
monies through its rates. APS has 90 days to file a plan addressing the operational
faults cited by the Commission, and must file quarterly progress reports
until all corrective actions are completed.
In a second audit order issued today, the Commission faulted Tucson Electric
Power Company (TEP), when acting as a wholesale power merchant, for obtaining
point-to-point transmission service that was not posted on TEP's
system and made available to other wholesale merchants. Among other violations,
the Commission audit also found that TEP allowed control area personnel to
interact with employees
engaged in wholesale merchant functions - a violation of the Standards of Conduct
rules.
The Commission directed TEP to refund any revenue generated in excess of
its variable operation and maintenance costs. In addition, TEP must establish
procedures to make sure all required OASIS postings are made on a timely
basis; transmission information is given to all transmission customers at
the same
time; and employees are appropriately trained on Standards of Conduct requirements.
TEP must also file quarterly reports detailing the implementation of its
corrective actions.
During the course of the audits, and in conjunction with other matters before
the Commission, APS and TEP both filed proposals to establish independent
market monitors. In the case of APS (EC05-20), the independent monitor would
focus
on identifying events that may cause price increases or affect competition.
The proposal is pending before the Commission. TEP's proposed market monitoring
plan (EC04-92), designed to help ensure that TEP's transmission system is operated
on a non-discriminatory basis, was recently approved by the Commission.
The audits were conducted for the period January 1, 2002, through October
31, 2003. The Commission regularly conducts random audits of jurisdictional
utilities to ensure compliance with Standards of Conduct and OASIS requirements,
Codes of Conduct requirements and Open Access Transmission Tariff provisions.
In a separate order today, the Commission reaffirmed its Standards of Conduct
rule (Order No. 2004), providing additional clarification to some of its
provisions. Among the key issues addressed in today's order:
- The Commission said it would allow natural gas local distribution companies (LDCs) to participate in hedging related to on-system sales and still qualify for an exemption from energy affiliate status.
- The Commission denied rehearing regarding exemptions for electric local distribution companies. Many electric distribution divisions or companies are not energy affiliates, however, because they do not engage in wholesale market activities, the Commission said.
The Commission strengthened its Standards of Conduct, adopting broader rules
in a November 2003 order to address the dramatic changes in the electric
and gas industries that have occurred in recent years. The standards apply
to interstate
natural gas and electric transmission providers and their relationships with
all of their energy affiliates and are designed to ensure that transmission
providers are independent of all their energy affiliates.
R-04-60
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