Preventing Undue Discrimination and Preference in Transmission Service

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[Federal Register: June 6, 2006 (Volume 71, Number 108)]
[Proposed Rules]
[Page 32685-32734]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jn06-20]

[[pp. 32685-32734]]
Preventing Undue Discrimination and Preference in Transmission
Service

[[Continued from page 32684]]

[[Page 32685]]

that the transmission provider produce and examine additional powerflow
cases or make other process changes. In order to determine the number
of hours that the requested firm transmission capacity is unavailable,
the transmission provider may need to model varying load conditions,
generation and transmission planned outages, and time-contingent or
condition-contingent generation dispatches. Generally, the greater the
number of conditions studied, the lower the risk to the transmission
provider of an inaccurate estimate of conditional curtailment hours. We
recognize that there are limits to the accuracy of any prediction of
hours of curtailment, no matter how detailed the system study.
328. There are a number of ways for a transmission provider to
determine the number of hours in a year when firm service is
unavailable, i.e., the conditional curtailment hours. One method
involves scaling down the powerflow base case. Using this method, the
transmission provider could scale down the load and generation in the
base case until the entire conditional firm request is available on the
studied flowgate. For example, a base case might need to be scaled down
to 95 percent of the summer peak demand in order to accommodate the
conditional firm request as firm point-to-point service. The
transmission provider would then calculate the number of hours the
seasonal load is forecast to be 95 percent or higher to come up with
the number of seasonal hours of curtailment for the conditional firm
customer.
329. Another method involves an inventory of generation and demand
shift factors. Using this method, the transmission provider could
determine conditional curtailment hours by adding up all the
outstanding generation and load shift factors on the relevant flowgate.
Once the transmission provider determines the load shift factor on the
flowgate, it can calculate the reduction needed in regional demand to
accommodate the conditional firm request by comparing the impact of the
request on the power flows. The demand reduction would not necessarily
correspond perfectly with the requested amount of service. For
instance, a 200 MW reduction might be required to accommodate a 100 MW
conditional firm request. Once the transmission provider determines a
reduced load level that would accommodate the conditional firm request,
the transmission provider would examine load forecasts to calculate the
number of hours the load is expected to exceed this reduced load level.
This alternative method of calculating conditional curtailment hours
might be more burdensome than scaling down the powerflow base case
because it requires additional data collection and analysis.
330. Both of these methods rely on average system conditions and do
not take into account extreme weather years or unexpected outages.
Thus, the methods would provide an optimistic view of bulk power
facility availability. These methods can be used to determine the
portion of time (hours) that transmission capability will most likely
be available and give general information on when (seasons, months)
firm service is available.
331. We seek comment on the most appropriate method of modeling the
transmission system to determine the number of conditional curtailment
hours. We also recognize that additional studies may cause additional
costs. We seek comment on methods of ensuring recovery of these
additional costs.
332. We also acknowledge that provision of conditional firm service
may require some modification to current transaction tracking
procedures in use by the industry and require development of additional
mechanisms. Today, transmission providers track transactions with
curtailment priorities so that when congestion occurs transactions are
curtailed consistent with OATT requirements, i.e., non-firm uses are
cut before firm uses and short-term transactions are cut before longer-
term transactions. In order to implement the conditional firm service,
transmission providers would need to determine in advance of scheduling
deadlines whether the service should be tracked as a long-term firm use
or to reflect the use of the conditional curtailment hours.\306\ If the
service is treated as firm during a certain period, the transaction
would not be cut before other firm uses. The transmission provider
would have to perform a calculus, taking into account forecast load and
transmission and generation availability, to determine the need to cut
the conditional firm transaction in the next period prior to scheduling
the transaction as conditional firm. While we do not view this as an
insurmountable problem, we note that the decision to curtail a
conditional firm transaction prior to other firm uses simply cannot be
made in real time. We also note that the transmission provider would
need to develop a mechanism to track the number of annual conditional
curtailment hours in each service agreement and its annual or monthly
use of those hours. Such a tracking mechanism would ensure that the
transmission provider did not exceed the annual or monthly cap on
conditional curtailment hours in any particular service agreement.
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\306\ We propose that during conditional curtailment hours, the
transaction would be tagged with the network non-firm tag (currently
used for secondary network service).
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2. Hourly Firm Service
333. The pro forma OATT contains a one-day minimum term for firm
point-to-point service. In Order No. 888, the Commission chose a one-
day minimum over a one-hour minimum because of concerns expressed by
commenters.\307\ There, commenters argued that comparability would not
be achieved if some point-to-point customers were permitted to take
service for one hour and receive the same priority as native load and
other long-term customers that have to pay the fixed cost of the
transmission system every hour of the year. They also expressed concern
that a one-hour minimum term for firm point-to-point service (hourly
firm) would promote selective use of the transmission system, impair
the ability of a utility to plan its system, and adversely affect
longer term transactions. Finally, some expressed concern that a one-
hour firm service may encourage speculative requests for service during
the system peak day (a practice known as ``cream skimming'').
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\307\ Order No. 888 at 31,752.
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334. In the NOI, the Commission noted that several public utility
transmission providers have individually filed for and received
Commission authorization to modify their OATTs to provide hourly firm
point-to-point service.\308\ In the NOI, the Commission sought comment
on whether the concerns expressed in Order No. 888 remain valid, and
whether hourly firm service should now be required. The Commission also
asked whether hourly firm requests should be batched to allow the
transmission provider to evaluate them as if they were a single
request, and whether scheduling timelines for firm and non-firm hourly
transmission service should differ.
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\308\ The NOI cited Entergy Services, Inc., 85 FERC 61,163
(1998), order on reh'g, 91 FERC 61,153 (2000) and El Paso Electric
Co., Docket No. ER04-567-000 (Apr. 9, 2004) (unpublished letter order).
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Comments
335. Some commenters support requiring transmission providers to

[[Page 32686]]

adopt hourly firm service.\309\ Alberta Intervenors and TransAlta argue
that hourly firm service encourages trade and market liquidity.
Regarding the concerns cited in Order No. 888, EPSA argues that, as a
practical matter, daily firm service already receives an equal priority
to native load and other long-term customers, and none of the concerns
expressed in Order No. 888 have materialized. ``Cream skimming'' should
not be a problem, EPSA continues, because firm transmission
reservations are not cost-free, and transmission customers are unlikely
to commit financial resources for speculative purposes. Constellation
argues that there should be no concern that comparability will be
eroded because hourly firm service provides additional flexibility to
the competitive markets. PPL argues that in non-ISO/RTO regions like
the western United States, hourly firm service could help to maximize
the use of existing transmission facilities, increase efficiencies in
wholesale markets, and allow customers to purchase only the amount of
firm transmission service that they need.
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\309\ E.g., Alberta Intervenors, Alcoa, Calpine, Constellation,
EPSA, HQ Energy, PPL, and TransAlta.
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336. Some commenters offer qualified support for hourly firm
service.\310\ For example, South Carolina E&G states that before the
Commission requires hourly firm service, it should obtain empirical
market information on transmission providers' ability to provide such
service. In its reply comments, Powerex explains that there is a
potential for a detrimental effect if a transmission provider is not
able to accurately determine its ATC, and before making hourly firm
service mandatory, the Commission should ensure that the rights of
long-term firm customers will not be negatively affected.
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\310\ E.g., APPA, Northwestern, Powerex, Public Power Council,
Salt River, and South Carolina E&G.
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337. Among commenters who oppose requiring the adoption of hourly
firm service,\311\ many repeat arguments that appeared in Order No.
888. For example, several commenters express concern that hourly firm
service will lead to ``cream skimming,'' result in unfairness to
longer-term firm transmission customers who would have to be curtailed
pro rata along with customers who have only made hourly firm
commitments, or create inefficiencies by having a higher reservation
priority than subsequently submitted load-based services such as
secondary network service.\312\ But other commenters who oppose
requiring hourly firm service state that the concerns expressed in
Order No. 888 may no longer be a major problem, and may be addressed by
allowing hourly firm service to be pre-empted by longer term firm
service requests.\313\
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\311\ E.g., Ameren, APS, Duke, EEI, KCP&L, LG&E, LPPC,
MidAmerican, NRECA, Progress Energy, Snohomish, Southern, TAPS, TVA,
TDU Systems, and WAPA.
\312\ E.g., LG&E, Progress Energy, Southern, and TAPS.
\313\ E.g., EEI and WAPA.
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338. TVA argues that reservations for hourly firm service would
nearly always end up being bumped by requests for longer service and as
such would waste valuable time and increase administrative costs with
no real benefit.
Processing
339. On the issue of whether a transmission customer should be
permitted to batch requests for service, those in favor generally state
that batching allows for greater efficiencies.\314\ For example,
Bonneville states that batching in the hourly market would decrease the
response time for all requests in the hourly queue. Salt River states
that a potential customer should be able to submit a batch of requests
(e.g., a block of hours) that is useful in shaping the service to its
load-serving needs. Snohomish states that in the day-ahead schedule
submittals, batching of hourly firm transmission requests for
evaluation as a single request should be permitted, but for periods
prior to day-ahead, batching of hourly requests should not be allowed
due to the potential for ``cream skimming.''
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\314\ E.g., Alberta Intervenors, Bonneville, Constellation,
EPSA, and South Carolina E&G.
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340. Among those opposed to or expressing reservations regarding
batching, Ameren and EEI argue that transmission providers already have
the ability to process multiple requests from the same party, but they
caution that batching requests for simultaneous modeling purposes
(e.g., transmission from points A to B and B to A simultaneously) would
be difficult to implement. WAPA states that, in its experience, the
majority of hourly firm transmission requests must be uniquely
identified and evaluated for potential conflicts with longer-term firm
transmission requests.
Scheduling
341. The pro forma OATT currently requires that schedules for firm
and non-firm service be submitted on different timelines. Schedules for
hourly non-firm point-to-point service must be submitted to the
transmission provider no later than 2 p.m. the day before service is to
commence.\315\ For all firm services, schedules must be submitted to
the transmission provider no later than 10 a.m. the day before service
is to commence.\316\
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\315\ See pro forma OATT section 14.6 (also allowing schedules to be
submitted by a reasonable time that is generally accepted in the region).
\316\ See pro forma OATT section 13.8 (also allowing schedules to be
submitted by a reasonable time that is generally accepted in the region).
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342. Some commenters argue that firm and non-firm hourly services
should be subject to the same scheduling timeline.\317\ To do
otherwise, Snohomish argues, would be administratively burdensome and
without benefit to the transmission provider or transmission customer.
Those arguing for different scheduling timelines generally argue that
the scheduling time-frames for firm and non-firm transmission service
should remain different, at least on a pre-schedule or day-ahead basis,
because the transmission provider must know the full extent of firm
utilization before non-firm offerings can be determined.\318\
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\317\ E.g., Ameren, Constellation, PNM-TNMP, Powerex, Salt
River, Snohomish, and South Carolina E&G.
\318\ E.g., Ameren, Northwestern, and Southern.
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Discussion
343. The Commission proposes to add point-to-point hourly firm
service to the pro forma OATT because it will eliminate a barrier to
the development of markets and thereby decrease opportunities for undue
discrimination. The terms of service we propose will ensure that hourly
firm customers are offered service in a manner consistent with
comparability principles, and pay their fair share of system costs. We
conclude that hoarding and speculation should not be a major concern
because requests for hourly firm service are subject to preemption by
longer-term requests for service. We also conclude that the provision
of hourly firm should have no effect on investment in the grid because
a transmission provider does not plan its system to meet hourly firm,
or any other short-term firm, transmission requests. In addition, the
expected effect of hourly firm on long-term transactions is no
different than the effect of other short-term firm services. For
example, though commenters are correct that hourly firm will be
curtailed pro rata with longer term firm point-to-point service, this
is already true of daily firm point-to-point service. As noted in the
NOI, many transmission providers already offer this service and there
appear to be no technical impediments to offering it, nor have
customers on these systems

[[Page 32687]]

expressed any concern about the effect of hourly firm on long-term firm
services or curtailments. Therefore, we conclude that the concerns
expressed in Order No. 888 regarding unduly discriminatory effects of
hourly firm service have proven unfounded, and we propose that hourly
firm service be a required offering in the pro forma OATT.
344. As for the pricing of hourly firm service, consistent with
Commission precedent, we propose to use the ``IES Method'' and apply
different pricing for hourly firm service based on whether the service
is taken during peak or off-peak hours.\319\ Pricing for hourly firm
service during peak periods would be based on 4,160 hours annually of
peak usage over 52, 5-day weeks of 16-hour days (52 x 5 x 16 = 4,160),
rather than all 8760 hours of the year. In other words, the rate is
derived from the hours during which the facilities are likely to be
used, rather than the total hours in the year. It is premised on the
assumption that a customer using the transmission system for the 16
peak hours of the day should pay the same contribution to fixed costs
as a customer who has reserved capacity on a daily basis.\320\ But
because hourly service is unlikely to be taken only during peak hours,
we propose to allow pricing for hourly firm service for off-peak hours
based on 8,760 hours of usage.\321\ This is appropriate because
customers using short-term service during off-peak hours do not
constrict the system during the peak period, and should pay less than
what they pay during the peak period.\322\ To ensure that hourly
customers do not pay more than their fair share of fixed costs,
consistent with the pricing principles set forth in Order No. 888, the
total charge in any day for hourly service cannot exceed the stated
daily rate multiplied by the maximum hourly capacity reservation during
such day.\323\ We conclude that using the IES Method to price hourly
firm service at a higher rate during peak periods will ensure that
hourly firm customers pay a fair share of the costs of the transmission
system and, as a result, mitigate ``cream-skimming'' concerns.
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\319\ The Method is named for a proceeding in which peak and
off-peak pricing was applied to hourly non-firm transmission
service. IES Utilities, Inc., 81 FERC ] 61,187 at 61,833-34 (1997),
reh'g denied, 82 FERC ] 61,089, aff'd on other grounds sub nom,
Wisconsin Public Power Inc., v. FERC, 1999 U.S. App. LEXIS 3998
(Feb. 23, 1999) (unpublished opinion); see New York State Electric &
Gas Corp., 92 FERC ] 61,169 at 61,593-94(2000) (approving
application of the IES Method for time-differentiated hourly non-
firm rate design), order on reh'g, 100 FERC ] 61,021 (2002).
\320\ Peak period pricing is referred to as the ``Appalachian
Method'' or ``AEP Method,'' and takes its name from the proceeding
in which it originated. Appalachian Power Co., 30 FERC ] 61,296
(1987). The Appalachian Method is consistent with the premise that
firm transmission service be priced based on the system's peak
periods of usage. See Entergy Services, Inc. 85 FERC ] 61,163, at
61,645 (1998) (approving application of the method for firm service on an
hourly basis during peak hours), reh'g denied, 91 FERC ] 61,153 (2000).
\321\ See IES Utilities, Inc., 81 FERC at 61,833-34 (approving
use of an 8,760 hour year to calculate rates for non-firm service on
an hourly basis during off-peak hours); Entergy Services, Inc., 85
FERC at 61,645 (approving use of an 8,760 hour year to calculate
rates for firm service on an hourly basis during off-peak hours).
\322\ Appalachian Power Co., 39 FERC at 61,965; see American
Electric Power Service Corp., 88 FERC ] 61,141 at 61,453-54 (1999).
\323\ And, in turn, the total demand charge in any week pursuant
to a reservation for hourly or daily service cannot exceed the
weekly rate multiplied by the maximum hourly capacity reservation in
any hour during such week. See pro forma OATT schedules 7 and 8; see
also Entergy Services, Inc., 85 FERC ]61,163 at 61,645 (1998)
(applying these principles to a proposal for firm service on an
hourly basis), reh'g denied, 91 FERC ]61,153 (2000).
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345. As for allowing transmission customers to batch requests for
service, we conclude that allowing such batching creates administrative
efficiencies for the transmission customer and transmission provider
alike. Therefore, we propose allowing transmission customers to batch
requests and schedules for hourly firm service that will be provided
within the same day.
346. The Commission also concludes that the current scheduling
practices can accommodate the scheduling of hourly firm transmission
service. To require that both firm and non-firm hourly services be
scheduled at the same time would require that the existing procedures
be revised, with no discernible benefit to the transmission customer or
transmission provider. Even with the addition of this new service, it
remains reasonable to require that the transmission provider have all
firm schedules at the same time, and in advance of the deadline for
non-firm schedules. Therefore, we propose that schedules for firm
hourly service, like all other firm schedules, will be due by 10 a.m.
the day before the service is to commence.
347. Finally, we propose that, consistent with other durations of
service, the confirmation period for hourly firm service specified in
section 13.2 of the pro forma OATT will allow longer-term requests for
service to preempt shorter hourly firm requests for service until one
hour before the commencement of hourly firm service.
3. Rollover Rights
348. Section 2.2 of the pro forma OATT allows existing firm
transmission service customers--wholesale requirements and
transmission-only customers with contracts of one year or more--the
right to continue to take transmission service from the transmission
provider when the customer's contract expires, rolls over or is
renewed. The pro forma OATT provides that the 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 from another supplier. This transmission
reservation priority for existing firm transmission service customers,
which is also referred to as a right of first refusal or a rollover
right, is an ongoing right that may be exercised at the end of all firm
contract terms of one year or longer. A transmission customer must give
notice of whether it will exercise its right of first refusal 60 days
before the expiration of its service agreement.
349. In Order No. 888, the Commission provided that, if a
transmission customer subject to the rollover right selects a new power
supplier that substantially changes the location or direction of its
power flows, the customer's right to continue taking service from the
transmission provider may be affected by transmission constraints
associated with the change.\324\ The Commission also provided that a
transmission provider may reserve existing capacity for retail native
load and network load growth reasonably forecasted within the
transmission provider's current planning horizon, but that any capacity
so reserved must be posted on the transmission provider's OASIS and
made available to others until the capacity is needed for the
anticipated network or retail native load use.\325\ The Commission also
has held that a transmission provider may restrict a right of first
refusal based on pre-existing contracts that commence in the future if
the transmission provider knows at the time of the execution of the
original service agreement that ATC used to serve a customer will be
available for only a particular time period, after which time it is
already committed to another transmission customer under a previously
confirmed transmission request.\326\ Once a

[[Page 32688]]

transmission provider evaluates the impact on its system of serving a
long-term firm transmission customer and grants the transmission
customer existing capacity, the transmission provider must plan and
operate its system with the expectation that it will continue to
provide service to the transmission customer should the transmission
customer exercise the right of first refusal. If constraints arise
after a transmission provider enters into a long-term agreement with
the transmission customer (and that agreement does not contain an
allowed restriction on the transmission customer's right of first
refusal), the obligation is on the transmission provider to determine
whether or not to build additional facilities to accommodate new
transmission customers.\327\ A transmission provider is obligated to
curtail service pursuant to its OATT or expand its system when its
system becomes constrained such that it cannot satisfy existing
transmission customers, including the exercise of their rollover
rights, because it should have planned and operated its system with the
expectation that each long-term firm transmission customer will
exercise its rollover rights.\328\
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\324\ Order No. 888 at 31,665 n.176.
\325\ Id. at 31,694.
\326\ E.g., Southwest Power Pool, Inc., 109 FERC ] 61,041 at P 6 (2004).
\327\ Id. at P 9.
\328\ Id.
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350. If a transmission provider's transmission system cannot
accommodate all of the requests for transmission service at the end of
the contract term, the existing long-term transmission customer must
agree to match the rate offered by the potential customer, up to the
transmission provider's maximum rate, and to accept a contract term at
least as long as that offered by the potential customer. However, a
competitor's offer does not have to be ``substantially similar in all
respects'' to the existing transmission customer's.\329\
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\329\ Idaho Power Co. v. FERC, 312 F.3d 454, 462 (D.C. Cir. 2002).
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The NOI
351. In the NOI, the Commission sought comment on whether
transmission providers have hindered transmission customers under pre-
Order No. 888 agreements from rolling over their contracts that allow
purchase of capacity and energy from another supplier. The Commission
also asked whether the language in section 2.2 of the pro forma OATT
needs to be reformed to ensure that rollover rights are provided when
transmission customers are seeking access to alternative supply
sources, or whether the issue was an enforcement matter. The Commission
sought comment on whether the rollover right policy determinations made
subsequent to Order No. 888 should be included in the pro forma OATT.
The Commission inquired whether there were other problems with section
2.2, either as written or as implemented by transmission providers,
that need to be addressed. The Commission also asked whether potential
transmission customers are denied transmission access by the exercise
of rollover rights. Finally, the Commission asked whether it should
reconsider the concept of rollover rights and whether the one-year
service with rollover rights is consistent with the need to create
incentives for transmission investment or should a longer minimum term
of service be adopted to qualify for rollover rights.\330\
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\330\ NOI at P 18.
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Comments
352. Many transmission providers and APPA argue that, because a
transmission provider may not know until 60 days prior to termination
whether a contract would be renewed, rollover rights in contracts as
short as one year inhibit the ability of transmission providers to plan
their systems.\331\ Transmission providers also argue that the right of
first refusal results in the denial of transmission that leads to an
inefficient use of transmission capacity.\332\ They explain that the
transmission provider must hold back capacity from the market for
existing transmission customers that have a right of first refusal but
that have not yet indicated whether they intend to exercise it. By the
time the termination notice is given, other transmission customers that
may have wanted to reserve the newly freed capacity have been turned
away and have made other arrangements. They assert that the result is
an inefficient use of capacity. In addition, these transmission
providers argue that the 60-day notice provision does not allow them
adequate time to re-market any capacity when it is freed-up by the
terminating customer. Further, certain transmission providers argue
that the right of first refusal unfairly gives transmission customers a
valuable ``free call option'' on transmission capacity without any
obligation to take the capacity at the end of the contract or to
compensate the transmission provider for the value of the option.\333\
To avoid these problems, many transmission providers suggest that the
rollover right should apply to firm transmission contracts with minimum
terms of between two and ten years.\334\ In addition, these commenters
suggest that, if the Commission lengthens the term of the firm
contracts eligible for the right of first refusal, the 60-day renewal
provision also should be extended.
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\331\ E.g., APPA, Bonneville, Duke, LPPC, Nevada Companies,
Progress, and Salt River.
\332\ E.g., Ameren, Duke, EEI, North Carolina Commission, Santa
Clara, and South Carolina E&G.
\333\ E.g., Ameren, Entergy, and Nevada Companies.
\334\ E.g., APPA, Bonneville, Cinergy, LDWP, MidAmerican, Nevada
Companies, Progress, Santee Cooper, South Carolina E&G, and Southern.
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353. Certain transmission customers argue that the Commission
should retain the right of first refusal in its present form, or change
it only after the Commission requires regional planning or other events
occur.\335\ Transmission customers stress the need for the rollover
rule as a means to ensure long-term service. According to
Constellation, transmission customers subject to rollover rights are
not temporary customers but are long-term customers that happen to take
their service under year-to-year agreements. Likewise, EPSA asserts
that rollover rights are important in planning for the long-term needs
of loads and generation located on the grid and that ``the ability to
roll over a firm transportation contract (by matching the contract term
and the rate of competing shippers) is the only way that market
participants can ensure that their needs will be met.''
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\335\ E.g., AMP-Ohio, Calpine, Constellation, and EPSA.
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354. Numerous commenters address the impact of native load growth
on the right of first refusal rule. As previously indicated, the
Commission permits transmission providers to restrict a firm
transmission customer's right of first refusal based on the
transmission provider's reasonable projections of native load growth.
Several commenters argue, however, that the Commission has not provided
adequate guidance as to the information a transmission provider must
submit to demonstrate native load growth.\336\ Further, commenters
argue that the Commission should allow transmission providers a means
to update their native load data to address any load growth that was
not anticipated at the time of the original contract. In addition, some
commenters argue that the Commission's rejection of native load growth
projections in prior cases, and the provision for pro rata curtailment
of service in the event of capacity shortfalls due to the exercise of a
right of first refusal, fail to respect the native load preference
adopted in Order No. 888, as well as in section 217 of the FPA as added
by section 1233 of EPAct

[[Page 32689]]

2005. They argue that new section 217 of the FPA reverses Commission
precedent that limits the ability of transmission providers to recall
capacity for native load once it is subject to a right of first refusal.
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\336\ E.g., Duke, EEI, Entergy, Nevada Companies, Progress
Energy, Santee Cooper, and Salt River.
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Discussion
355. The comments filed in response to the NOI demonstrate a need
to retain, but revise, the right of first refusal provision in the pro
forma OATT. The Commission proposes to revise the right of first
refusal provision in the pro forma OATT to apply to wholesale
requirements and transmission-only contracts that have a minimum term
of five years, rather than the current minimum term of one year. In
addition, the Commission proposes that a transmission customer under a
rollover agreement must provide notice of whether or not it will
exercise its right of first refusal no less than one year prior to the
expiration date of the transmission service agreement. We agree with
APPA that these changes strike an appropriate balance between providing
customers meaningful rollover rights and encouraging long-term
contracting, new investment and long-term planning. Finally, if the
existing customer seeks to exercise its rollover right and there is
insufficient transmission capacity on the system at the end of the
contract term to accommodate all of the requests for transmission
service, the existing customer would have to agree to accept a contract
term at least equal to a competing request by any new customer or five
years, whichever is longer, and to pay the current just and reasonable
rate, as approved by the Commission, for such service.
356. The Commission's proposal is consistent with the transmission
customers' comments that the right of first refusal should be designed
to ensure long-term service. Extending the minimum term of the right of
first refusal agreements to five years will encourage long-term use of
the grid. In addition, the one-year prior notice requirement should
allow adequate time for transmission providers to re-market unused
capacity that may result from a transmission customer choosing not to
roll over a service agreement. The one-year notice provision also
should limit the instances when the transmission provider must turn
away a transmission request only to find out that it could accommodate
the request after the transmission customer elected not to roll over.
These changes should result in a more efficient use of the transmission
grid.
357. If we adopt the proposed minimum five year/one year right of
first refusal provision in the pro forma OATT, we propose to allow this
provision to become effective upon Commission acceptance of the
transmission provider's coordinated and regional planning process set
forth in Attachment K of its OATTs. Thus, all new transmission service
agreements executed after the effective date of Attachment K will be
subject to the five year/one year right of first refusal rule. The
Commission proposes that transmission service agreements subject to a
right of first refusal entered into prior to the effective date of
revised section 2.2, unless terminated, will become subject to the five
year/one year right of first refusal rule on the first rollover date
after the effective date of revised section 2.2.
358. Our existing policy allows the transmission provider to limit
a transmission customer's right of first refusal by reserving capacity
to accommodate reasonably forecasted and verifiable native and network
load growth at the time the initial service agreement is executed. Many
transmission providers argue that this right should be extended to
allow the transmission provider to limit the right of first refusal
each time the right of first refusal is exercised, not only at the time
the initial service agreement is executed. We believe that our proposal
to extend the term of the right of first refusal from one to five years
should address, in many respects, the concern of transmission providers
that the existing right of first refusal is unfair to native load
customers. Under this proposal, a right of first refusal will no longer
be granted to users of the grid on an annual basis, but rather only to
those making longer-term commitments to the grid, as do native load
customers. In addition, while we expect a transmission provider to be
continually updating its forecast for native load growth and applying
this updated projection to new requests for service, applying this to
contracts at rollover may require an additional change to the right of
first refusal process. Specifically, the transmission provider would
have to compete for the capacity rather than reclaim it through its
rights to reserve capacity for native load growth. We seek comment on
whether this change would be appropriate. Further, while we have
addressed requests to limit the right of first refusal on the basis of
native load growth on a case-by-case basis, we recognize that this
approach has not yet resulted in a clear and transparent method for
demonstrating forecasted native load growth. Accordingly, we seek
comment on whether there is a sufficiently clear, consistent, and
transparent method that could be implemented on a generic basis to
address the need for a transmission provider to demonstrate its
forecast of native load growth and its effect on capacity reserved by
right of first refusal customers.
359. Many transmission providers argue that our current right of
first refusal policy is inconsistent with the native load protections
contained in section 217(b) of the FPA. We disagree, but note that the
reforms being proposed here should moot this argument. We are proposing
to extend the minimum term of the right of first refusal to a period
(five years) that is more consistent with the planning horizons of
transmission providers. In addition, limiting the right of first
refusal to agreements with terms of five years or more will ensure that
the right of first refusal is used by customers with long-term
obligations to purchase capacity rather than as a means for customers
with shorter-term transactions to use capacity for non-load-serving-
entity transactions.\337\ This is consistent with FPA section
217(b)(4), which states that the Commission shall exercise its
authority ``in a manner that facilitates the planning and expansion of
transmission facilities to meet the reasonable needs of load-serving
entities to satisfy the service obligations of the load-serving
entities.'' Our proposal also is consistent with FPA section 217(b)(2)
because it continues to allow the transmission provider to limit the
right of first refusal to accommodate reasonably forecasted and
verifiable native load growth.
360. Under the proposed rule, transmission providers still will be
required to plan their systems with the expectation that a transmission

[[Page 32690]]

customer with a long-term transmission agreement subject to a right of
first refusal will exercise its rollover right at the end of its term.
We believe it is important to reiterate the obligation on transmission
providers to maintain ATC for existing transmission customers with
rollover rights and our expectation that transmission providers will
include all customers with rollover rights in their long-term
planning.\338\ We understand that some existing reliability procedures
or practices may encourage transmission providers to exclude certain
transmission service contracts from their base-case models, even if
those contracts contain a rollover right. This is inconsistent with
Commission policy and undermines the purpose of the rollover right,
which is to facilitate system planning and reliability.
4. Modification of Receipt or Delivery Points
361. Section 22 of the pro forma OATT provides that a transmission
customer taking firm point-to-point service may modify its receipt and
delivery points on either a non-firm or a firm basis. Section 22.1
(Modifications on a Non-Firm Basis) provides that, subject to certain
conditions, a firm point-to-point customer may request transmission
service on a non-firm basis over receipt and delivery points other than
those specified in its service agreement (known as secondary receipt
and delivery points) in amounts not to exceed its firm capacity
reservation, without incurring an additional non-firm point-to-point
service charge or executing a new service agreement. Section 22.2
(Modifications on a Firm Basis) provides that any request to modify
receipt and delivery points on a firm basis shall be treated as a new
request for service in accordance with section 17 of the pro forma OATT
(Procedures for Arranging Firm Point-to-Point Transmission Service),
except that the 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 retains its priority for
service at the existing firm receipt and delivery points specified in
its service agreement.
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\337\ This is consistent with the approach suggested by TAPS,
which argues that the current one-year minimum contract term allows
significant capacity on constrained interfaces to be tied up in
relatively short-term deals simply designed to hold the firm
reservation as a path for non-firm economy purchases and to block
competitors' firm access (e.g., inexpensive, one-year ``paper
capacity'' deals). TAPS also argues that any restriction on the
availability and flexibility of rollover rights be contingent on an
expansion of the transmission grid so that transmission customers
have reasonable access to competitive supplies. We agree that
expansion of the grid is critical and accordingly have proposed to
require coordinated transmission planning on both a local and
regional level to ensure that transmission customers' needs are
treated comparably to those of the transmission provider. This
enhanced transmission planning, combined with other reforms proposed
in this NOPR (e.g., improvements to the calculation of ATC), should
mitigate TAPS's concerns by improving the ability to access
competitive supplies.
\338\ See, e.g., Southern Company Services, Inc., 104 FERC ]
61,140 at P 26-27 (2003).
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362. In the NOI, the Commission asked whether transmission
customers have experienced undue discrimination in attempting to
redirect to new receipt and delivery points pursuant to section 22.2
and whether any reforms were needed. The Commission did not
specifically ask about section 22.1, but some commenters nevertheless
addressed this section. Most commenters, however, did not distinguish
whether they were concerned with firm or non-firm redirects and instead
addressed redirects generally.
Comments
363. APPA notes that many of its members have experienced
difficulties in changing receipt points, especially when such requests
involve new sources of supply. In many cases, APPA asserts that
transmission providers require major upgrades before they will grant a
redirect to new points. The Public Power Council points out that
redirecting to new points depends on ATC, and, therefore, the ability
to make changes would be improved by better public knowledge of ATC at
those points in all timeframes and by more information about ATC
calculation methodologies. EPSA asserts that difficulty in redirecting
to new points inhibits the ability to reassign capacity. Williams
complains about delays by transmission providers in answering requests
for redirects and urges the Commission to enforce OATT procedures and
to consider a ``fast-track'' process for reviewing requests to redirect.
364. Bonneville and EEI believe that any discrimination may be an
unintentional result of a lack of clarity in the pro forma OATT, and
are joined by MidAmerican, Progress Energy, and PNM-TNMP in calling for
a number of clarifications. MidAmerican believes that these
clarifications will provide flexibility to transmission customers and
will enhance the ability to reassign transmission service to customers
desiring different points of receipt or delivery.
365. Southern and Ameren assert that because customers often make
redirect requests at the last minute, there is often not enough time
for the market to respond to capacity made available on an abandoned
path. Southern also highlights the administrative burdens and
complexity (particularly for reliability) of processing short-term
changes in service and suggests that the Commission consider measures
to encourage transmission customers to provide greater certainty as to
the expected paths along which they will schedule service and to do so
in a more timely manner. Southern, along with Bonneville, also urges
the Commission to clarify rollover rights when service is redirected to
new points. In general, however, Southern believes that the
Commission's current redirect policies are reasonable and practical.
366. A number of commenters focus on other related transmission
issues, such as the flexibility afforded network service versus point-
to-point service or other network-service-related issues; \339\ the
lack of flexibility with point-to-point service generally; \340\ or
issues associated with the interconnection of network load at new
delivery points.\341\
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\339\ E.g., Alberta Intervenors, Calpine, and TAPS.
\340\ E.g., Occidental.
\341\ E.g., NRECA and TDU Systems.
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Discussion
367. The Commission believes that it has already addressed many of
the concerns raised by commenters with regard to reform of section 22
of the pro forma OATT in Docket No. RM05-5-000.\342\ In Order No. 676,
the Commission adopted the ``Standards for Business Practices and
Communication Protocols for Public Utilities'' developed by the NAESB's
Wholesale Electric Quadrant (WEQ).\343\ Order No. 676 incorporates the
aforementioned standards by reference into the Commission's
regulations; requires public utilities to implement the standards by
July 1, 2006; and requires public utilities to file revisions to their
OATTs to include these standards.\344\ The WEQ Standards recently
adopted by the Commission include a number of standards addressing
requirements for dealing with redirects on both a firm and non-firm
basis.\345\ In fact, all of the WEQ Standards dealing with redirects
were adopted by the Commission in Order No. 676, except for WEQ
Standard 001-9.7, which addresses the impact of a firm redirect on a
long-term firm transmission customer's rollover rights under section
2.2 of the pro forma OATT. The Commission directed the WEQ to
reconsider WEQ Standard 001-9.7 and to adopt a revised standard
consistent with the Commission's

[[Page 32691]]

policies.\346\ The Commission also offered guidance to assist the WEQ
in developing a standard that is consistent with Commission policy.\347\
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\342\ Standards for Business Practices and Communication
Protocols for Public Utilities, Order No. 676, 71 FR 26199 (May 4,
2006), FERC Stats. & Regs. ] 31,216 (2006).
\343\ The WEQ was established by NAESB in response to a
Commission order requesting the wholesale electric power industry to
develop business practice standards and communication protocols by
establishing a single consensus, industry-wide standards
organization for the wholesale electric industry. See id. at P 3-4.
\344\ The standards will hereinafter be referred to as the WEQ
Standards. The Commission proposes to add a reference to the WEQ
standards in section 4 of the pro forma OATT, which identifies the
Commission's regulations containing the terms and conditions
relevant to the OASIS and standards of conduct.
\345\ The requirements for dealing with redirects on a firm
basis are found at WEQ Standard 001-9, et seq., and the requirements
for dealing with redirects on a non-firm basis are found at 001-10, et seq.
\346\ Order No. 676 at P 52.
\347\ Id. at P 53-61.
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368. As noted above, we believe that a number of concerns raised by
commenters are addressed by the WEQ Standards. For example, we believe
that the request of commenters for clarification that redirect service
may be requested for only a portion of the original quantity of service
is addressed for firm and non-firm service by WEQ Standards 001-9.2 and
001-10.2, respectively, which provide that the transmission customer
``shall be allowed to request a Redirect on a [Firm/Non-Firm] basis for
a portion or all of the Capacity Available to Redirect.'' Likewise, the
request of commenters for clarification that it is not necessary for a
customer to redirect its service for the entire remaining term of
service is addressed for firm and non-firm service by WEQ Standards
001-9.3 and 001-10.3, respectively, which provide that the transmission
customer ``shall be allowed to request a Redirect on a [Firm/Non-Firm]
basis for a portion or all of the time period of the Parent
Reservation.'' While we believe that many concerns expressed by
commenters with regard to redirects in this proceeding have been
addressed by Order No. 676, we request that each commenter reconsider
its concerns in this area with the benefit of Order No. 676's adoption
of the WEQ Standards, and inform us if additional concerns remain. The
Commission notes that several of the most active commenters addressing
redirects in this proceeding also were commenters in Docket No. RM05-5-
000 and therefore should be familiar with whether a particular WEQ
Standard addresses the issues raised in the comments submitted in this
proceeding.\348\
---------------------------------------------------------------------------

\348\ For example, Bonneville, EEI, NRECA, and Southern each
commented in Docket No. RM05-5-000.
---------------------------------------------------------------------------

369. The Commission anticipates that a number of other concerns,
while perhaps not yet addressed (or addressed fully) by a WEQ Standard,
are nevertheless the types of issues appropriate for the WEQ process.
The Commission therefore proposes that each commenter that continues to
believe additional reform is necessary in this area also evaluate
whether its concerns would more appropriately be addressed by the WEQ
as it considers its next version of its standards.\349\ Specifically,
as noted above, the WEQ is in the process of reevaluating WEQ Standard
001-9.7, dealing with redirects and rollovers, so that it is consistent
with the Commission's guidance given in Order No. 676. The Commission
requests comment on whether the WEQ process, along with the guidance
provided by the Commission in Order No. 676, is sufficient to address
the concerns of commenters that seek clarification on the interplay
between redirects and rollovers.
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\349\ The Commission notes in this regard that the WEQ's
procedures ensure that all industry members can have input into the
development of a business practice standard, whether or not they are
members of NAESB, and each standard it adopts is supported by a
consensus of the five industry segments: Transmission, generation,
marketers/brokers, distribution/load-serving entities, and end-
users. See Order No. 676 at P 5 & n.5.
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370. The Commission understands, however, that there are also more
fundamental concerns with regard to section 22 that were raised in the
NOI. Many comments reflect concerns about the inability of transmission
customers to effectively redirect their transmission service to new
receipt and delivery points in order to accommodate a new transaction,
the reassignment of capacity, or the designation of a new supply
source. Generally, these commenters argue that their ability to
redirect to new points is stymied by a lack of ATC at the new points or
the need for major upgrades at the new points; or that the transmission
provider takes too long to process its redirect request. Transmission
providers, on the other hand, complain of the administrative burdens
and complexity (particularly with regard to reliability) of processing
transmission customers' short-term changes in service, and also assert
that there is often not enough time for the market to respond to
capacity made available on customers' original paths.
371. The ability to redirect to new points is a function of whether
there is ATC at the new points. The Commission believes that its
proposed reforms requiring coordinated transmission planning between
transmission providers and their customers, as well as regional
transmission planning open to all stakeholders, will lead to a more
rationally planned transmission system that will result in fewer
transmission constraints and more ATC available to accommodate requests
to redirect to new points.\350\ Additionally, the Commission's proposed
reforms regarding the calculation of ATC and increased transparency
over the process will engender increased confidence among transmission
customers in their transmission providers' ATC postings.\351\ In short,
transmission customers will have more accurate and complete ATC
information to utilize in evaluating their redirect options. Moreover,
through increased transparency, transmission customers will have the
information they need to question a transmission provider's denial of a
request to redirect. Thus, we believe that our reforms in the area of
transmission planning and ATC calculation should go a long way toward
addressing transmission customer concerns in this area. Should
commenters believe that our proposed reforms in this area will not
address their concerns effectively, or that there is a better way of
addressing them, we encourage them to submit a specific proposal, along
with proposed revised pro forma OATT language.
---------------------------------------------------------------------------

\350\ Supra Part V.B.
\351\ Supra Part V.A.
---------------------------------------------------------------------------

372. We believe that redirects should be as customer-friendly as
possible. Other pro forma OATT reforms proposed in this rulemaking
should improve the ability to redirect transmission service to new
points pursuant to section 22. For example, the modifications to firm
point-to-point service discussed above will be applicable to a request
to redirect on a firm basis, as such requests are treated as a new
request for service under pro forma OATT section 22.2. In addition,
reforms related to the acquisition of service discussed below (e.g.,
with regard to making and processing requests for service, queuing, and
reservation priority) should, among other things, help to address
transmission customer concerns that transmission providers are too slow
in processing redirect requests. These reforms also should help to
address transmission provider concerns that customers do not respond
completely and in a timely manner and that there is insufficient time
to re-market capacity on the original paths.
5. Acquisition of Transmission Service
a. Processing of Service Requests
373. The pro forma OATT includes requirements that transmission
providers process requests for transmission service in a timely
fashion. Section 17.5 (Response to a Completed Application) and section
18.4 (Determination of Available Transmission Capability) of the pro
forma OATT provide that following the receipt of a completed
application for service, the transmission provider must respond to
transmission customer requests for determinations of the availability
of firm and non-firm

[[Page 32692]]

transmission capacity on a timely basis. The transmission provider must
make the determination as soon as reasonably practicable after receipt
but no later than certain specified time periods (or such time periods
generally accepted in the region). Section 19 (Additional Study
Procedures for Firm Point-to-Point Transmission Service Requests) of
the pro forma OATT provides deadlines that transmission providers must
adhere to in issuing system impact study agreements and facilities
studies agreements and that transmission customers must abide by in
responding to these study agreements. Section 19 requires transmission
providers to use due diligence to complete system impact studies and
facilities studies within 60 days. Section 32 of the pro forma OATT
(Additional Study Procedures for Network Integration Transmission
Service Requests) contains similar due diligence deadlines for
completing system impact studies and facilities studies associated with
requests for network service.
374. In the NOI, the Commission sought comment on problems
transmission customers and transmission providers have experienced
regarding the timely processing of requests for transmission service.
In particular, the Commission sought comment regarding whether
transmission customers have experienced delays by transmission
providers in responding to requests for transmission service in general
and, in particular, what problems commenters have experienced as
transmission providers process the queue for requests for transmission
service that cannot be immediately granted due to a lack of ATC. We
also asked about the type of remedies the Commission should impose on
public utility transmission providers for missing deadlines set forth
in their OATTs. Another issue we sought comment on was whether
commenters have identified blocking issues, such as where a customer
submits multiple requests intending to proceed with a single request
specifically to keep others out of the queue; and if so, whether
allowing transmission providers to charge a processing fee would reduce
the incentive to submit multiple self-competing requests. Finally, we
sought comment on whether the Commission should require transmission
providers to study transmission requests as a group.
Comments
375. A number of merchant generators articulated general concerns
regarding the time it takes transmission providers to process requests
for transmission service.\352\ EPSA notes that timeliness in responding
to transmission requests is a consistent problem. Constellation states
that the untimely processing of requests for transmission service is a
persistent problem under the OATT, particularly with respect to long-
term point-to-point service, network service, and modification of
network resource designations. Arkansas Cities adds that, under the
current OATT, utilities' lenient application of time periods needed for
the system impact study process and facilities study process cause
transmission customers to endure significant amounts of time to obtain
confirmed firm delivery service at a reasonable cost.
---------------------------------------------------------------------------

\352\ E.g., Constellation, EPSA, Powerex, and Williams.
---------------------------------------------------------------------------

376. A number of commenters suggest that transmission providers
should inform the Commission when they miss the target deadlines for
completing system impact studies and facilities studies and/or post
performance statistics on their OASIS sites that detail the time it
takes them to process system impact studies and facilities
studies.\353\ EPSA states that it strongly believes that the new OATT
should require the transmission provider to notify the Commission when
it is not able to meet deadlines. TDU Systems suggests that one way to
address the difficulty of determining acceptable delays is to require
transmission providers to post statistics on their OASIS sites
providing information as to the length of time it might take to process
requests for transmission service. Cinergy proposes that adopting
specific reporting metrics that require transmission providers to
report certain statistics regarding their performance could result in
an improved quality of service.
---------------------------------------------------------------------------

\353\ E.g., Cinergy, Constellation, EPSA, MidAmerican, Powerex,
and TDU Systems.
---------------------------------------------------------------------------

377. A number of merchant generators propose that the Commission
assess operational penalties on transmission providers that fail to
meet the study deadlines detailed in the pro forma OATT.\354\ LG&E
recommends that the Commission consistently enforce the established
deadlines through penalties or other remedies unless good cause for
failure to comply can be shown, so as to promote nondiscriminatory
adherence to established deadlines. Powerex suggests that the
Commission: (a) Identify a threshold percentage rate of acceptable
compliance with response timelines, (b) require transmission providers
to monitor and post their own rates of compliance with Commission-
required timelines on a path-specific basis, as well as the reasons for
delays, (c) require transmission providers whose rate of compliance on
a particular path falls below the Commission's threshold to file a
compliance report with the Commission identifying the problem(s) and
corrective measures that will be undertaken (including a timeline for
implementation of the corrective measures), and (d) use a progressive
penalty system that begins with reporting and auditing requirements for
non-compliant transmission providers and then moves toward monetary
penalties in cases where a transmission provider exhibits a pattern of
uncorrected noncompliance, as well as in any case where actual bad
faith, discrimination or preferential treatment has occurred.
---------------------------------------------------------------------------

\354\ E.g., EPSA, Powerex, and Williams.
---------------------------------------------------------------------------

378. A number of transmission providers state that transmission
service request processing is slowed by excessive requests for
transmission service from the same transmission customer with
essentially the same service attributes (e.g., point of receipt, point
of delivery, start time, end time, firmness).\355\ A number of other
commenters also argue that some transmission customers submit multiple
requests for transmission service with no intent to confirm most of the
requests if and when the requests are accepted.\356\ MidAmerican states
that it is aware of cases where customers have submitted multiple
requests for service associated with a new generator where the location
of the new generator is not known but queue priority is being sought by
the transmission customer. MidAmerican adds that the submission of such
multiple requests for service affects the processing of other lower
queued transmission requests. South Carolina E&G states that there are
instances when a transmission customer submits multiple requests
intending to proceed with a single request, seemingly with the purpose
of keeping others out of the queue. AWEA states that transmission
queues are frequently jammed with many projects holding each other up.
AWEA asserts that there often are ``zombie'' projects blocking the
queue, without a power purchase agreement or other indication that they
are serious projects. Suez Energy NA responds that there are blocking
issues when a transmission customer submits multiple requests for
transmission

[[Page 32693]]

service but intends to proceed with a single request.
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\355\ E.g., MidAmerican, Progress Energy, South Carolina E&G,
and Southern.
\356\ E.g., Alberta Intervenors, AWEA, Public Power Council, and
Suez Energy NA.
---------------------------------------------------------------------------

379. Several federal power agencies suggest that charging a fee on
transmission service requests could provide the right incentive to
transmission customers to limit requests for transmission service to
only those requests they expect to confirm.\357\ Several other
commenters suggest a similar fee.\358\ Bonneville supports the
imposition of a processing fee for multiple requests to provide a
disincentive to blocking behavior. Bonneville suggests that the fee
should provide a disincentive for making multiple, ``self-competing''
requests. Bonneville suggests that, at a minimum, requests with the
same point of receipt, point of delivery, source, sink, and time-frame
should be considered ``self-competing.'' In addition, Bonneville
contends that transmission providers should be allowed to define
parameters to identify additional instances of ``self-competing''
requests on their systems. South Carolina E&G argues that there is
merit to the concept of charging a processing fee that would increase
with the duration of the requested service, to reduce the incentive to
submit multiple self-competing requests.
---------------------------------------------------------------------------

\357\ E.g., Bonneville and TVA.
\358\ E.g., Alberta Intervenors, Snohomish, and South Carolina E&G.
---------------------------------------------------------------------------

380. The majority of commenters were in favor of allowing, but not
requiring, transmission providers to study requests for transmission
service as a group, also known as clustering requests for transmission
service.\359\ APPA and Bonneville suggest amending the pro forma OATT
so that all requests received during a set time period are studied
together. EEI argues that the Commission should not require the
studying of transmission requests as a group, though transmission
providers should continue to have the discretion to cluster
transmission requests when it is efficient to do so. EPSA states that
clustering should not be required, but may be considered as a customer
option as part of a comprehensive planning process.
---------------------------------------------------------------------------

\359\ E.g., EEI, EPSA, Nevada Companies, PacifiCorp, PNM-TNMP,
Powerex, and Southern.
---------------------------------------------------------------------------

381. Bonneville suggests that the Commission adopt two NAESB
proposed business standards designed to reduce the number of self-
competing requests. In particular, Bonneville believes the Commission
should adopt NAESB's proposed queue hoarding business practice and
queue flooding business practice.
Discussion
382. We agree with commenters who argue that requiring transmission
providers to report the length of time they take to complete studies
pursuant to sections 19 and 32 of the pro forma OATT would increase
transparency and improve the ability of transmission customers and the
Commission to detect undue discrimination. Therefore, we propose to
require transmission providers to post on their OASIS sites metrics
that track their performance in processing system impact studies and
facilities studies associated with requests for transmission service.
Transmission providers will be required to post the performance
metrics, outlined below, for each calendar quarter. Transmission
providers should begin tracking their performance upon the effective
date of the final rule in this proceeding and keep the quarterly
performance metrics posted on their OASIS sites for three calendar
years. The transmission provider will be required to post the quarterly
performance metrics within 15 days of the end of the quarter. The
performance metrics outlined below should be calculated separately for
affiliates' and non-affiliates' requests for short-term and long-term
transmission service. A transmission provider also will be required to
post performance metrics for studies that it conducts for RTOs.
383. We propose to require transmission providers to post the
following set of performance metrics on a quarterly basis:
? Process Time from Initial Service Request to Offer of
System Impact Study Agreement pursuant to Sections 17.5, 19.1 and 32.1
of the pro forma OATT
? Number of new System Impact Study Agreements delivered to
Transmission Customers
? Number of new System Impact Study Agreements delivered to the
Transmission Customer more than 30 days after the Transmission Customer
submitted its request
? Average time (days) from request submittal to change in
request status
? Average time (days) from request submittal to delivery of
System Impact Study Agreement
? Number of new System Impact Study Agreements executed
? System Impact Study Processing Time pursuant to Sections
19.3 and 32.3 of the pro forma OATT
? Number of System Impact Studies completed
? Number of System Impact Studies completed more than 60 days
after receipt of executed System Impact Study Agreement
? Average time (days) from receipt of executed System Impact
Study Agreement to date when completed System Impact Study made
available to the Transmission Customer
? Average cost of System Impact Studies completed during the period
? Service Requests Withdrawn from System Impact Study Queue
? Number of requests withdrawn from the System Impact Study queue
? Number of System Impact Studies withdrawn more than 60 days
after receipt of executed System Impact Study Agreement
? Average time (days) from receipt of executed System Impact
Study Agreement to date when request was withdrawn from the System
Impact Study queue
? Process Time from Completed System Impact Study to Offer of
Facilities Study pursuant to Sections 19.4 and 32.4 of the pro forma OATT
? Number of new Facilities Study Agreements delivered to
Transmission Customers
? Number of new Facilities Study Agreements delivered to
Transmission Customers more than 30 days after the completion of the
System Impact Study
? Average time (days) from completion of System Impact Study to
delivery of Facilities Study Agreement
? Number of new Facilities Study Agreements executed
? Facilities Study Processing Time pursuant to Sections 19.4 and 32.4
? Number of Facilities Studies completed
? Number of Facilities Studies completed more than 60 days
after receipt of executed Facilities Study Agreement
? Average time (days) from receipt of executed Facilities Study
Agreement to date when completed Facilities Study made available to the
Transmission Customer
? Average cost of Facilities Studies completed during the period
? Average cost of recommended upgrades for Facilities Studies
completed during the period
? Service Requests Withdrawn from Facilities Study Queue
? Number of requests withdrawn from the Facilities Study queue
? Number of Facilities Studies withdrawn more than 60 days
after receipt of executed Facilities Study Agreement
? Average time (days) from receipt of executed Facilities Study
Agreement to date when request was withdrawn from the Facilities Study
queue
384. We also propose to impose operational penalties when
transmission providers routinely fail to meet the 60-

[[Page 32694]]

day due diligence deadlines prescribed in sections 19.3, 19.4, 32.3 and
32.4 of the pro forma OATT. We propose to require a transmission
provider to file a notice with the Commission in the event the
transmission provider processes more than 20 percent of non-affiliates'
studies outside of the 60-day due diligence deadlines in the pro forma
OATT for two consecutive quarters. For the purposes of calculating this
notification trigger, the transmission provider should aggregate all
system impact studies and facilities studies that it completes during
the quarter for non-affiliates.\360\ The transmission provider may
explain in its notification filing that it believes there are
extenuating circumstances that prevented it from meeting the deadlines
in the pro forma OATT. The transmission provider then will be subject
to an operational penalty if the transmission provider continues to be
out of compliance with the deadlines prescribed in the pro forma OATT
for each of the two quarters following its notification filing. The
transmission provider will be deemed to be out of compliance if it
completes 10 percent or more of non-affiliates' system impact studies
and facilities studies outside of the deadlines prescribed in the pro
forma OATT. The operational penalty will be assessed on a quarterly
basis, starting with the quarter following the notification filing and
continuing until the transmission provider completes at least 90
percent of all studies within 60 days after the study agreement has
been executed. For any system impact study or facilities study
completed during that quarter and more than 60 days after the study
agreement was executed, the penalty will equal $500 for each day the
transmission provider takes to complete the study beyond 60 days. For
any system impact study or facilities study that is still pending at
the end of the quarter and that has been in the study queue for more
than 60 days, the penalty will equal $500 for each day the study has
been in the study queue beyond 60 days. Because of their independence,
we do not believe that RTOs have an incentive to neglect their
obligation to process applications for service in a timely fashion. As
a result, we propose that RTOs will not be subject to this penalty regime.
---------------------------------------------------------------------------

\360\ For instance, if the transmission provider completes 4
non-affiliates' system impact studies during the quarter with 2
completed more than 60 days after the system impact study agreement
was executed and completes 2 non-affiliates' facilities studies
during the quarter with none completed more than 60 days after the
facilities study agreement was executed, then the transmission
provider will be deemed to have completed 2 out of 6 (33 percent)
studies outside of the deadlines in the pro forma OATT.
---------------------------------------------------------------------------

385. In addition to the operational penalty described above, we
propose to require transmission providers to post on their OASIS sites
additional performance metrics after making a notification filing.
Transmission providers will have to post these performance metrics
until they process at least 90 percent of all system impact and
facilities studies within 60 days after the study agreement has been
executed. Starting the quarter following a notification filing, the
transmission provider will be required to post: (1) The average, across
completed system impact studies, of the employee-hours expended per
completed system impact study; (2) the average, across completed
facilities studies, of employee-hours expended per completed facilities
study, (3) the number of employees devoted to processing system impact
studies, and (4) the number of employees devoted to processing
facilities studies. These additional performance metrics should be
calculated separately for affiliates' and non-affiliates' requests for
transmission service and for short-term and long-term transmission service.
386. In addition to the operational penalties described above, we
may order other remedial actions, consistent with the Enforcement
Policy Statement. Any other remedial action will be determined on a
case-by-case basis. The transmission provider will pay the operational
penalty described above, consistent with the proposed rule discussed in
Part V.C.4.b. The transmission provider cannot recover for ratemaking
purposes any operational penalty it pays for failing to process
transmission service studies on a timely basis.
387. With respect to the problem of multiple, self-competing
transmission service requests, we seek comment on a fee structure that
could provide a disincentive for transmission customers to submit such
duplicative requests without penalizing transmission customers that
have legitimate requests for transmission service. We seek detailed
recommendations, including any proposed tariff language, regarding the
standards we would use to identify requests that would be subject to a
fee. We also seek recommendations on the level of the fee that balances
our policy goals to discourage requests for transmission service that
the transmission customer does not intend to confirm while not
discouraging legitimate requests for transmission service. Finally, we
seek comment regarding the circumstances, if any, under which the
processing fee would be refunded to or credited to the transmission
customer.
388. In Order No. 2003, we encouraged transmission providers to
study interconnection requests in clusters.\361\ We likewise encourage
transmission providers to study requests for transmission service in
clusters, though we will not require transmission providers to cluster
requests for transmission service for study purposes.\362\ As with
interconnection requests, studying requests for transmission service in
clusters allows the transmission provider to consider all requested
uses of the transmission system at one time. We seek comment regarding
whether transmission providers should be required to study requests for
transmission service in a group if the transmission provider fails to
complete studies on a timely basis; and, if so, we seek comment on the
circumstances that should trigger such a requirement and the
appropriate method of implementing the requirement. We further seek
comment regarding whether transmission providers should be required to
study requests for transmission service in a group if all the
transmission customers in the group agree to cluster their requests. We
also seek comment regarding how to select the requests that belong to a
cluster so that transmission customers cannot ``cherry-pick'' clusters
to avoid transmission system upgrade costs.
---------------------------------------------------------------------------

\361\ Order No. 2003 at P 155.
\362\ We note that we previously have allowed transmission
providers to study requests for transmission service in a group.
See, e.g., Southwest Power Pool, Inc., 110 FERC ] 61,028 at P 16 (2005).
---------------------------------------------------------------------------

389. In Order No. 676, we incorporated by reference a number of
NAESB business practices, including the business standards on queue
hoarding and queue flooding.\363\ NAESB's queue hoarding business
practice allows transmission providers to deny a transmission
customer's identical requests for transmission service if the customer
elects not to accept an initial offer of identical, or substantially
identical, transmission service. NAESB's queue flooding business
practice allows a transmission provider to invalidate the submission of
additional identical requests for transmission service when the sum of
all previously submitted identical requests for transmission service
equals or exceeds the total transfer capability on the requested path
for any time period during the duration of the requests. We would
consider the decision by a transmission provider to

[[Page 32695]]

deny service under the queue hoarding business practice and the
decision to invalidate requests under the queue flooding business
practice to be an act of discretion under 18 CFR 37.6(g)(4) (2005). As
a result, the transmission provider is to log the actions it takes
under the queue flooding and queue hoarding business practices.
---------------------------------------------------------------------------

\363\ See Order No. 676 at P 19.
---------------------------------------------------------------------------

b. Queue Processing Business Practices
390. The set of uniform business practices adopted in Order No. 676
relating to transmission service price negotiation and on improving
interaction between transmission customers and transmission providers
over OASIS nodes. These business practices include standards for the
time limit within which (1) transmission providers must respond to
requests for transmission service, (2) transmission customers must
confirm service, and (3) transmission providers must respond to a rebid
from a transmission customer.\364\ These business practices also
include negotiation priority rules, including the terms under which a
request can be pre-empted and under which a request has the right-of-
first-refusal.\365\
---------------------------------------------------------------------------

\364\ Id., Standards 001-4.6 and 001-4.13.
\365\ Id., Standards 001-4.14 and 001-4.16.
---------------------------------------------------------------------------

391. In the NOI, the Commission sought comment regarding whether
there are provisions of the pro forma OATT that need to be reformed to
better define the obligations of public utility transmission providers
in responding to requests for transmission service.
Comments
392. Several commenters asked that the Commission require
transmission providers to post standard business practices that
describe how the transmission provider will process requests for
transmission service.\366\ MidAmerican suggests that transmission
providers should be required to post on their OASIS sites a business
practice documenting how they process their queues, requests outside
the queue, and expected completion times. Calpine believes that the
processing of requests for transmission service, and the deadlines
associated with that process, should be standardized for all
transmission service providers. For example, Calpine notes that
Entergy's OASIS business practices state that Entergy will respond to
fixed, hourly non-firm transmission service requests ``within 30
minutes of receiving the request for the requests received earlier than
1 hour before the service is to commence.'' By comparison, Calpine
continues, SPP's tariff explains that hourly, non-firm transmission
service requests for the next hour may be submitted no later than 20
minutes prior to the start of service.
---------------------------------------------------------------------------

\366\ E.g., Calpine, MidAmerican, and TDU Systems.
---------------------------------------------------------------------------

Discussion
393. Order No. 676 contains many of the business practices we
expect transmission providers to follow when they process requests for
transmission service, including the issue Calpine raises in its
comments about discrepancies between Entergy's and SPP's processes for
requests for hourly non-firm transmission service. Calpine's comment
addresses the deadline for transmission customers to submit requests
for non-firm hourly point-to-point service and the deadline for
transmission providers to respond to requests for non-firm hourly
point-to-point service. Standard 001-4.13 in Order No. 676 indicates
that transmission providers should use their best efforts to respond to
requests for non-firm hourly point-to-point service that are submitted
less than an hour prior to start and transmission providers should
respond within 30 minutes to requests that are submitted more than an
hour before start. In addition, in this NOPR we have provided
additional clarity regarding the calculation of ATC and requirements
for processing rollover requests. We also provide general guidance
regarding which business practices should be filed as part of a
transmission provider's OATT and which should be posted on OASIS. Given
this additional clarity and the business practices already mandated by
Order No. 676, we seek comment on whether commenters believe additional
standardization of request queue processing is necessary. If so, we
seek comment on the specific issues commenters believe are not clearly
prescribed in Order No. 676 or this NOPR and which require additional
mandatory queue processing business practices.
c. Reservation Priority
394. Section 13.2 of the pro forma OATT requires transmission
providers to process requests for long-term firm point-to-point service
on a first-come, first-served basis. In the NOI, we asked whether the
first-come, first-served approach to reservation priorities has
resulted in a fair and equitable means of allocating transmission
capacity when the transmission system is oversubscribed. If not, we
asked whether an alternative approach should be implemented.
Comments
395. Most transmission providers and federal power agencies respond
that the first-come, first-served approach to allocating transmission
service is the best alternative available.\367\ Several merchant
generators and public power entities concur that no better alternative
exists.\368\ Several commenters suggest that the first-come, first-
served approach may provide an advantage to transmission customers who
have the financial resources to purchase software and employ staff to
continually monitor OASIS sites.\369\ Santa Clara states that entities
that have superior software and are able to consistently procure
capacity to the exclusion of other market participants may have an
unfair advantage.
---------------------------------------------------------------------------

\367\ E.g., Ameren, EEI, Nevada Companies, TVA, and WAPA.
\368\ E.g., NRECA, Powerex, Public Power Council, Sempra, and
TDU Systems.
\369\ E.g., Bonneville and Santa Clara.
---------------------------------------------------------------------------

396. For the short-term market, Bonneville contends, the first-
come, first-served approach has two defects: (1) It advantages larger
and better-financed transmission customers, which can continually
monitor OASIS sites and submit requests electronically the moment new
ATC is posted; and (2) it results in arbitrary awards of transfer
capability when one customer's submission precedes a second customer's
submission by mere seconds. Bonneville suggests that the Commission
modify the first-come, first-served rule for awarding short-term firm
point-to-point service capacity so that all requests submitted within a
given time-frame are considered simultaneously submitted.
397. Several commenters propose some version of priority preference
for requests for transmission service that are pre-confirmed.\370\
Bonneville states that transmission customers flood the queue with
unconfirmed requests to force competitors with higher queue positions
to extend the length of their requests to retain their queue positions.
---------------------------------------------------------------------------

\370\ E.g., Bonneville, Entergy, and South Carolina E&G.
---------------------------------------------------------------------------

398. Bonneville suggests that the Commission consider reducing the
time transmission customers have to confirm requests for short-term
transmission service after the transmission provider has accepted a
request for short-term transmission service. Bonneville states that a
shorter time-frame would clear the short-term firm transmission market
more quickly and make it more difficult for transmission customers to
tie up scarce transfer capability.

[[Page 32696]]

399. Powerex suggests that the Commission clarify its reservation
priority standards so that when transmission providers make use of
discounts in short-term service, price (not to exceed the ceiling
price) should be the third-level tie breaking mechanism, with higher-
priced requests of equal duration having greater priority and requests
earlier in the open access same-time information system having right of
first refusal to match subsequent requests. Powerex states that in the
presence of discounting, the open access transmission tariff allows a
higher value service (firm) to be sold at a lower price than a lower
value service (non-firm) even in the same operating horizon, because
price based displacement only applies to short-term non-firm
transmission services.
Discussion
400. In response to comments that transmission customers that have
the financial resources to purchase software and employ staff to
continually monitor OASIS sites have an unfair advantage under a first-
come, first-served approach, we seek comment regarding whether any such
advantage would be mitigated if all requests submitted within a 5-
minute window, with duration as a tie breaker, were deemed to have been
submitted simultaneously. We also seek comment on whether transmission
customers could game a 5 minute equivalent priority standard to request
transmission service only after another transmission customer has made
a request. To the extent we adopt a 5 minute equivalent priority
standard, we propose to allocate capacity on a pro rata basis, though
we seek comment on other methods for allocating limited transmission
capacity among equivalent priority requests of equal duration.
401. We also propose to change the priority rules to give priority
to pre-confirmed requests. As a result, a pre-confirmed short-term
request for firm transmission service would preempt any non-pre-
confirmed short-term requests, regardless of duration. Similarly, a
pre-confirmed request for long-term firm transmission service would
preempt a request for long-term transmission service that is not pre-
confirmed. We seek comment on whether this change to the reservation
priority rules will alleviate concerns commenters have expressed
regarding the flooding or jamming of the transmission queue by transmission
customers who submit multiple requests for transmission service.
402. We propose to add price as a tie-breaker in determining
reservation queue priority when the transmission provider is willing to
discount transmission service. Price would serve as a tie-breaker after
pre-confirmation for those requests that are not yet confirmed. As a
result, a pre-confirmed request for short-term firm point-to-point
service would preempt another pre-confirmed request for short-term firm
point-to-point service that has an earlier queue time, and an equal or
shorter duration but a lower offer price. However, a request for short-
term firm point-to-point service that is not pre-confirmed would not
preempt a pre-confirmed request for short-term firm point-to-point
service that has an earlier queue time, and an equal or shorter
duration but a lower offer price.
6. Designation of Network Resources
a. Qualification as a Network Resource
403. Taken together, the following sections of the pro forma OATT
describe the resources a network customer can appropriately designate
as a network resource. Section 30.1 of the pro forma OATT describes
network resources as all generation owned or purchased by the network
customer designated to serve network load under the tariff. Section
30.1 also indicates that network resources may not include resources
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 noninterruptible basis. Pursuant to section 30.7 of the pro
forma OATT, 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 network service.
Section 29.2 requires the network customer to provide the following
information about a power purchase agreement that is to serve as a new
designated network resource: source of supply, control area location,
transmission arrangements and delivery point(s) to the transmission
provider's transmission system.
404. The Commission has issued a number of orders that clarify
which resources meet the criteria set out in sections 30.1 and 30.7 of
the pro forma OATT. In MSCG, the Commission stated that network
resources must be generating resources owned by the network customer or
purchases of noninterruptible power under executed contracts that
require the network customer to pay for the purchase.\371\ In WPPI, the
Commission found that a network customer can designate as a network
resource a system purchase that is not backed by a specific
generator.\372\ The Commission found that Wisconsin Public Service
Corporation (WPS) had appropriately designated a power purchase as a
network resource, even though the power purchase agreement did not
require WPS to take energy around the clock and allowed WPS to convert
its energy purchase to a discounted product that could be
interrupted.\373\ In addition, the Commission stated that because the
pro forma OATT requires a power purchase to be noninterruptible, third-
party transmission arrangements to deliver the resource to the network
have to be noninterruptible as well.\374\ In Illinois Power, the
Commission found that a firm purchase need not be backed by a capacity
purchase to qualify as a network resource.\375\
---------------------------------------------------------------------------

\371\ Morgan Stanley Capital Group v. Illinois Power Co., 83 FERC ]
61,204 at 61,911-12 (1998), order on reh'g, 93 FERC ] 61,081
(2000) (MSCG).
\372\ Wisconsin Public Power Inc. v. Wisconsin Public Service
Corp., 84 FERC ]
61,120 at 61,650-51 (1998) (WPPI).
\373\ Id.
\374\ Id. at 61,660.
\375\ Illinois Power Co., 102 FERC ] 61,257 at P 14 (2003),
reh'g denied, 108 FERC ] 61,175 (2004) (Illinois Power).
---------------------------------------------------------------------------

405. In the NOI, the Commission sought comment regarding whether
network resources consisting of firm contracts that do not specify
generation sources until the energy is scheduled (so-called ``seller's
choice contracts'') are a problem. The Commission also sought comment
on the specific difficulties entities have experienced with designation
of network resources and asked what reforms are needed to the
designations provision in the pro forma OATT.
Comments
406. A number of commenters indicate that firm contracts that do
not specify generation sources are acceptable network resources as long
as the network customer specifies enough information for the
transmission provider to identify how the contract power will enter its
control area.\376\ Bonneville suggests that the customer should be
required to identify the point(s) of receipt on the transmission
provider's system whenever it designates a network resource. EEI states
that the designation of seller's choice contracts as network resources
is only problematic if the seller's choice contract permits the seller
to choose the

[[Page 32697]]

flowgate path over which the energy will be delivered. EEI further
explains that no issue is present if the seller is limited to a single
path or flowgate. On the other hand, PNM-TNMP argues that allowing
seller's choice contracts to be considered network resources
significantly complicates transmission planning, as virtually none of
the information required by section 29.2 of the OATT can be provided.
---------------------------------------------------------------------------

\376\ E.g., Bonneville, EEI, Nevada Companies, Public Power
Council, and TVA.
---------------------------------------------------------------------------

407. Several commenters cited specific difficulties with or
suggested specific modifications to the network designation provisions
of the tariff. APPA indicated that under the liquidated damages
provisions in the EEI contract, it is the buyer's responsibility to go
out into the market to purchase replacement supplies (cover), and the
seller then pays the buyer the difference between the contract price
and the cover price. APPA states that these provisions are not
consistent with the concept of having to specify generation resources
or contracts as network resources, since the actual source and supplier
of generation may well change at a time when both wholesale power
supplies and transmission capacity are at a premium. Ameren suggests
that the Commission clarify that liquidated damages products cannot be
designated network resources. Ameren states that a liquidated damages
contract allows a supplier to walk away from a deal if it can obtain a
price elsewhere high enough to offset the liquidated damages
provisions. Ameren argues that liquidated damages contracts are
financial instruments that produce no electricity. MidAmerican also
contends that provisions for designating liquidated damages contracts
as network resources should be eliminated. Southwestern urges the
Commission to reform the OATT to make it clear that a firm purchased
power contract with liquidated damages should be eligible to be
considered a designated network resource.
Discussion
408. We propose to maintain our current policy regarding the power
purchase agreements that network customers may designate as network
resources. In particular, a network customer will continue to be able
to designate resources from system purchases not linked to a specific
generating unit, provided the purchase power agreement is not
interruptible for economic reasons, does not allow the seller to fail
to perform under the contract for economic reasons, and the executed
contract requires the network customer to pay for the purchase. In
addition, third party transmission arrangements to deliver the purchase
to the network have to be noninterruptible as well.
409. In response to comments that seller's choice contracts are
problematic because the network customer can provide limited, if any,
information required by section 29.2 of the pro forma OATT, we
reiterate that a request to designate a new network resource must
include the information specified in section 29.2(v), including the
source of supply, control area location, transmission arrangements, and
delivery point(s) to the transmission provider's transmission system.
When a network customer is designating a system purchase as a new
network resource, the source information required in section 29.2(v)
should identify that the resource is a system purchase and should
identify the control area from which the power will originate. A power
purchase agreement that is structured so that a network customer cannot
specify all of the information required by section 29.2(v) cannot be
designated as a network resource.
410. In response to suggestions that liquidated damages products
should not be designated network resources because they are
interruptible for economic reasons, we clarify that network customers
may not designate as network resources those power purchase agreements
that give the seller a contractual right to compensate the buyer
instead of delivering power even if the seller is able to deliver
power. For instance, a network customer may not designate as a network
resource a purchase agreement that allows the seller to interrupt
service for reasons other than reliability, but allows the buyer to
force delivery at a higher price. In addition, a network customer may
not designate as a network resource a purchase agreement that requires
a seller to pay the buyer's cost of replacement power when the seller
chooses not to deliver energy for economic reasons.
b. Documentation for Network Resources
411. Section 30.2 of the pro forma OATT stipulates that a network
customer request the designation of a new network resource by a request
for modification of service pursuant to an application under section 29
of the pro forma OATT, and section 29.2 stipulates that the network
customer must provide specified information about its designated
network resources. The Commission found in WPPI that transmission
customers may need to document compliance with specific requirements
for obtaining tariff service, possibly including contractual
terms.\377\ The Commission went on to state that it expected a
transmission provider's merchant function to police its own compliance
with tariff obligations.\378\
---------------------------------------------------------------------------

\377\ WPPI at 61,660.
---------------------------------------------------------------------------

Comments
412. LG&E suggests that the pro forma OATT require the transmission
provider to have a process to verify that each load-serving entity has
a contractual right to the resources they are designating. LG&E argues
this would help eliminate concerns over double booking of resources by
two parties. EPSA states that transmission providers have attempted to
require customers to demonstrate that they have obtained contracts
covering an annual period, rather than allowing customers to provide
reasonable advance notice for each contract during the service period.
EPSA asks the Commission to prohibit this practice.
---------------------------------------------------------------------------

\378\ Id.
---------------------------------------------------------------------------

Discussion
413. We clarify that transmission providers are not responsible for
verifying that the generating units and power purchase agreements
network customers designate as network resources satisfy the
requirements in sections 30.1 and 30.7 of the pro forma OATT. While
transmission providers are responsible for verifying that the network
customer has provided all the information section 29.2 requires the
network customer to provide, the transmission provider is not
responsible for obtaining contractual terms to verify requirements in
sections 30.1 and 30.7 of the pro forma OATT. The transmission provider
continues to have the responsibility to verify that third-party
transmission arrangements to deliver the purchase to the transmission
provider's system are firm.
414. We propose to require the transmission provider's merchant
function as well as network customers to include a statement with each
application to designate a new network resource that attests that: (1)
The transmission customer owns or has committed to purchase the new
designated network resource, and (2) the new designated network
resource comports with the requirements for designated network
resources. The network customer should include this attestation in the
customer's comment section of the request when it confirms the request.
Similarly, we propose that all entities that submit an application for
network service be required to

[[Page 32698]]

include a statement with the application for service that attests that,
for each network resource identified in the application for service:
(1) The transmission customer owns or has committed to purchase the
designated network resource, and (2) the designated network resource
comports with the requirements for designated network resources.
415. We propose that if the network customer does not include an
attestation when it confirms its request, the transmission provider
will notify the network customer within 15 days of confirmation that
its request is deficient. Wherever possible, the transmission provider
will attempt to remedy deficiencies in the request through informal
communications with the network customer. If such efforts are
unsuccessful, the transmission provider will terminate the network
customer's request and change the status of the request on OASIS to
``retracted.'' This termination will be without prejudice to the
network customer submitting a new request that includes the required
attestation. The network customer will be assigned a new priority
consistent with the date of the new request.
416. In the event that the transmission provider or any network
customer designates a network resource that it does not own or has not
committed to purchase or that does not comport with the requirements
for designated network resources, we will deem the network customer to
be in violation of the pro forma OATT and will consider assessing civil
penalties on a case-by-case basis consistent with the Commission's
Enforcement Policy Statement. We encourage the transmission provider
and other market participants to use the Commission's Enforcement
Hotline to report instances when they believe a network customer has
designated as a network resource a resource that does not meet the
criteria for network resources.
c. Undesignation of Network Resources
417. Section 28.2 of the pro forma OATT requires the transmission
provider, on behalf of its native load customers, to designate
resources and loads in the same manner as any network customer under
Part III of the pro forma OATT (Network Integration Transmission
Service). The information provided by the transmission provider must be
consistent with the information it uses to calculate ATC. Section 30.3
of the pro forma OATT allows the network customer to terminate the
designation of all or part of a generating resource as a network resource
at any time, though the network customer should provide notification to
the transmission provider as soon as reasonably practicable.
418. In Order No. 888-B, the Commission clarified that the pro
forma OATT allows network customers to designate network resources over
shorter time periods. The Commission indicated that a network customer
that seeks to engage in firm sales from its current designated network
resources may terminate the generating resource (or a portion of it) as
a network resource pursuant to section 30.3 of the pro forma OATT and
request, as set forth in section 29 of the pro forma OATT, that the
same generation resource be designated as a network resource effective
with the end of its power sale.\379\
---------------------------------------------------------------------------

\379\ Order No. 888-B at 62,093
---------------------------------------------------------------------------

419. In the NOI, the Commission sought comment on whether network
customers should be allowed to ``undesignate'' portions of their
designated network resources on a short-term basis in order to make
firm sales from these resources.
Comments
420. Most commenters suggest that the Commission continue to allow
network customers to undesignate a portion of their designated network
resources on a short-term basis in order to make firm sales.\380\ APPA
argues that the ability of network customers to undesignate their
network resources on a short-term basis is an important aspect of Order
No. 888-B and should be preserved. APPA states that the flexibility
afforded to network resource customers allows them to lay off excess
power supplies that they do not need to serve their designated loads
during off-peak demand periods. APPA and EEI contend that this
increases the number of wholesale sellers in the market during non-peak
periods, and this supports wholesale competition for power supply sales.
---------------------------------------------------------------------------

\380\ E.g., APPA, EEI, Entergy, Nevada Companies, Public Power
Council, Southern, and TVA.
---------------------------------------------------------------------------

421. Several commenters suggest that network customers should have
the same right as transmission providers to undesignate network
resources to make off-system sales.\381\ APPA states that the
Commission should make explicit the requirement that the transmission
provider must provide the same flexibility to its network customers as
it does to its own merchant function in designating and terminating
network resources.
---------------------------------------------------------------------------

\381\ E.g., APPA, NRECA, and Public Power Council.
---------------------------------------------------------------------------

422. NRECA asserts that public utility transmission providers must
be required to undesignate resources or portions thereof in order to
make firm sales out of generation fleets that they have designated as a
network resource.
Discussion
423. We propose to continue to allow network customers to
undesignate a portion of their network resources on a short-term basis
to make off-system sales. We reiterate that a network customer may
redesignate the resource by making a request to designate a new network
resource. In response to comments that the transmission provider also
should be required to undesignate network resources when the
transmission provider makes firm off-system sales, we reiterate that
the transmission provider must abide by both the requirement in section
28.2 of the pro forma OATT to designate its network resources in the
same manner as network customers and the prohibition in section 30.1 of
the pro forma OATT against making firm sales from its designated
network resources. That is, the transmission provider and all network
customers must designate their network resources and are prohibited
from making firm sales from designated network resources. To the extent
the transmission provider or a network customer wants to make a firm
sale from a network resource, it must undesignate the resource pursuant
to section 30.3 of the pro forma OATT. The network customer, including
the transmission provider itself, can request to redesignate the
resource by making a request to designate a new network resource
pursuant to section 30.2 of the pro forma OATT.
424. We seek comment on the amount of time prior to operation that
the transmission provider and other network customers should be
required to terminate a network resource to ensure that the appropriate
set of network resources are included in the ATC calculation.
7. Clarifications Related to Network Service
Secondary Network Service
425. Section 28.4 of the pro forma OATT allows a network customer
to deliver economy energy purchases to its network load from non-
designated network resources on an as-available basis without
additional charge. In Order No. 888, the Commission described economy
energy purchases as energy that displaces firm network resources.\382\
---------------------------------------------------------------------------

\382\ Order No. 888 at 21,751.
---------------------------------------------------------------------------

426. The use of secondary network service to deliver purchased power

[[Page 32699]]

when a network customer is making off-system sales was raised in
several Commission investigations and audits. In Idaho Power, the
Commission accepted a settlement with Idaho Power related to Idaho
Power's incorrect use of the native load priority to access its
transmission system.\383\ In Idaho Power, the utility's wholesale
merchant function purchased power outside of Idaho Power's control area
to facilitate an off-system sale and used secondary network service to
bring the purchases into Idaho Power's control area.\384\ In accepting
the settlement, the Commission stated that ``[i]t is axiomatic that the
native load priority cannot be used to complete sales that are not
necessary to serve native load.'' \385\ In MidAmerican, the Commission
issued an audit report that contained a finding that MidAmerican's
wholesale merchant function used network service instead of point-to-
point service to deliver short-term energy purchases to its control
area that were not used to serve MidAmerican's native load.\386\
---------------------------------------------------------------------------

\383\ Idaho Power Co., 103 FERC ] 61,182 at P 2 (2003) (Idaho Power).
\384\ Id. at P 4.
\385\ Id.
\386\ MidAmerican Energy Co., 112 FERC ] 61,346 at P 6 (2005).
---------------------------------------------------------------------------

Comments
427. South Carolina E&G asks the Commission to clarify whether
specific methods used to bring sellers and buyers together in the
wholesale market are appropriate under the pro forma OATT in its
current form. South Carolina E&G notes that as a utility's native load
forecasts evolve into real-time conditions, the utility may need to
sell off excess energy. South Carolina E&G notes further that, as
inexpensive sources of power become available off-system, the utility
may engage in economy purchases of power for native load. South
Carolina E&G asserts that such practices clearly benefit the market and
safeguard native load customers' interests by ensuring that economy
purchases minimize the price of consumers' power and/or giving the
utility a market outlet for excess energy, thus avoiding the uneconomic
backing down of lower cost generating units while retaining higher cost
prescheduled purchases. South Carolina E&G urges the Commission to
support the continuation of such practices.
Discussion
428. We propose to clarify that a network customer may not use
secondary network service to bring energy onto its system to support an
off-system sale if the purchased power does not displace the customer's
own higher cost generation. We propose to modify the section 28.4 of
the pro forma OATT to clarify that a network customer may use secondary
network service to deliver economy energy and we propose to add a
definition for ``economy energy'' to the pro forma OATT. We propose to
define ``economy energy'' as energy purchased by a network customer
that displaces the customer's own higher cost generation for the
purpose of serving the customer's designated network loads.
429. While we reiterate that secondary network service may be used
only to serve a network customer's designated network load, we do not
intend to discourage market participants from identifying opportunities
to profitably purchase for resale. We simply intend to ensure that all
market participants compete on a comparable basis and use point-to-
point service to complete all segments of a purchase for resale off-system.
430. We also do not intend to discourage network customers from
purchasing off-system energy to lower the cost of serving network
loads. A network customer may use secondary network service in hours
when it is also making off-system sales. However, the network customer
may do so only to deliver purchases that qualify as economy energy
purchases. In response to South Carolina E&G's observation that a
utility's native load forecasts evolve in real-time to the point that
the utility may need to sell off excess energy that was purchased off-
system, we note that our definition would allow a network customer to
use network service to deliver off-system purchases when the network
customer purchases the energy with the intent to serve native load.
431. In enforcing this policy, we will apply the definition of
``economy energy'' at the time the network customer commits to purchase
energy. For instance, we will not take issue if a network customer uses
secondary network service to deliver an hour-ahead purchase that costs
less than the network customer's generation cost in the hour of
operation. Similarly, we will not question the use of secondary network
service by a network customer to deliver a day-ahead off-system
purchase that costs less than the network customer's forecast
generation cost, even if real-time system conditions evolve so that the
realized generation cost is less than the cost of the purchased energy.
We also would not take issue with a network customer that uses network
service to deliver off-system block energy because the purchased energy
is more economic than using its network resources, but makes off-system
sales during some hours when the block energy purchase is scheduled. In
other words, in enforcing this policy, we will apply the definition of
``economy energy'' as it applies to the entire period covered by the
block purchase and not to a single hour within the block.
``[O]n an As-Available Basis''
432. Section 28.4 of the pro forma OATT allows a network customer
to use secondary network service to deliver economy energy purchases to
its network load from non-designated resources ``on an as-available
basis.'' However, the current pro forma OATT does not specify how a
network customer must arrange for secondary network service.
Discussion
433. We propose to modify section 28.4 of the pro forma OATT by
clarifying that a network customer need not file an application for
network service to receive secondary network service, but that all
other requirements of Part III of the pro forma OATT (except for
transmission rates) apply to secondary network service. In other words,
a network customer must request secondary network service on OASIS in a
manner consistent with pro forma OATT sections 18.1 and 18.2
(Procedures for Arranging Non-Firm Point-To-Point Transmission Service).
Redirect of Network Service
434. The current pro forma OATT does not include any provision to
change the point of receipt for an off-system designated network
resource, in a manner similar to redirect of point-to-point service.
However, we are aware that several transmission providers have posted
business practices that allow network customers either to substitute an
off-system non-designated network resource for a designated network
resource or to redirect the point of receipt associated with an
existing network resource.
Discussion
435. We propose to clarify that network customers may not redirect
network service in a manner comparable to the way customers redirect
point-to-point service. Unlike point-to-point service that is based
upon a contract-path model consisting of a designated point of receipt
and point of delivery, network service involves no identified contract
path and is therefore not a directable service. Rather, network

[[Page 32700]]

service provides for the integration of designated network resources
and loads using the entire transmission grid in a manner comparable to
the transmission provider's use of the transmission grid to serve its
native load customers. When a network customer wants to substitute one
designated network resource for another, it should terminate the
designation of the existing network resource and designate a new
network resource. The network customer can then request to redesignate
its original network resource by making a request to designate a new
network resource. Alternatively, a network customer could use secondary
network service when it wants to substitute a non-designated network
resource for a designated network resource on an as-available basis.
8. Transmission Curtailments
436. Section 1.7 of the pro forma OATT defines curtailment as ``a
reduction in firm or non-firm transmission service in response to a
transmission capacity shortage as a result of system reliability
conditions.'' Curtailment provisions for point-to-point service are set
forth in sections 13.7 and 14.7 for firm and non-firm transmission
services respectively and the curtailment provisions for network
service are contained in section 33. Complaints regarding improper
curtailment of service by transmission providers have been made in a
variety of proceedings and the Commission has found cases of improper
curtailment in the past.\387\
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\387\ See, e.g., Consolidated Edison Co. of N.Y. v. Public Serv.
Elec. & Gen. Co., 108 FERC ] 61,120 (2004).
---------------------------------------------------------------------------

437. In the NOI, the Commission asked whether there is evidence of
improper curtailment practices by public utility transmission providers
or customers that warrants reforms to the pro forma OATT. If there is,
we requested that commenters provide specific examples of such
practices. We also asked whether transmission providers engaging in
improper curtailments should be subject to monetary penalties or other
remedies for market manipulation.
Comments
438. EEI argues that there do not appear to be many instances of
improper curtailments and many utilities state that they are not aware
of any improper curtailments by public utility transmission providers.
For example, Southern states that curtailments are performed on a non-
discriminatory basis, in accordance with applicable OATT provisions.
Ameren, KCP&L, and PNM-TNMP state that they are not aware of any
improper practices that would warrant reforms to the pro forma OATT.
APPA does not advocate changes to the pro forma OATT regarding
curtailment, stating that its members express more concerns about the
denial of service prior to and at the time of scheduling than they do
regarding curtailment of service once it has commenced. However, APPA
also notes that most of its members use firm service that is unlikely
to be interrupted once it is scheduled. Public Power Council,
Snohomish, MEAG and Salt River concur with APPA that OATT reforms are
not needed for curtailments.
439. Transmission customers, particularly IPPs, generally have a
different view, arguing that the reasons for curtailment are difficult
to discern, and that information is often insufficient to determine
whether curtailments have been performed correctly. Northwest IPPs
state curtailments frequently appear arbitrary. Powerex argues that
incomplete postings on many transmission systems and the lack of
transparency in curtailment data could mask improper curtailment.
Calpine states that it is usually difficult to determine whether a
curtailment of service is truly justified by system reliability factors
because the operational facts underlying the utility's curtailment
decision are unknown. It argues that the criteria for utility
curtailment decisions are not standardized, making it difficult to
determine the propriety of curtailment decisions, particularly when
curtailment is internal to a single area and not performed through the
NERC TLR process. Calpine recommends that the terms and conditions for
curtailments be standardized by the new reliability organizations
created by EPAct 2005, that such terms and conditions be made a formal
part of the pro forma OATT and the OATTs of public, private and federal
utilities, and that these be posted on the transmission provider's
OASIS. Calpine further recommends that regional NERC organizations be
requested to audit the curtailment practices of all utilities that are
not members of an RTO/ISO. Constellation asserts that TLRs are a
``blunt and inefficient mechanism'' for curtailment and calls for a
requirement that transmission providers provide redispatch options.
440. In reply to claims that vertically integrated utilities
provide inadequate information on curtailments, Southern states that
existing OASIS requirements already require utilities to post a
considerable amount of information on curtailments, and that the
information currently posted is adequate to meet customers' needs.
Nevertheless, Southern also states that while those rules have been
effective in achieving their intended purpose, incremental additions to
the information that is available through OASIS could assure customers
that they have all of the information they need to make prudent
decisions about transmission service and that they are being treated in
a fair, equitable, and non-discriminatory way.
441. Commenters appear divided on the issue of whether there should
be penalties for improper curtailments. The most common view, expressed
by EEI and others, is that penalties for improper curtailments should
be assessed only if the Commission finds that the transmission provider
imposed the curtailment with the intent to treat a customer in an
unduly discriminatory or preferential manner. Other commenters
expressed a wide range of views. Alcoa states that improper
curtailments should be the subject of monetary penalties. Santa Clara
contends that transmission providers should be fully liable for any
damages caused by improper curtailments. On the other hand, Southern
argues that curtailment is a reliability issue and it would be unwise
to subject transmission providers to after-the-fact assessments of
their curtailment decisions. KCP&L notes that the responsibility for
calling a TLR rests with the reliability coordinator, who makes
decisions based on the NERC standard, so that penalties for improper
curtailment activity should be a subject for the ERO.
Discussion
442. The Commission reminds both transmission providers and
customers that our regulations require posting of transmission
curtailment information on OASIS. The OASIS regulations state:

When any transaction is curtailed or interrupted, the
Transmission Provider must post notice of the curtailment or
interruption on the OASIS, and the Transmission Provider must state
on the OASIS the reason why the transaction could not be continued
or completed.
(ii) Information to support any such curtailment or
interruption, including the operating status of the facilities
involved in the constraint or interruption, must be maintained and
made available upon request, to the curtailed or interrupted
customer, the Commission's Staff, and any other person who requests
it, for three years.\388\
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\388\ We note that we are proposing to change this information
retention period to five years, consistent with our other proposed
changes to the OASIS information retention provisions.

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[[Page 32701]]

(iii) Any offer to adjust the operation of the Transmission
Provider's system to restore a curtailed or interrupted transaction
must be posted and made available to all curtailed and interrupted
Transmission Customers at the same time.\389\
---------------------------------------------------------------------------

\389\ 18 CFR 37.6(d)(3) (2005).

443. Those commenting that they have inadequate information about
curtailments do not clearly state whether the source of this deficiency
lies in: (1) The inadequacy of our standards, (2) inadequate compliance
with these standards, (3) difficulties in dealing with the way the
information is provided, or (4) some other area. We are, however,
mindful that objective review of curtailments can require a
considerable amount of information, some of which may not be provided
under the present OASIS regulations, or may be provided in an
inefficient manner. For example, we recognize that it is difficult for
a customer to determine what network resources were available to the
transmission provider that could have been redispatched consistent with
pro forma OATT sections 30.5 and 33.2 to relieve the transmission
constraint that led to a transmission curtailment. Another example may
be discerning which discrete transaction(s) could be curtailed on a
non-discriminatory basis to effectively relieve the constraint
consistent with pro forma OATT section 13.6. We seek comment on whether
additional requirements would improve the transparency of transmission
curtailment information and the ability of customers to make use of
that information.
444. With respect to the imposition of penalties, the Commission
recognizes that the transmission curtailment decision is a reliability
decision that should be based on applicable reliability standards.
Moreover, we note that the need for transmission curtailment depends on
many factors outside the control of an individual transmission
provider, including loop flows throughout an interconnection.
Accordingly, we will not propose generic penalties for improper
transmission curtailments in this rulemaking. However, the absence of
generic penalties should not be construed to mean that we will tolerate
intentional behavior that subjects customers to unduly discriminatory
or preferential actions. We remain vigilant in monitoring for intentionally
discriminatory provision of transmission service, and stand ready to use
our enforcement powers and penalty authority when needed.
9. Standardization of Rules and Practices
445. In Order No. 888, the Commission required each public utility
that owns, controls, or operates facilities used for transmitting
electric energy in interstate commerce to file, pursuant section 205 of
the FPA, a pro forma OATT under which it would provide open access
transmission services. However, certain rules, standards and practices
governing the provision of such transmission service (e.g., public
utility business practices) are not reflected in the pro forma OATT.
Only when a public utility adopts a rule, standard or practice that
significantly affects its rates and services has the Commission
required it to make a filing pursuant to FPA section 205 to amend its
OATT.\390\ The Commission has applied this policy using a ``rule of
reason'' test.\391\
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\390\ E.g., Cleveland v. FERC, 773 F.2d 1368, 1376 (D.C. Cir. 1985).
\391\ See, e.g., Public Serv. Comm'n of N.Y. v. FERC, 813 F.2d
448, 454 (D.C. Cir. 1987) (holding that the Commission properly
excused utilities from filing policies or practices that dealt only
with matters of ``practical insignificance'' to serving customers);
Midwest Independent Transmission System Operator, Inc., 98 FERC ]
61,137 at 61,401 (``It appears that the proposed Operating Protocols
could significantly affect certain rates and service and as such are
required to be filed pursuant to Section 205.''), order granting
clarification, 100 FERC ] 61,262 (2002).
---------------------------------------------------------------------------

446. The rule of reason test has arisen primarily with respect to
protocols or operating procedures used by RTOs and ISOs. For example,
the Commission has held that while the business practices manuals of
the Midwest ISO implicate the Commission's jurisdiction because they
generally involve ``the installation, operation, or use of facilities
for the transmission or delivery of power * * * in interstate
commerce,'' they do not require a FPA section 205 filing because ``they
mostly involve general operating procedures.''\392\ In other cases, the
facts have required the filing of the rule, standard or practice. For
example, CAISO proposed to post certain, technical, operational and
business standards related to dynamic scheduling on its Web site and
include only the rates under its OATT. There, the Commission found that
the details contained in the standards are practices that may affect
the terms and conditions of service significantly, and therefore, under
the Commission's ``rule of reason,'' must be filed under FPA section
205.\393\
---------------------------------------------------------------------------

\392\ Midwest Independent Transmission System Operator, Inc.,
108 FERC ] 61,163 at P 656, 658, order on reh'g, 109 FERC ] 61,157
(2004), order on reh'g, 111 FERC ] 61,043, order on reh'g, 112 FERC ]
61,086 (2005); see also PJM Interconnection, L.L.C., 81 FERC ]
61,257 at 62,267 (1997) (finding no reason to require filing of the
PJM Manuals but requiring that such manuals be available for public
inspection on a permanent basis), order on reh'g, 92 FERC ] 61,282 (2000).
\393\ California Independent System Operator Corp., 107 FERC ]
61,329 at P 21-22 (2004); see also Southwest Power Pool, Inc., 112 FERC ]
61,303 at P 25 (2005) (requiring that the SPP OATT provide
sufficient information for market participants to fully understand
SPP's implementation of an imbalance market), reh'g dismissed, 113 FERC ]
61,115 (2005); PJM Interconnection, L.L.C., 104 FERC ] 61,124
at P 61 (requiring PJM to place all procedures, standards and
requirements for proposing that a transmission owner construct a
specific upgrade, and all procedures for charging customers, in its
tariff, not in its manuals), order on reh'g, PJM Interconnection,
L.L.C., 105 FERC ] 61,123 (2003).
---------------------------------------------------------------------------

447. In the NOI, the Commission asked: (1) Whether all rules,
standards and practices should be required to be included in public
utilities' OATTs? (2) If not all, which of such rules, standards and
practices should be included in public utilities' OATTs? and (3) Should
rules, standards and practices not required to be included in public
utilities' OATTs be required to be posted on OASIS to increase transparency?
Included in Open Access Transmission Tariffs
448. Some commenters argue that the rules, standards and practices
governing the provision of transmission service should be included in
public utilities' OATTs.\394\ Occidental states that the inclusion of
rules, standards and practices governing the provision of transmission
service in public utilities' OATTs will add much needed clarity as to
how transmission service is provided. EPSA states that while it may not
be necessary, or desirable, to require all business practices to be
incorporated into the OATT, there have been instances where
transmission providers have adopted business practices that are
inconsistent with their OATT requirements or that should have been
filed as OATT amendments. Some commenters also support the inclusion of
the NAESB standards in the OATT.\395\
---------------------------------------------------------------------------

\394\ E.g., Occidental, TAPS, and Williams.
\395\ E.g., Salt River and Snohomish.
---------------------------------------------------------------------------

449. In contrast, some commenters oppose including rules, standards
and practices in the OATT.\396\ EEI argues that rules, standards and
practices should not be included as part of an OATT unless they
significantly affect rates and service under the OATT. EEI states that
this is consistent with the Commission's current practice for the
inclusion of manuals in an OATT. Indicated New York Transmission Owners
state that the inclusion of rules, standards and practices in the OATT is

[[Page 32702]]

unnecessary and would administratively encumber any future revisions to
the practices and rules by requiring conforming tariff filings.
---------------------------------------------------------------------------

\396\ E.g., BPA, EEI, MidAmerican, and Southern.
---------------------------------------------------------------------------

Posted on OASIS
450. Several commenters believe it would be appropriate to post
rules, standards and practices on public utilities' OASIS sites.\397\
For example, EEI states that it would be appropriate to post all rules,
standards and practices that are not part of the OATT on a transmission
provider's OASIS. APPA asserts that, in particular, transmission
providers should post the methodologies they use to develop ATC and ATC
calculations should be periodically verified by an independent third
party.\398\
---------------------------------------------------------------------------

\397\ E.g., APPA, BPA, EEI, EPSA, MidAmerican, and Southern.
\398\ See supra Part V.A addressing posting requirements for ATC
calculation.
---------------------------------------------------------------------------

451. Other commenters contend that rules, standards and practices
should be posted on public utilities' OASIS sites only when they are
not required to be filed.\399\ TAPS argues that any rules, standards
and practices not required to be filed must be publicly posted on the
transmission provider's OASIS to provide needed transparency, because
including essential terms in business practices that are not posted
makes it very difficult for customers to understand if they are being
treated fairly by the transmission provider. TDU Systems asserts that
requiring posting on transmission providers' OASIS sites of any
standards and practices not included in their OATTs would facilitate
transactions across several transmission provider systems, especially
where transmission providers are not participating in RTOs or
ISOs.\400\ Williams goes one step further and recommends that the
Commission require that transmission providers both file with the
Commission and post on their OASIS sites, all policies, practices and
interpretations used or relied upon to evaluate a request for
transmission service.
---------------------------------------------------------------------------

\399\ E.g., Progress Energy and TAPS.
\400\ Suez Energy NA emphasizes that the posting of rules,
standards, and practices on OASIS merely ensures that they are
transparent, it does not ensure that they are non-discriminatory.
---------------------------------------------------------------------------

Discussion
452. There appears to be broad consensus among the commenters that
rules, standards and practices not required to be included in a
transmission provider's pro forma OATT should be posted on the
transmission provider's OASIS. We agree and propose to require
transmission providers to post on OASIS all of their rules, standards
and practices that relate to transmission services. We believe this
proposal will provide greater transparency and mitigate the potential
for undue discrimination against customers taking transmission service
under the transmission provider's OATT.\401\ However, we seek comment
on how to determine what ``relates'' to transmission service to
facilitate a consistent interpretation and to minimize discretion on
what rules, practices and standards should be posted on OASIS.\402\
---------------------------------------------------------------------------

\401\ We clarify that posting rules, practices and standards on
the transmission provider's OASIS--in lieu of filing such practices
with the Commission as part of the transmission provider's pro forma
OATT--neither insulates a transmission provider from complaints nor
confers a just and reasonable presumption. We encourage customers to
call the Commission's Enforcement Hotline with complaints about the
application of such rules, standards and practices should they
experience problems with their transmission providers. To the extent
customers are not satisfied with responses from utilities, they
should contact the Commission's Enforcement Hotline via telephone
(202) 502-8390, toll-free 1-888-889-8030, fax (202) 208-0057, or at
http://www.ferc.gov/cust-protect/enforce-hot.asp .
\402\ We note that certain rules and practices are already
required to be posted on OASIS. See, e.g., Order No. 889; Open
Access Same-Time Information Systems, Order No. 605, 64 FR 34117
(Jun. 25, 1999), FERC Stats. and Regs. ] 31,075 (1999); Order No. 676.
---------------------------------------------------------------------------

453. Commenters presented wide ranging positions on the issue of
what rules, standards and practices to include in the OATT. We do not
propose to modify our existing policy on this issue at this time.\403\
We agree with EPSA's concern that requiring transmission providers to
include all of their rules, standards and practices in their OATTs
could decrease a transmission provider's flexibility to change
businesses practices and respond to the requests of customers.
Additionally, we believe that requiring transmission providers to file
all of their rules, standards and practices in their OATTs would be
impractical and potentially administratively burdensome.\404\
---------------------------------------------------------------------------

\403\ See supra notes 391-393 and accompanying text.
\404\ Of course, we will require the filing of certain rules,
standards and practices when circumstances require. In Order No.
676, the Commission, among other things, incorporated certain
business standards developed by NAESB by reference into the
Commission's regulations and required public utilities to file
revisions to their OATTs to include these standards. Order No. 676 at P 20.
---------------------------------------------------------------------------

454. We propose to require, however, that creditworthiness and
security requirements be included in a transmission provider's OATT.
The creditworthiness provision in section 11 of the pro forma OATT
authorizes transmission providers to require ``reasonable credit review
procedures'' in accordance with ``standard commercial practices,'' to
determine the ability of transmission customers to meet service
obligations. Furthermore, to protect transmission providers from the
risk of non-payment, the provision authorizes the transmission provider
to require as security a letter of credit or other forms of security
consistent with the Uniform Commercial Code. In the Creditworthiness
Policy Statement, the Commission explained that non-RTO or -ISO
transmission providers generally have not incorporated creditworthiness
or security requirements into their OATTs.\405\ The Commission stressed
that transparency of credit procedures and security requirements can
enhance market certainty and liquidity by allowing customers to
determine for themselves the information they need to demonstrate
creditworthiness and the amount and type of security they need to
receive transmission service. In interpreting the ``reasonable credit
review procedures'' requirement in section 11 of the pro forma OATT,
the Commission stated that it expected transmission providers to post
on their OASIS sites the process and methodologies used to evaluate a
potential customer's creditworthiness and calculate the necessary
security.\406\ But it also stated that it would ``consider
standardizing credit procedures through a generic rulemaking if
necessary to prevent undue discrimination.'' \407\
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\405\ Policy Statement on Electric Creditworthiness, 109 FERC ]
61,186 at P 9 (2004) (Creditworthiness Policy Statement).
\406\ Id. at P 12. The Commission explained that all
transmission providers (including RTOs and ISO) were expected to
``(1) make their credit-related practices more transparent and
comprehensive; (2) post on their [OASIS sites] the procedures that
they use to do their credit analyses; and (3) provide a customer
with a written analysis setting forth how that entity applied its
credit standards to that customer, if that customer is required to
provide security.'' Id.
\407\ Id. at P 15.
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455. Our preliminary conclusion is that a transmission provider's
OATT should contain sufficient information about its credit process and
requirements to enable customers to understand the information required
to demonstrate creditworthiness and to determine for themselves the
general amount and type of security they may need to provide in order
to receive service. We therefore propose to amend section 11 of the pro
forma OATT on creditworthiness to require each transmission provider to
include its creditworthiness and security requirements in a new
Attachment L to its OATT.

[[Page 32703]]

456. In the Creditworthiness Policy Statement, the Commission
explained that, to assess an applicant's credit risk, transmission
providers should use both qualitative factors, such as the local
regulatory environment or the applicant's history and financial
policies, and quantitative factors, such as information included on the
applicant's financial statements.\408\ We propose to require the new
Attachment L to include such quantitative and qualitative criteria to
determine the level of secured and unsecured credit. We also propose to
require the new Attachment L to include the following elements: (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. We propose to allow these basic elements to be
supplemented with a credit guide or manual to be posted on OASIS.
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\408\ Id. at P 13 & nn.13-14. An evaluation using both sets of
factors would allow an applicant without a credit rating or a strong
balance sheet, but with solid credit, to meet the creditworthiness
criteria. Id. at P 14.
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457. Though we are proposing to require transmission providers to
incorporate the creditworthiness and security methodologies into their
OATTs, we recognize that there is a balance here between the burden on
the transmission provider of adding these methodologies to its OATT and
the need for Commission review and approval if methodologies frequently
change. We seek comment on whether the proposal is unduly burdensome.
10. OATT Definitions
458. In the NOI, the Commission requested comment on whether new or
amended pro forma OATT definitions were necessary. The Commission also
noted that new section 215(a)(4) of the FPA, which was adopted as part
of EPAct 2005, defines the term ``reliable operation.'' \409\ We
therefore asked whether this definition should be incorporated in the
pro forma OATT.
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\409\ EPAct 2005 sec. 1211(a) (to be codified at FPA section
215(a), 16 U.S.C. 824o). Section 215(a)(4) defines ``reliable
operation'' as ``operating the elements of the bulk power system
within equipment and electric system thermal, voltage, and stability
limits so that instability, uncontrolled separation, or cascading
failures of such system will not occur as a result of a sudden
disturbance, including a cybersecurity incident, or unanticipated
failure of system elements.''
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459. Though MidAmerican urges the Commission to incorporate the
definition of ``reliable operation'' into the pro forma OATT, other
commenters argue that the definition of reliable operation should not
be included in the pro forma OATT.\410\ Southern argues that the
definition of reliable operation included in section 215 of the FPA
would impose a higher standard on transmission providers than is
currently required by well-established NERC standards. Southern and EEI
assert that the system is not planned to be able to guarantee that
operations will not be impaired under any conditions. Southern argues
that transmission providers should not be held to a higher standard of
having to ensure that the system can continue to be operated even if a
``sudden disturbance, including a cybersecurity incident or
unanticipated failure of system elements'' occurs.
---------------------------------------------------------------------------

\410\ E.g., EEI, Powerex, Snohomish, Southern, Suez Energy NA,
and TAPS.
---------------------------------------------------------------------------

460. Along with Southern, EEI contends that the ERO should
establish standards related to reliable operation. EEI states that
section 215 of the FPA simply gives the Commission jurisdiction over
reliability standards, which are defined as standards for the reliable
operation of the transmission system; it does not require transmission
providers to meet a ``reliable operation'' standard. This is an
important distinction, EEI continues, because while a transmission
provider may adopt reasonable reliability standards, that does not
guarantee that it will in all instances meet a ``reliable operation''
requirement, which would require the transmission provider to in all
instances prevent instability, uncontrolled separation or cascading
failures despite sudden disturbances, cybersecurity incidents, or
unanticipated failures of system elements. EEI and Southern contend
that because the ERO will implement the directives of Congress
contained in section 215, the ERO will be best suited to establish the
reliability standards that incorporate principles of reliable operation.
461. TAPS suggests that what is more important than adding a
``reliable operation'' definition is making explicit in the tariff what
the Commission stated in its Policy Statement on Matters Related to
Bulk Power System Reliability (Reliability Policy Statement) \411\--
that transmission provider obligations under the pro forma OATT are
subject to an overriding ``Good Utility Practice'' requirement that
includes compliance with NERC reliability standards or more stringent
regional reliability council standards.
---------------------------------------------------------------------------

\411\ Policy Statement on Matters Related to Bulk Power System
Reliability, 107 FERC ] 61,052 at P 23, clarified, 108 FERC ] 61,288
(2004); Supplement to Policy Statement on Matters Related to Bulk
Power System Reliability, 110 FERC ] 61,096 (2005).
---------------------------------------------------------------------------

Discussion
462. We propose to require transmission-owning public utilities to
modify the definition of Good Utility Practice in their respective
OATTs to reference the reliable operation definition adopted in section
215 of the FPA. We propose to take this action for two reasons. First,
the Commission indicated in the Reliability Policy Statement that it
expects public utilities operating transmission facilities under the
pro forma OATT to conform to prevailing reliability standards. The
Commission finds that referencing the reliable operation definition in
section 215 of the FPA satisfies our requirement that transmission
providers provide safe and reliable transmission service to customers
taking service under the pro forma OATT. Second, we are mindful of the
obligation placed on ``all users, owners and operators of the bulk
power system'' under section 215(b) of the FPA to ``comply with
reliability standards'' that will take effect under this section. Those
reliability standards must ``provide for reliable operation of the
bulk-power system.'' \412\ When the ERO is certified by the Commission
and we approve its reliability standards, those standards will be based
on the same definition of reliable operation we propose to incorporate
into the pro forma OATT. We agree with EEI and Southern that the ERO is
best suited to develop reliability standards for the Commission's
approval, but our proposal to incorporate the definition of reliable
operation does not establish a reliability standard; rather, we believe
it reflects Congress's benchmark for acceptable utility practice. It
therefore belongs in our definition of Good Utility Practice in the pro
forma OATT.
---------------------------------------------------------------------------

\412\ Section 215(a)(3) of the FPA.
---------------------------------------------------------------------------

463. In addition to amending the definition of Good Utility
Practice, we propose to add a definition for ``non-firm sales'' to
clarify section 30.4 of the pro forma OATT. A number of transmission
providers have modified section 30.4 of the OATT to state that ``The
Network Customer shall not operate its designated Network Resources
located in the Network

[[Page 32704]]

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''
(emphasis added). We propose to define ``non-firm sales'' as ``an
energy sale for which delivery or receipt of the energy may be
interrupted for any reason or for no reason, without liability on the
part of either the buyer or seller.'' This is the definition of non-
firm sales used in a number of industry-standard master power sales
agreements, including the EEI Master Purchase and Sale Agreement. We
propose to clarify that, for the purposes of applying section 30.4 of
the pro forma OATT, energy sales that can only be interrupted to
maintain system reliability will be considered firm sales.
464. We also propose to add two new definitions that are required
to implement our proposed reforms. For example, we propose a definition
of ``affiliate'' in section 1.1 of the revised pro forma OATT incident
to our proposed change to the pricing of reassigned capacity. We also
propose a new definition of ``pre-confirmed application'' in section
1.40 of the revised pro forma OATT incident to our proposal to give
priority to requests that are pre-confirmed.

E. Enforcement

1. General Policy
a. Compliance Review Regime
Comments
465. A number of commenters indicate that a strong program to audit
compliance with the pro forma OATT is crucial to preventing undue
discrimination in the provision of transmission service. APPA argues
that the Commission should establish a regime of systematic tariff
compliance reviews because the OATT is at bottom a behavioral remedy
rather than a structural one, so active Commission oversight is
necessary. In addition, APPA notes that OATT transmission customers
(especially network customers that are dependent upon the transmission
systems of their neighboring public utility OATT transmission
providers) are often reluctant to open the ``can of worms'' that filing
a section 206 complaint against their transmission providers entails.
Powerex urges the Commission to establish systematic tariff compliance
audits as a monitoring tool because remedies and penalties alone are
structurally ill-suited to address the myriad of idiosyncratic
deviations from the Commission's policies and standards that currently
exist. TAPS asserts that, while customer complaints are an indication
that something is awry, the lack of transparency makes it very hard for
customers to detect discrimination and tariff violations on the part of
the transmission provider. TAPS suggests that customers often conclude
that a complaint process is not cost effective because even if they
ultimately prevail, they will have lost out on the purchase opportunity
that prompted the complaint.
Discussion
466. The Commission intends to maintain a strong audit program to
determine whether transmission providers and transmission customers are
in compliance with the new pro forma OATT. This audit program will
include operational audits similar to the OATT compliance components of
audits conducted by Commission staff in the past.
467. These audits will determine compliance with specific
provisions of the OATT. Staff's findings and recommendations will be
detailed in public audit reports issued in accordance with the
Commission's authority. If an audit is contested, it will be disposed
of consistent with the Commission's final rule on disposition of
contested operational audits. The Commission staff's compliance audits
historically have included the collection of information regarding the
audit target's overall operations. In this vein, the Commission staff's
OATT compliance audits may also collect information regarding
implementation of a transmission provider's OATT, with the intent that
Commission staff may share the information it gathers with the
Commission subject to all applicable ex parte rules.
b. Use of Independent Third Party Audits
Comments
468. A number of commenters indicate that the Commission should not
rely on third party audits as the primary means of ensuring compliance
with the OATT. APPA states that if an OATT Transmission Provider
retains and pays an ``independent reviewer'' to prepare compliance
audit reports, someone will inevitably question the reviewer's
independence. Therefore, APPA argues that it might be better for the
Commission itself to prepare the reports, or to retain a consultant to
do so. Southern suggests that the Commission's existing mechanisms,
coupled with new rules that will ensure that all regulated entities
subject to investigations or audits are afforded their full due process
rights, should be adequate to ensure compliance with OATT provisions.
469. A number of commenters also indicate that the Commission
should require third party audits for frequent abusers. EEI suggests
that a transmission provider that is found to have a systematic or
continuing violation of the OATT could be required to hire an
independent reviewer to monitor its future compliance for a period of
time after the violation occurred. TVA suggests that, if a particular
transmission provider repeatedly misapplies its OATT, the Commission
should at that point consider requiring that transmission provider to
hire an independent monitor for a defined period of time as a remedy
for those actual infractions. NRECA argues that those transmission
providers who are consistently in violation or who do not cure audit
findings in a timely manner should see both an increase in frequency
and further scrutiny from the audit process.
Discussion
470. We propose to have Commission staff conduct audits of
compliance with the new OATT. Commission staff is in a unique position
to conduct OATT compliance audits and recommend remedial action
consistent with previous audits. In addition, entities audited by
Commission staff now have clear and assured due process rights as the
result of Order No. 675.
471. We may require third party audits as part of an individual
compliance plan we order an audited party to undertake when we issue
the Commission staff's audit report. The Commission staff monitors
compliance with all of its audit recommendations as part of its regular
practice. We may, in selected cases, decide to enhance this regular
monitoring by requiring an audited party to hire an independent
reviewer to continue compliance audits after the Commission staff's
audit has ended. We could take such action in response to a number of
circumstances, including, but not limited to, identification of
systematic OATT violations, violations that require on-going
monitoring, or a pattern of repeated OATT violations. Under these
circumstances, the audited party should bear the burden of on-going
compliance monitoring. If we decide to order independent OATT
compliance audits as part of an individual audited party's compliance
plan, we will specify the scope and duration of the audits.

[[Page 32705]]

2. Civil Penalties
a. Background
472. The NOI observed that the existing OATT allows transmission
providers to impose certain operational penalties on customers for
tariff violations, but does not address the adverse consequences to a
transmission provider who violates its OATT. It also summarized the
broad variety of remedies and sanctions available for enforcement of
its rules and regulations, including the enhanced civil penalty
authority provided by EPAct 2005.\413\
---------------------------------------------------------------------------

\413\ EPAct 2005 expanded the Commission's civil penalty
authority under the FPA to encompass violations of all provisions of
FPA Part II (EPAct 2005 section 1284(e)(1) (to be codified at
section 316A of the FPA, 16 U.S.C. 825o-1)), and established the
maximum civil penalty the Commission can assess under FPA Part II as
$1 million per day per violation (EPAct 2005 section 1284(e)(2) (to
be codified at section 316A of the FPA, 16 U.S.C. 825o-1)).
---------------------------------------------------------------------------

473. In the NOI, the Commission asked for comments on whether we
should address the issue of remedies or penalties against transmission
providers as part of OATT reform. It also asked if transmission
providers should be subject to revocation of their market-based rate
authority for certain OATT violations, and if certain violatins should
be considered market manipulation under the Market Behavior Rules \414\
and section 1283 of EPAct 2005.\415\
---------------------------------------------------------------------------

\414\ Investigation of Terms and Conditions of Public Utility
Market-Based Rate Authorizations, 105 FERC ] 61,218 (2003), order on
reh'g, 107 FERC ] 61,175 (2004).
\415\ NOI at P 15.
---------------------------------------------------------------------------

474. Subsequent to the NOI, on October 20, 2005 the Commission
issued its Enforcement Policy Statement, which discusses the factors
the Commission will take into account in determining remedies and
sanctions for violations, including civil penalties.\416\ Also, in
EPAct 2005, Congress provided the Commission with specific anti-
manipulation authority.\417\ On January 19, 2006, to implement this new
authority, the Commission issued Order No. 670 (Anti-manipulation
Rule),\418\ adopting a new Part 1c of its regulations, under which it
is ``unlawful for any entity, directly or indirectly, in connection
with the purchase or sale of electric energy or the purchase or sale of
transmission services subject to the jurisdiction of the Commission,
(1) to use or employ any device, scheme, or artifice to defraud, (2) to
make any untrue statement of a material fact or to omit to state a
material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading,
or (3) to engage in any act, practice, or course of business that
operates or would operate as a fraud or deceit upon any entity.'' \419\
The Anti-manipulation Rule made it unnecessary to retain Market
Behavior Rules 2 or 6. Accordingly, on February 16, 2006, the
Commission rescinded Market Behavior Rules 2 and 6 and codified the
substance of Market Behavior Rules 1, 3, 4, and 5 in the Commission's
regulations.\420\
---------------------------------------------------------------------------

\416\ Enforcement of Statutes, Order, Rules and Regulations,
Policy Statement on Enforcement, 113 FERC ] 61,068 at P 17-20 (2005)
(Enforcement Policy Statement).
\417\ EPAct 2005 sec. 1283 (to be codified at section 222 of the
FPA, 16 U.S.C. 824v). Congress prohibited the use or employment of
``any manipulative or deceptive device or contrivance'' in
connection with the purchase or sale of electric energy or
transmission services subject to the jurisdiction of the Commission.
Congress directed the Commission to give these terms the same
meaning as under the Securities Exchange Act of 1934, 15 U.S.C.
78j(b) (2000).
\418\ Prohibition of Energy Market Manipulation, Order No. 670,
71 FR 4244 (Jan. 26, 2006), FERC Stats. & Regs. ] 31,202, reh'g
denied, 114 FERC ] 61,300 (2006).
\419\ Id., 71 FR 4244, 4258 (Jan. 26, 2006) (to be codified at
18 CFR 1c.2(a)).
\420\ Investigation of Terms and Conditions of Public Utility
Market-Based Rate Authorizations, 114 FERC ] 61,165 (2005). The
primary purpose of the Market Behavior Rules was to prohibit market
manipulation by public utility sellers acting under market-based
rate authority.
---------------------------------------------------------------------------

b. Whether Civil Penalties Should Be Specified in the OATT
Comments
475. Commenters often did not distinguish between operational
penalties and civil penalties in their comments about the need for
additional penalties in the OATT. EEI and MidAmerican made the
distinction, asserting that civil penalties should not be specified in
the OATT. They and others contend that: enforcement actions, including
civil penalties, should be reviewed on a case-by-case basis; \421\
civil penalties should be based upon the seriousness of the violation;
\422\ penalties should require proof of intent or willfulness; \423\
penalties should only apply for repeated violations; \424\ and, penalty
procedures should provide for due process.\425\
---------------------------------------------------------------------------

\421\ E.g., Entergy, Santa Clara, Steel Manufacturers
Association, WAPA, and Williams.
\422\ Steel Manufacturers Association.
\423\ E.g., EEI, KCP&L, Progress Energy, Public Power Council,
Southern, and Xcel.
\424\ E.g., Alberta Intervenors, Public Power Council,
Snohomish, Suez Energy NA, and TDU Systems.
\425\ E.g., Bonneville, EEI, Southern, and Nevada Companies.
---------------------------------------------------------------------------

Discussion
476. The Commission intends to enforce OATT provisions in a firm
but fair manner. For example, the Commission elsewhere is proposing
that transmission providers as well as transmission customers be
subject to specified operational penalties for violations of certain
OATT provisions. However, aside from these operational penalties, the
Commission does not intend to provide a schedule of enforcement
remedies and sanctions in the OATT. Instead, the Commission prefers to
examine violations and determine the appropriate response for a
violation on a case-by-case basis. The Commission has a broad array of
equitable remedies and sanctions for violations.\426\ Our enhanced
civil penalties, as provided by EPAct 2005, are among the available
sanctions for violations of the Commission's statutes, rules,
regulations and orders, including instances of undue discrimination and
market manipulation.
---------------------------------------------------------------------------

\426\ Enforcement Policy Statement at P 4. The ``enhanced civil
penalty authority will operate in tandem with our existing authority
to require disgorgement of unjust profits obtained through
misconduct and/or to condition, suspend, or revoke certificate
authority or other authorizations, such as market-based rate
authority for sellers of electric energy.'' Id. at P 12.
---------------------------------------------------------------------------

477. Although we will look at violations on a case-by-case basis
and not identify in this proposed rule specific penalties for different
violations, the Enforcement Policy Statement provides guidance and
regulatory certainty regarding enforcement and places entities subject
to our jurisdiction on notice of the consequences of violations.\427\
As we noted, ``[I]t is important that we retain the discretion and
flexibility to address each case on its merits, and to fashion remedies
appropriate to the facts presented, including any mitigating factors.''
\428\
---------------------------------------------------------------------------

\427\ Id. at P 1.
\428\ Id. at P 13. Several commenters supported the application
of the Enforcement Policy Statement to OATT violations. E.g., APPA,
EEI, Midwest SATs, National Grid, and TAPS.
---------------------------------------------------------------------------

478. As the facts of a specific matter warrant, we will seek
disgorgement of unjust profits that are the result of a violation.
Violators should not retain the gains acquired as the result of the
violation. OATT violators will be expected to disgorge unjust profits
whenever they can be determined or reasonably estimated.\429\ In
addition, as warranted by the facts, civil penalties may also be
assessed. Those penalties (up to $1 million per day per violation),
however, can be mitigated by the factors set forth in the Enforcement
Policy Statement, such as self-reporting, compliance programs, and
cooperation

[[Page 32706]]

with staff from the Commission's Office of Enforcement.\430\
---------------------------------------------------------------------------

\429\ Enforcement Policy Statement at P 19 and P 23.
\430\ Id. at P 6 and P 21-27.
---------------------------------------------------------------------------

c. Whether Transmission Providers Should Be Subject to Revocation of
Their Market-Based Rates for OATT Violations.
Comments
479. In the NOI, the Commission also asked if transmission
providers should be subject to revocation of their market-based rate
authority for certain OATT violations.\431\ Some commenters agree that
revocation of market-based rates could be an appropriate remedy.\432\
EPSA asserts that revocation of market-based rate authority should be
among the penalties the Commission could impose for serious violations
of the OATT, such as when more transmission capacity is set aside than
is actually needed to serve native load, or undue preferences are
extended to native load or affiliate transactions. TAPS states that
where lack of ATC forecloses network customer access to alternatives, a
transmission provider should not be able to make sales of electric
power at market-based rates and should be required to offer embedded-
cost-based sales. APPA asserts that whether a transmission provider's
violation of the OATT merits possible revocation of its market-based
rate authority depends on the nature and severity of the violation.
APPA argues that if the violation concerns practices that favor the
transmission provider's own wholesale merchant function at the expense
of its third-party competitors, and if that violation is willful or
repeated, then revocation or conditioning of the market-based rate
authority of the transmission provider's merchant function may be
warranted.\433\
---------------------------------------------------------------------------

\431\ NOI at P 15.
\432\ E.g., Arkansas Cities, NRECA, Occidental, Snohomish, and Williams.
\433\ APPA at 32.
---------------------------------------------------------------------------

480. Other commenters argue that revocation of market-based rate
authority should be reserved for market behavior violations, not OATT
violations.\434\ EEI and MidAmerican argue that the Commission has
separated public utilities' transmission functions from their marketing
functions and, thus, penalties for violation of the OATT should be kept
separate from penalties imposed for market behavior violations.
PacifiCorp contends that the Commission's new penalty authority is
sufficient to ensure compliance with the OATT and that there no longer
is a need to consider revocation of market-based rate authority.
Progress Energy states that the Commission should not penalize the
utility's merchant function for violations of the OATT caused by the
utility's transmission function. Ameren and Southern would add a
``willful'' or ``intent'' requirement to revoking market-based rates
for an OATT violation.
---------------------------------------------------------------------------

\434\ E.g., EEI, MidAmerican, PacifiCorp, PNM-TNMP, and Progress Energy.
---------------------------------------------------------------------------

Discussion

481. As discussed in the Enforcement Policy Statement, the better
approach is to look at all of the facts and circumstances of each
violation before deciding on any remedy or sanction.\435\ There may be
OATT violations in circumstances that, after applying the factors in
the Enforcement Policy Statement, merit revocation or limitation of
market-based rate authority. However, before the Commission will
consider revoking an entity's market-based rate authority for a
violation of the OATT, there must be a nexus between the specific facts
relating to the OATT violation and the entity's market-based rate
authority. The Commission proposes that if it determines, as a result
of a significant OATT violation, that the market-based rate authority
of a transmission provider will be revoked within a particular market,
each affiliate of the transmission provider that possesses market-based
rate authority will have it revoked in that market on the effective date of
revocation of the transmission provider's market-based rate authority.
---------------------------------------------------------------------------

\435\ Enforcement Policy Statement at P 18. Among the factors
examined are ``willfulness'' and ``intent'' of the violator. Id. at P 20.
---------------------------------------------------------------------------

d. Whether Certain OATT Violations Should Be Considered Market Manipulation
Under the Market Behavior Rules and Section 1283 of EPAct 2005.
Comments
482. In the NOI, the Commission asked if specific OATT violations
should be considered market manipulation under the Market Behavior
Rules and section 1283 of EPAct 2005.\436\ The Commission then
suggested that one such type of violation might be when a transmission
provider sets aside more transmission capacity than is needed to serve
native load, but uses the capacity for third-party sales.\437\
---------------------------------------------------------------------------

\436\ NOI at P 15. Section 1283 of EPAct 2005 establishes
section 222 of the FPA (to be codified at 16 U.S.C. 824v).
\437\ NOI at P 15.
---------------------------------------------------------------------------

483. None of the commenters want specific violations identified in
the OATT to be deemed per se market manipulation. Some commenters
prefer to have the Commission approach these matters on case-by-case
basis.\438\
---------------------------------------------------------------------------

\438\ E.g., APPA, Entergy, Nevada Companies, Public Power
Council, and Southern.
---------------------------------------------------------------------------

484. Some commenters, like Constellation, identify OATT violations
that may constitute market manipulation. Ameren, EEI, and Occidental
argue that intentionally setting aside more transmission capacity than
is needed to serve native load could constitute market manipulation.
LG&E states that the key factor is ``intent.'' LG&E provides an example
in which ATC becomes available as a result of less-than-expected native
load requirements, and not because the transmission owner intentionally
overstated native load requirements, and the transmission owner's
affiliate followed proper reservation and scheduling protocol in a
manner applicable to all potential transmission customers. Under these
circumstances, LG&E contends, the Commission's imposition of a civil
penalty would be inappropriate given the absence of intent to impart
false or misleading information into the marketplace or hoard transmission.
485. Occidental suggests that curtailments of firm transmission
service designed to permit wholesale power sales by the merchant
function of the transmission provider or an affiliate should also be
considered market manipulation. Suez Energy NA argues that incidents of
affiliate abuse by a transmission provider may be considered market
manipulation pursuant to section 1283 of EPAct 2005. TAPS states that
certain withholding of transmission capacity can rise to the level of a
violation of the Commission's market behavior rules and its new anti-
manipulation authority if the withholding reduces the supply of both
transmission and generation in a market, which artificially raises prices.
Discussion
486. As explained above, we now are examining market manipulation
in the context of Part 1c of our regulations. We do not propose to
identify in the OATT specific conduct as per se market manipulation. As
noted in Order No. 670, market manipulation is a fact-intensive
determination.\439\ We do not want to restrict our fact-finding to
specific types of violations. Although certain fraudulent or deceptive
practices concerning the OATT could qualify as market manipulation
under Order No. 670, the Commission declines to address such
circumstances generically

[[Page 32707]]

in this rulemaking and instead will consider them on a case-by-case
basis, if and when they arise, under the standards set forth in Order
No. 670.
---------------------------------------------------------------------------

\439\ Anti-manipulation Rule at P 72.
---------------------------------------------------------------------------

VI. Information Collection Statement

487. The following collections of information contained in this
proposed rule have been submitted to the Office of Management and
Budget (OMB) for review under section 3507(d) of the Paperwork
Reduction Act of 1995.\440\ OMB's regulations require OMB to approve
certain information collection requirements imposed by agency rule.\441\
---------------------------------------------------------------------------

\440\ 44 U.S.C. 3507(d) (2000).
\441\ 5 CFR 1320.11 (2005).
---------------------------------------------------------------------------

488. Comments are solicited on the need for this information,
whether the information will have practical utility, ways to enhance
the quality, utility, and clarity of the information to be collected,
and any suggested methods for minimizing respondents' burden, including
the use of automated information techniques.
Burden Estimate: The public reporting and records retention burdens
for the proposed reporting requirements and the records retention
requirement are as follows.\442\
---------------------------------------------------------------------------

\442\ These burden estimates apply only to this NOPR and do not
reflect upon all of FERC-516 or FERC-717.

----------------------------------------------------------------------------------------------------------------
Number of Number of Hours per Total annual
Data collection respondents responses response hours
----------------------------------------------------------------------------------------------------------------
Part 35 (FERC-516):
Conforming tariff changes....................... 176 1 25 4,400
Revision of Imbalance Charges................... 176 1 5 880
ATC revisions................................... 176 1 40 7,040
Planning (Attachment K)......................... 176 1 100 17,600
Congestion studies.............................. 176 1 250 44,000
Attestation of network resource commitment...... 176 1 1 176
Quarterly Reports for capacity reassignment..... 176 1 60 10,560
Operational Penalty annual filing............... 176 1 10 1,760
Creditworthiness--include criteria in the tariff 176 1 40 7,040
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Sub Total Part 35........................... .............. .............. .............. 93,456
Part 37 (FERC-717):
ATC-related standards...........................
NERC/NAESB Team to develop...................... 1 1 1,920 1,920
Review and comment by utility................... 176 1 20 3,520
Implementation by each utility.................. 176 1 40 7,040
Mandatory data exchanges........................ 176 1 80 14,080
Explanation of change of ATC values............. 176 1 100 17,600
Reevaluate CBM and post quarterly............... 176 1 20 3,520
Post OASIS metrics; requests accepted/denied.... 176 1 80 14,080
Posting of metrics for System Impact Studies.... 176 1 100 17,600
Post all rules to OASIS......................... 176 1 5 880
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Sub Total (Part 37)......................... .............. .............. .............. 80,240
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Total (Part 35 + Part 37)............... .............. .............. .............. 173,696
¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
Recordkeeping................................... 176 1 30 5,280
----------------------------------------------------------------------------------------------------------------

Total Annual Hours for Collection:
Reporting + recordkeeping hours = 173,696 + 5,280 = 178,976 hours.
Cost to Comply:
Reporting = $19,801,344
hour), consultant ($150), technical ($80), and administrative support
($25))
Recordkeeping = $1,392,160
$89,760
$1,302,400
Total costs = $21,193,504
Labor $ ($19,801,344 + $89,760) + Recordkeeping Storage Costs
($1,302,400)
OMB's regulations require it to approve certain information
collection requirements imposed by an agency rule. The Commission is
submitting notification of this proposed rule to OMB. If the proposed
requirements are adopted they will be mandatory requirements.
Title: FERC-516, Electric Rate Schedules and Tariff Filings; FERC-
717 Standards for Business Practices and Communication Protocols for
Public Utilities.
Action: Proposed Collections.
OMB Control Nos. 1902-0096 and 1902-0173.
Respondents: Business or other for profit.
Frequency of responses: On occasion.
Necessity of the Information:
489. The Federal Energy Regulatory Commission is proposing
amendments to its regulations adopted in Order Nos. 888 and 889, and to
the pro forma open access transmission tariff, to ensure that
transmission services are provided on a basis that is just, reasonable
and not unduly discriminatory or preferential. The purpose of this
rulemaking is to strengthen the pro forma OATT to ensure that it
achieves its original purpose--remedying undue discrimination--not to
create new market structures. We propose to achieve this goal by
increasing the clarity and transparency of the rules applicable to the
planning and use of the transmission system and by addressing
ambiguities and the lack of sufficient detail in several important
areas of the pro forma OATT. The lack of specificity in the pro forma
OATT creates opportunities for undue discrimination as well as making
the undue discrimination that does occur more difficult to detect. To
accomplish this we are proposing five objectives: (1) To improve
transparency and

[[Page 32708]]

consistency in several critical areas, by providing for greater
consistency in the calculation of ATC, (2) to reform the transmission
planning requirements of the pro forma OATT to eliminate potential
undue discrimination and support the construction of adequate
transmission facilities to meet the needs of all load-serving entities,
(3) to remedy certain portions of the pro forma OATT that may have
permitted utilities to discriminate against new merchant generation,
including intermittent generation, (4) to provide for greater
transparency in the provision of transmission service to allow
transmission customers better access to information to make their
resource procurement and investment decisions, as well as to increase
the Commission's ability to detect any remaining incidents of undue
discrimination, and (5) to reform and provide greater clarity in areas
that have generated recurring disputes over the past 10 years, such as
rollover rights, ``redirects,'' and generation redispatch. The reforms
proposed in this NOPR are intended to address deficiencies in the pro
forma OATT that have become apparent since the implementation of Order
No. 888 in 1996 and to facilitate improved planning and operation of
transmission facilities.
490. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, [Attention:
Michael Miller, Office of the Executive Director, Phone: (202) 502-
8415, fax: (202) 273-0873, e-mail: michael.miller@ferc.gov.]
491. For submitting comments concerning the collections of
information and the associated burden estimate(s), please send your
comments to the contact listed above and to the Office of Information
and Regulatory Affairs, Office of Management and Budget, 725 17th
Street, NW., Washington, DC 20503 [Attention: Desk Officer for the
Federal Energy Regulatory Commission, phone (202) 395-4650, fax: (202)
395-7285. Due to security concerns, comments should be sent
electronically to the following e-mail address:
oira_submission@omb.eop.gov. Please reference the docket number of this
rulemaking in your submission.

VII. Environmental Analysis

492. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\443\ The
Commission concludes that neither an Environmental Assessment nor an
Environmental Impact Statement is required for this NOPR under section
380.4(a)(15) of the Commission's regulations, which provides a
categorical exemption for approval of actions under sections 205 and
206 of the FPA relating to the filing of schedules containing all rates
and charges for the transmission or sale subject to the Commission's
jurisdiction, plus the classification, practices, contracts and
regulations that affect rates, charges, classifications and services.\444\
---------------------------------------------------------------------------

\443\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. ]
30,783 (1987).
\444\ 18 CFR 380.4(a)(15) (2005).
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VIII. Regulatory Flexibility Act Analysis

493. The Regulatory Flexibility Act of 1980 (RFA) \445\ generally
requires a description and analysis of proposed rules that will have
significant economic impact on a substantial number of small entities.
This rule applies to public utilities that own, control or operate
interstate transmission facilities, not to electric utilities per se.
The total number of public utilities that, absent waiver, would have to
modify their current OATTs by filing the revised pro forma OATT is
176.\446\ Of these only six public utilities, or less than two percent,
dispose of four million MWh or less per year.\447\ The Commission does
not consider this a substantial number, and in any event, these small
entities may seek waiver of these requirements.\448\ Moreover, the
criteria for waiver that would be applied under this rulemaking for
small entities is unchanged from that used to evaluate requests for
waiver under Order Nos. 888 and 889. Thus, small entities who have
received waiver of the requirements to have on file an open access
tariff or to operate an OASIS would be unaffected by the requirements
of this proposed rulemaking.
---------------------------------------------------------------------------

\445\ 5 U.S.C. 601-612 (2000).
\446\ The sources for this figure are FERC Form No. 1 and FERC
Form No. 1-F data.
\447\ Id.
\448\ The Regulatory Flexibility Act defines a ``small entity''
as ``one which is independently owned and operated and which is not
dominant in its field of operation.'' See 5 U.S.C. 601(3) and
601(6)(2000); 15 U.S.C. 632(a)(1)(2000). In Mid-Tex Elec. Coop. v.
FERC, 773 F.2d 327, 340-343 (D.C. Cir. 1985), the court accepted the
Commission's conclusion that, since virtually all of the public
utilities that it regulates do not fall within the meaning of the
term ``small entities'' as defined in the Regulatory Flexibility
Act, the Commission did not need to prepare a regulatory flexibility
analysis in connection with its proposed rule governing the
allocation of costs for construction work in progress (CWIP). The
CWIP rules applied to all public utilities. The revised pro forma
OATT will apply only to those public utilities that own, control or
operate interstate transmission facilities. These entities are a
subset of the group of public utilities found not to require
preparation of a regulatory flexibility analysis for the CWIP rule.
---------------------------------------------------------------------------

IX. Comment Procedures

494. The Commission invites interested persons to submit comments
on the matters and issues proposed in this notice to be adopted,
including any related matters or alternative proposals that commenters
may wish to discuss. Comments are due August 7, 2006. Reply comments
are due September 5, 2006. Comments must refer to Docket Nos. RM05-25-
000 and RM05-17-000, and must include the commenters' name, the
organization they represent, if applicable, and their address in their
comments. Comments may be filed either in electronic or paper format.
495. To facilitate the Commission's review of the comments,
commenters are requested to provide an executive summary of their
position, not to exceed ten pages. Commenters are requested to identify
each section of the NOPR that their discussion addresses and to use
conforming headings. Additional issues the commenters wish to raise
should be clearly identified in a separate section entitled ``Other
Issues,'' which should be organized by the relevant pro forma OATT
section (if applicable). Furthermore, we also request that commenters
with specific tariff language suggestions submit a redline/strikeout
version showing their proposed changes to the language that appears in
the pro forma OATT attached to this NOPR.\449\ The commenters should
double space their comments. To assist commenters in their review, the
Commission has posted a copy of the proposed revised pro forma OATT
with changes from the current version of the pro forma OATT shown in
redline/strikeout on the following location on our Web site at
http://www.ferc.gov/industries/electric/indus-act/oatt-reform.asp .

---------------------------------------------------------------------------

\449\ The pro forma OATT includes two amendments that have been
made since the tariff was finalized in Order No. 888-B. First, the
tariff was amended to include protocols for curtailment of multi-
system transactions and parallel flows. See North American
Reliability Council, 85 FERC ] 61,353 (1998), reh'g denied, 87 FERC ]
61,161 (1999) and recently updated in North American Electric
Reliability Council, 110 FERC ] 61,388 (2005). The second amendment
incorporates standardized generator interconnection procedures. See
Order No. 2003. The standardized generator interconnection
procedures are not included in the pro forma OATT attached to this
NOPR because we do not propose changes to them.
---------------------------------------------------------------------------

496. Comments and reply comments may be filed electronically via the

[[Page 32709]]

eFiling link on the Commission's Web site at http://www.ferc.gov .
The Commission accepts most standard word processing formats and commenters
may attach additional files with supporting information in certain
other file formats. Documents created electronically using word
processing software should be filed in the native application or print-
to-PDF format and not in a scanned format. This will enhance document
retrieval for both the Commission and the public. Attachments that
exist only in paper form may be scanned. Commenters filing
electronically should not make a paper filing. Service of rulemaking
comments is not required. Commenters that are not able to file comments
electronically must send an original and 14 copies of their comments
to: Federal Energy Regulatory Commission, Office of the Secretary, 888
First Street, NE., Washington, DC 20426.
497. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.

X. Document Availability

498. 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 the Commission's Home Page (http://www.ferc.gov) and
in the Commission'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.
499. From the Commission's Home Page on the Internet, this
information is available in the Commission's document management
system, eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type ``RM05-25'' or
``RM05-17'' in the docket number field.
500. User assistance is available for eLibrary and the Commission's
website during normal business hours. For assistance, please contact
the Commission's Online Support at 1-866-208-3676 (toll free) or 202-
502-6652 (e-mail at FERCOnlineSupport@FERC.gov), or the Public
Reference Room at 202-502-8371, TTY 202-502-8659 (e-mail at
public.referenceroom@ferc.gov).

List of Subjects

18 CFR Part 35

Electric power rates, Electric utilities, Reporting and
recordkeeping requirements.

18 CFR Part 37

Conflict of interests, Electric power plants, Electric utilities,
Reporting and recordkeeping requirements.

By direction of the Commission.
Magalie R. Salas,
Secretary.

In consideration of the foregoing, the Commission proposes to amend
parts 35 and 37, Chapter I, Title 18 of the Code of Federal
Regulations, as follows:

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

1. The authority citation for part 35 continues to read as follows:

Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 71-7352.

2. Amend Sec. 35.28 as follows:
a. paragraph (c) is revised.
b. paragraphs (d)(i) and d(ii) are redesignated as d(1) and d(2).
c. newly redesignated paragraph d(1) is revised.
d. paragraph (e)(1) (introductory text) is revised.
e. paragraph (e)(1)(ii) is revised.

Sec. 35.28 Non-discriminatory open access transmission tariff.

* * * * *
(c) Non-discriminatory open access transmission tariffs.
(1) Every public utility that owns, controls, or operates
facilities used for the transmission of electric energy in interstate
commerce must have on file with the Commission a tariff of general
applicability for transmission services, including ancillary services,
over such facilities. Such tariff must be the open access pro forma
tariff contained in Order No. 888, FERC Stats. & Regs. ] 31,036, as
revised by the open access pro forma tariff contained in Order No. ----
, FERC Stats. & Regs. ] ----, or such other open access tariff as may
be approved by the Commission consistent with Order No. ----, FERC
Stats. & Regs. ] ----.
(i) Subject to the exceptions in paragraphs (c)(1)(ii),
(c)(1)(iii), (c)(1)(iv) and (c)(1)(v) of this section, the pro forma
tariff contained in Order No. 888, FERC Stats. & Regs. ]31,036, as
revised by the open access pro forma tariff contained in Order No. ----
, FERC Stats. & Regs. ] ----, and accompanying rates, must be filed no
later than 60 days prior to the date on which a public utility would
engage in a sale of electric energy at wholesale in interstate commerce
or in the transmission of electric energy in interstate commerce.
(ii) If a public utility owns, controls, or operates facilities
used for the transmission of electric energy in interstate commerce as
of ----, it must file the revisions to the pro forma tariff contained
in Order No. ----, FERC Stats. & Regs. ] ---- pursuant to section 206
of the FPA and accompanying rates pursuant to section 205 of the FPA,
no later than ----.
(iii) If a public utility owns, controls, or operates transmission
facilities used for the transmission of electric energy in interstate
commerce as of ----, such facilities are jointly owned with a non-
public utility, and the joint ownership contract prohibits transmission
service over the facilities to third parties, the public utility with
respect to access over the public utility's share of the jointly owned
facilities must file no later than ---- the revisions to the pro forma
tariff contained in Order No. ----, FERC Stats. & Regs. ] ----,
pursuant to section 206 of the FPA and accompanying rates pursuant to
section 205 of the FPA.
(iv) Any public utility whose transmission facilities are under the
independent control of a Commission-approved ISO or RTO may satisfy its
obligation under paragraph (c)(1) of this section, with respect to such
facilities, through the open access transmission tariff filed by the
ISO or RTO.
(v) If a public utility obtains a waiver of the tariff requirement
pursuant to paragraph (d) of this section, it does not need to file the
pro forma tariff required by this section.
(vi) Any public utility that seeks a deviation from the pro forma
tariff contained in Order No. 888, FERC Stats. & Regs. ]31,036, as
revised in Order No. ----, FERC Stats. & Regs. ] ----, must demonstrate
that the deviation is consistent with the principles of Order No., ----
FERC Stats. & Regs. ] ----.
(vii) Each public utility's open access transmission tariff must
include the standards incorporated by reference in part 38 of this chapter.
(2) Subject to the exceptions in paragraphs (c)(2)(i) and
(c)(3)(iii) of this section, every public utility that owns, controls,
or operates facilities used for the transmission of electric energy in
interstate commerce, and that uses those facilities to engage in
wholesale sales and/or purchases of electric energy, or unbundled
retail sales of electric energy, must take transmission service for
such sales and/or purchases under the open access tariff filed pursuant
to this section.

[[Page 32710]]

(i) For sales of electric energy pursuant to a requirements service
agreement executed on or before July 9, 1996, this requirement will not
apply unless separately ordered by the Commission. For sales of
electric energy pursuant to a bilateral economy energy coordination
agreement executed on or before July 9, 1996, this requirement is
effective on December 31, 1996. For sales of electric energy pursuant
to a bilateral non-economy energy coordination agreement executed on or
before July 9, 1996, this requirement will not apply unless separately
ordered by the Commission.
(ii) [Reserved.]
(3) Every public utility that owns, controls, or operates
facilities used for the transmission of electric energy in interstate
commerce, and that is a member of a power pool, public utility holding
company, or other multi-lateral trading arrangement or agreement that
contains transmission rates, terms or conditions, must have on file a
joint pool-wide or system-wide open access transmission pro forma
tariff, which tariff must be the open access pro forma tariff contained
in Order No. 888, FERC Stats. & Regs. ] 31,036, as revised by the open
access pro forma tariff contained in Order No. ----, FERC Stats. &
Regs. ] ----, or such other open access tariff as may be approved by
the Commission consistent with Order No. ----, FERC Stats. & Regs. ]
--
--.
(i) For any power pool, public utility holding company or other
multi-lateral arrangement or agreement that contains transmission
rates, terms or conditions and that is executed after July 9, 1996,
this requirement is effective on the date that transactions begin under
the arrangement or agreement.
(ii) For any power pool, public utility holding company or other
multi-lateral arrangement or agreement that contains transmission
rates, terms or conditions and that is executed on or before July 9,
1996, a public utility member of such power pool, public utility
holding company or other multi-lateral arrangement or agreement that
owns, controls, or operates facilities used for the transmission of
electric energy in interstate commerce must file the revisions to its
joint pool-wide or system-wide contained in Order No. ----, FERC Stats.
& Regs. ] ----, pursuant to section 206 of the FPA and accompanying
rates pursuant to section 205 of the FPA, no later than ----.
(iii) A public utility member of a power pool, public utility
holding company or other multi-lateral arrangement or agreement that
contains transmission rates, terms or conditions and that is executed
on or before July 9, 1996 must take transmission service under a joint
pool-wide or system-wide pro forma tariff filed pursuant to this
section for wholesale trades among the pool or system members.
(4) Consistent with paragraph (c)(1) of this section, every
Commission-approved ISO or RTO must have on file with the Commission a
tariff of general applicability for transmission services, including
ancillary services, over such facilities. Such tariff must be the open
access pro forma tariff contained in Order No. 888, FERC Stats. & Regs.
] 31,036, as revised by the open access pro forma tariff contained in
Order No. ----, FERC Stats. & Regs. ] ----, or such other open access
tariff as may be approved by the Commission consistent with Order No.
----, FERC Stats. & Regs. ] ----.
(i) Subject to paragraph (c)(4)(ii) of this section, a Commission-
approved ISO or RTO must file the revisions to the pro forma tariff
contained in Order No. ----, FERC Stats. & Regs. ] ----, pursuant to
section 206 of the FPA and accompanying rates pursuant to section 205
of the FPA, no later than ----.
(ii) If a Commission-approved ISO or RTO can demonstrate that its
existing open access tariff is consistent with or superior to the
revisions to the pro forma tariff contained in Order No. ----, FERC
Stats. & Regs. ] ----, or any portions thereof, the Commission-approved
ISO or RTO may instead set forth such demonstration in its filing
pursuant to section 206 no later than ----.
(d) Waivers. * * *
(1) No later than ----, or
* * * * *
(e) Non-public utility procedures for tariff reciprocity
compliance. (1) A non-public utility may submit a transmission tariff
and a request for declaratory order that its voluntary transmission
tariff meets the requirements of Order No. 888, FERC Stats. & Regs. ]
31,036 and Order No. ----, FERC Stats. & Regs. ] ----.
(i) * * *
(ii) If the submittal is found to be an acceptable transmission
tariff, an applicant in a Federal Power Act (FPA) section 211 or 211A
proceeding against the non-public utility shall have the burden of
proof to show why service under the open access tariff is not
sufficient and why a section 211 or 211A order should be granted.
* * * * *

PART 37--OPEN ACCESS SAME-TIME INFORMATION SYSTEMS

3. The authority citation for part 37 continues to read as follows:

Authority: 16 U.S.C. 791-825r, 2601-2645; 31 U.S.C. 9701; 42
U.S.C. 7101-7352.

4. Amend Sec. 37.6 as follows:
a. paragraph (a)(1) is revised.
b. paragraph (b)(introductory text) is revised.
c. paragraphs (b)(1)(v) through (b)(1)(viii) are added.
d. paragraphs (b)(2)(i) and b(2)(ii) are revised.
e. paragraph (b)(3) is revised.
f. paragraph (c)(2) is revised.
g. paragraphs (e)(1) and (e)(2)(ii) are revised.
h. paragraph (e)(3)(ii) is revised.
i. paragraphs (h) and (i) are added.

Sec. 37.6 Information to be posted on the OASIS.

(a) * * *
(1) Make requests for transmission services offered by Transmission
Providers, Resellers and other providers of ancillary services, request
the designation of a network resource, and request the termination of
the designation of a network resource;
* * * * *
(b) Posting transfer capability. The available transfer capability
on the Transmission Provider's system (ATC) and the total transfer
capability (TTC) of that system shall be calculated and posted for each
Posted Path as set out in this section.
(1) * * *
(v) Available transfer capability or ATC means the transfer
capability remaining in the physical transmission network for further
commercial activity over and above already committed uses, or such
definition as contained in Commission-approved Reliability Standards.
(vi) Total transfer capability or TTC means the amount of electric
power that can be moved or transferred reliably from one area to
another area of the interconnected transmission systems by way of all
transmission lines (or paths) between those areas under specified
system conditions, or such definition as contained in Commission-
approved Reliability Standards.
(vii) Capacity Benefit Margin or CBM means the amount of TTC
preserved by the Transmission Provider for load-serving entities, whose
loads are located on that Transmission Provider's system, to enable
access by the load-serving entities to generation from interconnected
systems to meet generation reliability requirements, or such definition
as contained in Commission-approved Reliability Standards.
(viii) Transmission Reliability Margin or TRM means the amount of
TTC necessary to provide reasonable

[[Page 32711]]

assurance that the interconnected transmission network will be secure,
or such definition as contained in Commission-approved Reliability
Standards.
(2) * * *
(i) Information used to calculate any posting of ATC and TTC must
be dated and time-stamped and all calculations shall be performed
according to consistently applied methodologies referenced in the
Transmission Provider's transmission tariff and shall be based on
Commission-approved Reliability Standards as well as current industry
practices, standards and criteria
(ii) On request, the Responsible Party must make all data used to
calculate ATC, TTC, CBM, and TRM for any constrained posted paths
publicly available (including the limiting element(s) and the cause of
the limit (e.g., thermal, voltage, stability)) in electronic form
within one week of the posting. The information is required to be
provided only in the electronic format in which it was created, along
with any necessary decoding instructions, at a cost limited to the cost
of reproducing the material. This information is to be retained for six
months after the applicable posting period.
* * * * *
(3) Posting. The ATC, TTC, CBM, and TRM for all Posted Paths must
be posted in megawatts by specific direction and in the manner
prescribed in this subsection.
(i) Constrained posted paths--(A) For Firm ATC and TTC. (1) The
posting shall show ATC, TTC, CBM, and TRM for a 30-day period. For this
period postings shall be: By the hour, for the current hour and the 168
hours next following; and thereafter, by the day. If the Transmission
Provider charges separately for on-peak and off-peak periods in its
tariff, ATC, TTC, CBM, and TRM will be posted daily for each period.
(2) Postings shall also be made by the month, showing for the
current month and the 12 months next following.
(3) If planning and specific requested transmission studies have
been done, seasonal capability shall be posted for the year following
the current year and for each year following to the end of the planning
horizon but not to exceed 10 years.
(B) For Non-Firm ATC and TTC. The posting shall show ATC, TTC, CBM
and TRM for a 30-day period by the hour and days prescribed under
paragraph (b)(3)(i)(A)(1) of this section and, if so requested, by the
month and year as prescribed under paragraph (b)(3)(i)(A) (2) and (3)
of this section. The posting of non-firm ATC and TTC shall show CBM as
zero.
(C) Updating Posted Information for Constrained Paths. (1) The
capability posted under paragraphs (b)(3)(i) (A) and (B) of this
section must be updated when transactions are reserved or service ends
or whenever the TTC estimate for the Path changes by more than 10 percent.
(2) All updating of hourly information shall be made on the hour.
(3) When the monthly and yearly capability posted under paragraphs
(b)(3)(i)(A) and (B) are updated, the Transmission Provider shall post
a brief, but specific, narrative explanation of the reason for the
update. This narrative should include, if relevant, scheduling of
planned outages and occurrence of forced transmission outages, de-
ratings of transmission facilities, scheduling of planned generation
outages and occurrence of forced generation outages, changes in load
forecast, changes in new facilities' in-service dates, or other events
or assumption changes that caused the update.
(ii) Unconstrained posted paths. (A) Postings of firm and nonfirm
ATC, TTC, CBM, and TRM shall be posted separately by the day, showing
for the current day and the next six days following and thereafter, by
the month for the 12 months next following. If the Transmission
Provider charges separately for on-peak and off-peak periods in its
tariff, ATC, TTC, CBM, and TRM will be posted separately for the
current day and the next six days following for each period. These
postings are to be updated whenever the ATC changes by more than 20
percent of the Path's TTC.
(B) If planning and specific requested transmission studies have
been done, seasonal capability shall be posted for the year following
the current year and for each year following until the end of the
planning horizon but not to exceed 10 years.
(iii) Calculation of CBM.
(A) The Transmission Provider must reevaluate its CBM needs at
least quarterly.
(B) The Transmission Provider must post its practices for
reevaluating its CBM needs.
(c) Posting Transmission Service Products and Prices.
(1) * * *
(2) Transmission Providers must provide a downloadable file of
their complete tariffs in the same electronic format as the tariff that
is filed with the Commission. Transmission Providers also must post all
of their rules, standards and practices that relate to transmission services.
* * * * *
(e) Posting specific transmission and ancillary service requests
and responses--(1) General rules. (i) All requests for transmission and
ancillary service offered by Transmission Providers under the pro forma
tariff, including requests for discounts, and all requests to designate
or terminate a network resource, must be made on the OASIS and posted
prior to the Transmission Provider responding to the request, except as
discussed in paragraphs (e)(1) (ii) and (iii) of this section. The
Transmission Provider must post all requests for transmission service,
for ancillary service, and for the designation or termination of a
network resource comparably. Requests for transmission service,
ancillary service, and to designate and terminate a network resource,
as well as the responses to such requests, must be conducted in
accordance with the Transmission Provider's tariff, the Federal Power
Act, and Commission regulations.
(ii) The requirement in paragraph (e)(1)(i) of this section, to
post requests for transmission and ancillary service offered by
Transmission Providers under the pro forma tariff, including requests
for discounts, prior to the Transmission Provider responding to the
request, does not apply to requests for next-hour service made during
Phase I.
(iii) In the event that a discount is being requested for ancillary
services that are not in support of basic transmission service provided
by the Transmission Provider, such request need not be posted on the OASIS.
(iv) In processing a request for transmission or ancillary service,
the Responsible Party shall post the same information as required in
paragraphs (c)(4) and (d)(3) of this section, and the following
information: the date and time when the request is made, its place in
any queue, the status of that request, and the result (accepted,
denied, withdrawn). In processing a request to designate or terminate
the designation of a network resource, the Responsible Party shall post
the date and time when the request is made.
(v) For any request to designate or terminate a network resource,
the Transmission Provider (at the time when the request is received),
must post on the OASIS (and make available for download) information
describing the request (including: name of requestor, identification of
the resource, effective time for the designation or termination,

[[Page 32712]]

identification of whether the transaction involves the Transmission
Provider's wholesale merchant function or any affiliate; and any other
relevant terms and conditions) and shall keep such information posted
on the OASIS for at least 30 days. A record of the transaction must be
retained and kept available as part of the audit log required in Sec. 37.7.
(vi) The Transmission Provider shall post a list of its current
designated network resources and all network customers' current
designated network resources on OASIS. The list of network resources
should include the name of the resource, its geographic and electrical
location, its total installed capacity, and the amount of capacity to
be designated as a network resource.
(2) * * *
(ii) Information to support the reason for the denial, including
the operating status of relevant facilities, must be maintained for
five years and provided, upon request, to the potential Transmission
Customer.
* * * * *
(3) Posting when a transaction is curtailed or interrupted. (ii)
Information to support any such curtailment or interruption, including
the operating status of the facilities involved in the constraint or
interruption, must be maintained and made available upon request, to
the curtailed or interrupted customer, the Commission's Staff, and any
other person who requests it, for five years.
* * * * *
(h) Posting information summarizing the time to complete
transmission service request studies. (1) For each calendar quarter,
the Responsible Party must post the set of measures detailed in
paragraph (h)(1)(i) through paragraph (h)(1)(vi) of this section
related to the Responsible Party's processing of transmission service
request system impact studies and facilities studies. The Responsible
Party must calculate and post the measures in paragraph (h)(1)(i)
through paragraph (h)(1)(vi) of this section separately for requests
for short-term firm point-to-point transmission service, long-term firm
point-to-point transmission service, and requests to designate a new
network resource and must be calculated and posted separately for
transmission service requests from Affiliates and transmission service
requests from Transmission Customers who are not Affiliates. The
Responsible Party is required to include in the calculations of the
measures in paragraph (h)(1)(i) through paragraph (h)(1)(vi) of this
section all studies the Responsible Party conducts of transmission
service requests on another Transmission Provider's OASIS.
(i) Process Time from Initial Service Request to Offer of System
Impact Study Agreement.
(A) Number of new system impact study agreements delivered during
the reporting quarter to entities that request transmission service,
(B) Number of new system impact study agreements delivered during
the reporting quarter to entities that request transmission service
more than thirty (30) days after the Responsible Party received the
request for transmission service,
(C) Mean time (in days), for all requests acted on by the
Responsible Party during the reporting quarter, from the date when the
Responsible Party received the request for transmission service to when
the Responsible Party changed the transmission service request status
to indicate that the Responsible Party could offer transmission service
or needed to perform a system impact study,
(D) Mean time (in days), for all system impact study agreements
delivered by the Responsible Party during the reporting quarter, from
the date when the Responsible Party received the request for
transmission service to the date when the Responsible Party delivered a
system impact study agreement, and
(E) Number of new system impact study agreements executed during
the reporting quarter.
(ii) System Impact Study Processing Time. (A) Number of system
impact studies completed by the Responsible Party during the reporting
quarter,
(B) Number of system impact studies completed by the Responsible
Party during the reporting quarter more than 60 days after the
Responsible Party received an executed system impact study agreement,
(C) Mean time (in days), for all system impact studies completed by
the Responsible Party during the reporting quarter, from the date when
the Responsible Party received the executed system impact study
agreement to the date when the Responsible Party provided the system impact
study to the entity who executed the system impact study agreement, and
(D) Mean cost of system impact studies completed by the Responsible
Party during the reporting quarter.
(iii) Transmission Service Requests Withdrawn from the System
Impact Study Queue. (A) Number of transmission service requests
withdrawn from the Responsible Party's system impact study queue during
the reporting quarter,
(B) Number of transmission service requests withdrawn from the
Responsible Party's system impact study queue during the reporting
quarter more than 60 days after the Responsible Party received the
executed system impact study agreement, and
(C) Mean time (in days), for all transmission service requests
withdrawn from the Responsible Party's system impact study queue during
the reporting quarter, from the date the Responsible Party received the
executed system impact study agreement to date when request was
withdrawn from the Responsible Party's system impact study queue.
(iv) Process Time from Completed System Impact Study to Offer of
Facilities Study. (A) Number of new facilities study agreements
delivered during the reporting quarter to entities that request
transmission service,
(B) Number of new facilities study agreements delivered during the
reporting quarter to entities that request transmission service more
than thirty (30) days after the Responsible Party completed the system
impact study,
(C) Mean time (in days), for all facilities study agreements
delivered by the Responsible Party during the reporting quarter, from
the date when the Responsible Party completed the system impact study
to the date when the Responsible Party delivered a facilities study
agreement, and
(D) Number of new facilities study agreements executed during the
reporting quarter.
(v) Facilities Study Processing Time. (A) Number of facilities
studies completed by the Responsible Party during the reporting quarter,
(B) Number of facilities studies completed by the Responsible Party
during the reporting quarter more than 60 days after the Responsible
Party received an executed facilities study agreement,
(C) Mean time (in days), for all facilities studies completed by
the Responsible Party during the reporting quarter, from the date when
the Responsible Party received the executed facilities study agreement
to the date when the Responsible Party provided the facilities study to
the entity who executed the facilities study agreement,
(D) Mean cost of facilities studies completed by the Responsible
Party during the reporting quarter, and
(E) Mean cost of upgrades recommended in facilities studies
completed during the reporting quarter.
(vi) Service Requests Withdrawn from Facilities Study Queue.

[[Page 32713]]

(A) Number of transmission service requests withdrawn from the
Responsible Party's facilities study queue during the reporting quarter,
(B) Number of transmission service requests withdrawn from the
Responsible Party's facilities study queue during the reporting quarter
more than 60 days after the Responsible Party received the executed
facilities study agreement, and
(C) Mean time (in days), for all transmission service requests
withdrawn from the Responsible Party's facilities study queue during
the reporting quarter, from the date the Responsible Party received the
executed facilities study agreement to date when request was withdrawn
from the Responsible Party's facilities study queue
(2) The Responsible Party is required to post the measures in
paragraph (h)(1)(i) through paragraph (h)(1)(vi) of this section for
each calendar quarter within 15 days of the end of the calendar
quarter. The Responsible Party will keep the quarterly measures posted
on OASIS for three calendar years.
(3) The Responsible Party will be required to post on OASIS the
measures in paragraph (h)(3)(i) through paragraph (h)(3)(iv) of this
section in the event the Responsible Party, for two consecutive
calendar quarters, completes more than twenty (20) percent of the
studies associated with requests for transmission service from entities
that are not Affiliates of the Responsible Party more than sixty (60)
days after the Responsible Party delivers the appropriate study
agreement. The Responsible Party will have to post the measures in
paragraph (h)(3)(i) through paragraph (h)(3)(iv) of this section until
it processes at least ninety (90) percent of all studies within 60 days
after it has received the appropriate executed study agreement. For the
purposes of calculating the percent of studies completed more than
sixty (60) days after the Responsible Party delivers the appropriate
study agreement, the Responsible Party should aggregate all system
impact studies and facilities studies that it completes during the
reporting quarter. The Responsible Party must calculate and post the
measures in paragraph (h)(3)(i) through paragraph (h)(3)(iv) of this
section separately for requests for short-term firm point-to-point
transmission service, long-term firm point-to-point transmission
service, and requests to designate a new network resource and must be
calculated and posted separately for transmission service requests from
Affiliates and transmission service requests from Transmission
Customers who are not Affiliates.
(i) Mean, across all system impact studies the Responsible Party
completes during the reporting quarter, of the employee-hours expended
per system impact study the Responsible Party completes during
reporting period;
(ii) Mean, across all facilities studies the Responsible Party
completes during the reporting quarter, of the employee-hours expended
per facilities study the Responsible Party completes during reporting
period;
(iii) The number of employees the Responsible Party has assigned to
process system impact studies;
(iv) The number of employees the Responsible Party has assigned to
process facilities studies.
(4) The Responsible Party is required to post the measures in
paragraph (h)(3)(a) through paragraph (h)(3)(d) of this section for
each calendar quarter within 15 days of the end of the calendar
quarter. The Responsible Party will keep the quarterly measures posted
on OASIS for five calendar years.
(i) Posting data related to grants and denials of service. The
Responsible Party is required to post data each month listing, by path
or flowgate, the number of transmission service requests that have been
accepted and the number of transmission service requests that have been
denied during the prior month. This posting must distinguish between
the length of the service request (e.g., short-term or long-term
requests) and between the type of service requested (e.g., firm point-
to-point, non-firm point-to-point or network service). The posted data
must show:
(1) The number of non-Affiliate requests for transmission service
that have been rejected,
(2) The total number of non-Affiliate requests for transmission
service that have been made,
(3) The number of Affiliate requests for transmission service that
have been rejected, and
(4) The total number of Affiliate requests for transmission service
that have been made.
5. In Sec. 37.7, paragraph (b) is revised to read as follows:

Sec. 37.7 Auditing Transmission Service Information.

* * * * *
(b) Audit data must remain available for download on the OASIS for
90 days, except ATC/TTC postings that must remain available for
download on the OASIS for 20 days. The audit data are to be retained
and made available upon request for download for five years from the
date when they are first posted in the same electronic form as used
when they originally were posted on the OASIS.
---------------------------------------------------------------------------

\450\ A ``*'' indicates that the commenter filed a notice of
intervention only.

Note: The following appendices will not be published in the Code
---------------------------------------------------------------------------
of Federal Regulations.

Appendix A: Commenter Acronyms

Initial Commenters in Docket No. RM05-25-000
------------------------------------------------------------------------
Abbreviation RM05-25-000 Initial comments
------------------------------------------------------------------------
AEP.................................... American Electric Power System
(AEP Texas North Company; AEP
Texas Central Company;
Appalachian Power Company;
Columbus Southern Power
Company; Indiana Michigan
Power Company; Kentucky Power
Company; Kingsport Power
Company; Ohio Power Company;
Public Service Company of
Oklahoma; Southwestern
Electric Power Company and
Wheeling Power Company).
Alabama MEA............................ Alabama Municipal Electric
Authority.
Alberta Intervenors.................... Alberta Intervenors
(TransCanada Energy Ltd.;
ENMAX Energy Marketing, Inc.;
EPCOR Merchant and Capital,
LP; and TransAlta
Corporation).
Alberta System Operator................ Alberta Electric System
Operator.
Alcoa.................................. Alcoa Inc. and Alcoa Power
Generating Inc.
Alliance of State Leaders.............. Alliance of State Leaders
Protecting Electricity
Consumers.

[[Page 32714]]

Ameren................................. Ameren Services Company
(Central Illinois Light
Company d/b/a AmerenCILCO;
Central Illinois Public
Service Company d/b/a
AmerenCIPS; Illinois Power
Company d/b/a AmerenIP; Union
Electric Company d/b/a
AmerenUE; Ameren Energy
Marketing Company; Ameren
Energy Generating Company; and
AmerenEnergy Resources
Generating Company).
American Forest and Paper* \450\....... American Forest and Paper
Association.
American Transmission.................. American Transmission Company
LLC.
AMP-Ohio............................... American Municipal Power-Ohio,
Inc.
APPA................................... American Public Power
Association.
APS.................................... Arizona Public Service Company.
Arkansas Cities........................ Arkansas Cities and Cooperative
(Conway Corporation; West
Memphis Utilities Commission;
City of Osceola, Arkansas;
City of Prescott, Arkansas;
Hope Water & Light Commission;
and Farmers Electric
Cooperative Cooperation).
Arkansas Commission.................... Arkansas Public Service
Commission.
AWEA................................... American Wind Energy
Association.
BC Transmission........................ British Columbia Transmission
Corporation.
Bonneville............................. Bonneville Power
Administration.
Bureau of Reclamation.................. U.S. Bureau of Reclamation.
CAISO.................................. California Independent System
Operator Corporation.
California Commission.................. Public Utilities Commission of
the State of California.
Calpine................................ Calpine Corporation.
Canadian Electricity Association....... Canadian Electricity
Association.
Chelan................................. Public Utility District No. 1
of Chelan County and Public
Utility District No. 2 of
Grant County.
Cinergy................................ Cinergy Services, Inc.
(Cincinatti Gas & Electric
Company; PSI Energy, Inc.; and
Union Light, Heat and Power
Company).
Constellation.......................... Constellation Energy Group,
Inc.
Cottonwood............................. Cottonwood Energy Company LP
and Union Power Partners, LP.
Detroit Edison......................... Detroit Edison Company.
Douglas................................ Public Utility District No. 1
of Douglas County.
Duke................................... Duke Energy Corporation.
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.
Edison Mission......................... Edison Mission Energy, Edison
Mission Marketing & Trading,
Inc. and Midwest Generation
EME, LLC.
EEI.................................... Edison Electric Institute.
ELCON.................................. Electricity Consumers Resource
Council, American Iron and
Steel Institute and American
Chemistry Council.
Entergy................................ Entergy Services, Inc.
EPSA................................... Electric Power Supply
Association.
Exelon................................. Exelon Corporation.
Fayetteville........................... Public Works Commission of the
City of Fayetteville, North
Carolina.
FirstEnergy............................ FirstEnergy Service Company
(FirstEnergy Solutions;
American Transmission Systems,
Inc.; Jersey Central Power and
Light Company; Metropolitan
Edison Company; and
Pennsylvania Electric
Company).
Florida Industrial Cogeneration Florida Industrial Cogeneration
Association. Association.
FMPA................................... Florida Municipal Power Agency.
FP&L................................... Florida Power & Light Company.
Hogan.................................. William H. Hogan.
HQ Energy.............................. HQ Energy Services (U.S.), Inc.
IECG*.................................. Industrial Energy Consumer
Group.
Indicated New York Transmission Owners. Indicated New York Transmission
Owners (Central Hudson Gas &
Electric Corp.; Consolidated
Edison Company of New York,
Inc.; New York State Electric
& Gas Corp.; Orange and
Rockland Utilities, Inc.;
LIPA; New York Power
Authority; and Rochester Gas
and Electric Corp.).
International Transmission............. International Transmission
Company.
ISO New England........................ ISO New England, Inc. and New
England Power Pool.
ISO/RTO................................ ISO/RTO Council.
KCP&L.................................. Kansas City Power & Light
Company.
Kentucky Commission.................... Kentucky Public Service
Commission.
Lafayette.............................. Lafayette Utilities System of
the City and Parish of
Lafayette, Louisiana;
Mississippi Delta Energy
Agency, Clarksdale Public
Utilities Commission of the
City of Clarksdale,
Mississippi; and Public
Service Commission of the City
of Yazoo City, Mississippi.
LDWP................................... City of Los Angeles Department
of Water and Power.
LG&E................................... LG&E Energy LLC (Louisville Gas
and Electric Company and
Kentucky Utilities Company).
LPPC................................... Large Public Power Council.

[[Page 32715]]

MEAG................................... MEAG Power.
Memphis Light.......................... Memphis Light, Gas & Water
Division.
Metropolitan Water District............ Metropolitan Water District of
Southern California.
MidAmerican............................ MidAmerican Energy Company.
Midwest Municipals..................... Midwest Municipal Transmission
Group.
Midwest SATs........................... Midwest Stand-Alone
Transmission Companies
(American Transmission Company
LLC; International
Transmission Company; and
Michigan Electric Transmission
Company, LLC).
MISO................................... Midwest Independent
Transmission System Operator,
Inc.
MISO States............................ Organization of MISO States.
Montana Alberta Tie.................... Montana Alberta Tie Ltd.
NARUC.................................. National Association of
Regulatory Utility
Commissioners.
National Grid.......................... National Grid USA.
NCPA................................... Northern California Power
Agency.
Nevada Commission...................... Public Utilities Commission of
Nevada.
Nevada Companies....................... Nevada Power Company and Sierra
Pacific Power Company.
New York Commission.................... New York State Public Service
Commission.
North Carolina Commission.............. North Carolina Utilities
Commission; Public Staff of
the North Carolina Utilities
Commission; and the Attorney
General of the State of North
Carolina.
Northeast Utilities.................... Northeast Utilities Service
Company (Connecticut Light and
Power Company; Western
Massachusetts Electric
Company; Public Service
Company of New Hampshire;
Holyoke Water Power Company;
and Holyoke Power and Electric
Company).
Northwest IPPs......................... Northwest Independent Power
Producers Coalition (BP
Energy; Calpine Corporation;
EPCOR; National Energy Supply
Company; Northwest Energy
Development; Sempra
Generation; Suez Energy North
America, Inc.; and TransAlta
Energy Marketing, (U.S.)
Inc.).
Northwest Unregulated TUs.............. Northwest Unregulated
Transmitting Utilities (Clark
Public Utilities; Public
Utility District No. 1 of
Cowlitz County; Eugene Water
and Electric Board; Public
Utility District No. 2 of
Grant County; Public Utility
District No. 1 of Snohomish
County; and Tacoma Power).
NorthWestern........................... NorthWestern Corporation.
NPPD................................... Nebraska Public Power District.
NRECA.................................. National Rural Electric
Cooperative Association.
Occidental............................. Occidental Chemical
Corporation.
Ohio Commission........................ Public Utilities Commission of
Ohio.
Oklahoma Commission.................... Oklahoma Corporation
Commission.
Old Dominion........................... Old Dominion Electric
Cooperative.
PacifiCorp............................. PacifiCorp.
PJM.................................... PJM Interconnection, L.L.C.
PNM-TNMP............................... Public Service Company of New
Mexico and Texas-New Mexico
Power Company.
Portland General....................... Portland General Electric
Company.
Powerex................................ Powerex Corp.
PPL.................................... PPL Companies (PPL Electric
Utilities Corporation; PPL
EnergyPlus, LLC; PPL Montana,
LLC; PPL Holtwood, LLC; Lower
Mount Bethel Energy, LLC; PPL
Maine, LLC; PPL Great Works,
LLC; PPL Colstrip I, LLC; PPL
Colstrip II, LLC; PPL Martins
Creek, LLC; PPL Brunner
Island, LLC; PPL Montour, LLC;
PPL Susquehanna, LLC; PPL
Wallingford Energy, LLC; PPL
Southwest Generation Holdings,
LLC; PPL University Park, LLC,
PPL Shoreham Energy, LLC; and
PPL Edgewood Energy, LLC).
Progress Energy........................ Progress Energy, Inc. (Carolina
Power & Light Company d/b/a
Progress Energy Carolinas and
Florida Power Corporation, d/b/
a Progress Energy Florida).
Public Power Council................... Public Power Council.
Renewable Energy....................... Renewable Energy and Public
Interest Organizations
(American Wind Energy
Association; Citizens for
Pennsylvania's Future
(PennFuture); Minnesotans for
an Energy Efficient Economy;
Natural Resources Defense
Council; Ohio Consumers'
Council; Pace Energy Project;
Project for Sustainable FERC
Energy Policy; Renewable
Northwest Project; The Stella
Group, Ltd.; The Wind
Coalition; and West Wind
Wires).
Rural Utilities Service................ U.S. Department of Agriculture
Rural Utilities Service.
Sacramento............................. Sacramento Municipal Utility
District.
Salt River............................. Salt River Project Agricultural
Improvement and Power
District.
San Diego G&E.......................... San Diego Gas & Electric
Company.
Santa Clara............................ City of Santa Clara, California
d/b/a Silicon Valley Power.
Santee Cooper.......................... South Carolina Public Service
Authority.
Sempra Global.......................... Sempra Global.
SEPA................................... Southeastern Power
Administration.

[[Page 32716]]

Snohomish.............................. Public Utility District No. 1
of Snohomish County,
Washington.
South Carolina E&G..................... South Carolina Electric & Gas
Company.
Southern............................... Southern Company Services, Inc.
Southern Montana Coop.................. Southern Montana Electric
Generation and Transmission
Cooperative, Inc.
Southwest TDU Group.................... Southwest Transmission
Dependent Utility Group
(Aguila Irrigation District;
Ak-Chin Energy Services;
Buckeye Water Conservation and
Drainage District; Central
Arizona Water Conservation
District; Electrical District
No. 3; Electrical District No.
4; Electrical District No. 5;
Electrical District No. 6;
Electrical District No. 7;
Electrical District No. 8;
Harquahala Valley Power
District; Maricopa County
Municipal Water District No.
1; McMullen Valley Water
Conservation and Drainage
District; City of Needles;
Roosevelt Irrigation District;
City of Safford; Tonopah
Irrigation District; Wellton-
Mohawk Irrigation and Drainage
District).
Southwestern Coop...................... Southwestern Electric
Cooperative, Inc.
SPP.................................... Southwest Power Pool, Inc.
Steel Manufacturers Association........ Steel Manufacturers
Association.
Suez Energy NA......................... Suez Energy North America.
Tacoma................................. Tacoma Power.
TANC................................... Transmission Agency of Northern
California.
TAPS................................... Transmission Access Policy
Study Group.
TDU Systems............................ Transmission Dependent
Utilities Systems.
Tennessee Valley PPA................... Tennessee Valley Public Power
Association.
TransAlta.............................. TransAlta Energy Marketing
(U.S.) Inc.
Trans-Elect............................ Trans-Elect, Inc.
TVA.................................... Tennessee Valley Authority.
WAPA................................... Western Area Power
Administration.
Williams............................... Williams Power Company, Inc.
Wisconsin Commission................... Public Service Commission of
Wisconsin.
Wisconsin Electric..................... Wisconsin Electric Power
Company.
Wyoming Infrastructure*................ Wyoming Infrastructure
Authority.
Xcel................................... Xcel Energy Services, Inc.
------------------------------------------------------------------------

Reply Commenters in Docket No. RM05-25-000
------------------------------------------------------------------------
Abbreviation RM05-25-000 reply comments
------------------------------------------------------------------------
Alberta Intervenors.................... Alberta Intervenors
(TransCanada Energy Ltd.;
ENMAX Energy Marketing, Inc.;
EPCOR Merchant and Capital,
LP; and TransAlta
Corporation).
Anaheim................................ Cities of Anaheim, Azusa,
Banning, Colton, Pasadena and
Riverside, California.
APPA................................... American Public Power
Association.
BC Transmission........................ British Columbia Transmission
Corporation.
Bonneville............................. Bonneville Power
Administration.
California Municipal Utilities California Municipal Utilities
Association. Association.
Cogeneration Association of California. Cogeneration Association of
California and Energy
Producers and Users Coalition.
EEI.................................... Edison Electric Institute.
ElectriCities.......................... ElectriCities of North
Carolina, Inc.
Entergy................................ Entergy Services, Inc.
EPSA................................... Electric Power Supply
Association.
Fallon................................. City of Fallon, Nevada.
Fertilizer Institute................... Fertilizer Institute.
FMPA................................... Florida Municipal Power Agency.
FP&L................................... Florida Power & Light Company.
Great Northern......................... Great Northern Power
Development, L.P.
Joint Commenters....................... Joint Commenters (Duke Energy.
Corporation, Progress Energy
Corporation, South Carolina
Public Service Authority and
Southern Company Services,
Inc.).
Lafayette\+ 451\....................... Lafayette Utilities System of
the City and Parish of
Lafayette, Louisiana;
Mississippi Delta Energy
Agency, Clarksdale Public
Utilities Commission of the
City of Clarksdale,
Mississippi; and Public
Service Commission of the City
of Yazoo City, Mississippi.
LDWP................................... City of Los Angeles Department
of Water and Power.
LPPC................................... Large Public Power Council.
Mark Lively\+\......................... Mark B. Lively.
MEAG................................... MEAG Power.
Memphis Light.......................... Memphis Light, Gas & Water
Division.

[[Page 32717]]

Midwest Municipals..................... Midwest Municipal Transmission
Group .
Midwest SATs........................... Midwest Stand-Alone
Transmission Companies
(American Transmission Company
LLC; International
Transmission Company; and
Michigan Electric Transmission
Company, LLC).
NARUC.................................. National Association of
Regulatory Utility
Commissioners.
National Grid.......................... National Grid USA.
NCPA................................... Northern California Power
Agency.
Newmont Mining......................... Newmont USA Limited, d/b/a
Newmont Mining Corporation.
Northwest IPPs......................... Northwest Independent Power
Producers Coalition (BP
Energy; Calpine Corporation;
EPCOR; National Energy Systems
Company; Northwest Energy
Development; Sempra
Generation; Suez Energy North
America, Inc.; and TransAlta
Energy Marketing, (U.S.)
Inc.).
NRECA.................................. National Rural Electric
Cooperative Association.
Occidental............................. Occidental Chemical
Corporation.
PacifiCorp............................. PacifiCorp.
Powerex................................ Powerex Corp.
Progress Energy........................ Progress Energy, Inc. (Carolina
Power & Light Company d/b/a
Progress Energy Carolinas and
Florida Power Corporation, d/b/
a Progress Energy Florida).
Puget.................................. Puget Sound Energy, Inc.
Sacramento............................. Sacramento Municipal Utility
District.
Salt River............................. Salt River Project Agricultural
Improvement and Power
District.
San Antonio............................ San Antonio City Public Service
Board.
Seattle................................ City of Seattle--City Light
Department.
South Carolina Regulatory Staff........ South Carolina Office of
Regulatory Staff.
Southern............................... Southern Company Services, Inc.
TANC................................... Transmission Agency of Northern
California.
TAPS................................... Transmission Access Policy
Study Group.
TDU Systems............................ Transmission Dependent
Utilities Systems.
Truckee Donner......................... Truckee Donner Public Utility
District.
TVA.................................... Tennessee Valley Authority.
TVA Noticing Distributors\+\........... TVA Noticing Distributors
(Paducah Power Systems,
Glasgow Electric Plant Board,
Princeton Electric Plant Board
and Hopkinsville Electric
System).
Williams............................... Williams Power Company, Inc.
------------------------------------------------------------------------

Commenters in RM05-17-000
------------------------------------------------------------------------
Abbreviation RM05-17-000 Comments
------------------------------------------------------------------------
Allegheny.............................. Allegheny Power.
APPA................................... American Public Power
Association.
Bonneville............................. Bonneville Power
Administration.
CEOB................................... California Electricity
Oversight Board.
EEI.................................... Edison Electric Institute.
EPSA................................... Electric Power Supply
Association.
Exelon................................. Exelon Corporation.
FTC.................................... Federal Trade Commission.
Generator Coalition.................... Generator Coalition
(Cottonwood Energy Company LP;
KGen Power Management Inc.;
Suez Energy North America,
Inc.; and Union Power
Partners, LP).
International Transmission............. International Transmission
Company.
ISO/RTO................................ ISO/RTO Council.
LDWP................................... City of Los Angeles Department
of Water and Power.
MidAmerican............................ MidAmerican Energy Company.
MISO................................... Midwest Independent
Transmission System Operator,
Inc.
NERC................................... North American Electric
Reliability Council.
NY Commission.......................... New York State Public Service
Commission.
PG&E................................... Pacific Gas and Electric
Company.
PGP.................................... Public Generating Pool.
Powerex................................ Powerex Corp.
Southern............................... Southern Company Services,
Inc.
Southern California Edison............. Southern California Edison
Company.*
TANC................................... Transmission Agency of
Northern California.
TAPS................................... Transmission Access Policy
Study Group.
WestConnect............................ WestConnect Public Utilities.
------------------------------------------------------------------------

[[Page 32718]]

Pro Forma Open Access Transmission Tariff

Table of Contents

I. Common Service Provisions
---------------------------------------------------------------------------

\451\ A ``+'' indicates that the commenter also filed
supplemental comments.
---------------------------------------------------------------------------

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 Economy Energy
1.13 Eligible Customer
1.14 Facilities Study
1.15 Firm Point-To-Point Transmission Service
1.16 Good Utility Practice
1.17 Interruption
1.18 Load Ratio Share
1.19 Load Shedding
1.20 Long-Term Firm Point-To-Point Transmission Service
1.21 Native Load Customers
1.22 Network Customer
1.23 Network Integration Transmission Service
1.24 Network Load
1.25 Network Operating Agreement
1.26 Network Operating Committee
1.27 Network Resource
1.28 Network Upgrades
1.29 Non-Firm Point-To-Point Transmission Service
1.30 Non-Firm Sale
1.31 Open Access Same-Time Information System (OASIS)
1.32 Part I
1.33 Part II
1.34 Part III
1.35 Parties
1.36 Point(s) of Delivery
1.37 Point(s) of Receipt
1.38 Point-To-Point Transmission Service
1.39 Power Purchaser
1.40 Pre-Confirmed Application
1.41 Receiving Party
1.42 Regional Transmission Group (RTG)
1.43 Reserved Capacity
1.44 Service Agreement
1.45 Service Commencement Date
1.46 Short-Term Firm Point-To-Point Transmission Service
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 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
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
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
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)

[[Page 32719]]

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
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 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

[[Page 32720]]

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 Economy Energy
Energy purchased by a Network Integration Transmission customer
that displaces that customer's own higher cost designated Network
Resource(s) for the purpose of serving that customer's designated
Network Load(s).
1.13 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.
1.14 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.
1.15 Firm Point-To-Point Transmission Service
Transmission Service under this Tariff that is reserved and/or
scheduled between specified Points of Receipt and Delivery pursuant to
Part II of this Tariff.
1.16 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).
1.17 Interruption
A reduction in non-firm transmission service due to economic
reasons pursuant to Section 14.7.
1.18 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 the
Tariff and calculated on a rolling twelve month basis.
1.19 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.
1.20 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.
1.21 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.
1.22 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.
1.23 Network Integration Transmission Service
The transmission service provided under Part III of the Tariff.
1.24 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 a 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.
1.25 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.
1.26 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

[[Page 32721]]

Transmission Service under Part III of this Tariff.
1.27 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.
1.28 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.
1.29 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.
1.30 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.
1.31 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.
1.32 Part I
Tariff Definitions and Common Service Provisions contained in
Sections 2 through 12.
1.33 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.
1.34 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.
1.35 Parties
The Transmission Provider and the Transmission Customer receiving
service under the Tariff.
1.36 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.
1.37 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.
1.38 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.
1.39 Power Purchaser
The entity that is purchasing the capacity and energy to be
transmitted under the Tariff.
1.40 Pre-Confirmed Application
An Application that commits the Transmission Customer to execute a
Service Agreement upon receipt of notification that the Transmission
Provider can provide the requested Transmission Service.
1.41 Receiving Party
The entity receiving the capacity and energy transmitted by the
Transmission Provider to Point(s) of Delivery.
1.42 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.
1.43 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.
1.44 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.
1.45 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.
1.46 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.
1.47 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

[[Page 32722]]

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 the
longer of a competing request by any new Eligible Customer or five
years and to pay the current just and reasonable rate, as approved by
the Commission, for such service. 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 acceptance by the
Commission of the Transmission Provider's Attachment K], unless
terminated, will become subject to the five year/one year requirement
on the first rollover date after [the acceptance by the Commission of
the Transmission Provider's Attachment K].

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 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 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.
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 and 6) 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
3.6 below list the six 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 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.

[[Page 32723]]

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.

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 37 of the
Commission's regulations (Open Access Same-Time Information System and
Standards of Conduct for Public Utilities) and 18 CFR 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.

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 a power pool or
Regional Transmission Group also agrees to provide comparable
transmission service to the members of such power pool and Regional
Transmission Group 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 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

[[Page 32724]]

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 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.

[[Page 32725]]

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 hour 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. However, Pre-Confirmed Applications for service will
receive priority over earlier-submitted requests that are not Pre-
Confirmed. Within classes of requests (Pre-Confirmed or not confirmed),
the highest price offered by the Eligible Customer is the first
tiebreaker, followed by the date and time of the request.
(ii) Reservations for Short-Term Firm Point-To-Point Transmission
Service will be conditional based upon the length of the requested
transaction. However, Pre-Confirmed Applications for Short-Term Point-
To-Point Transmission Service will receive priority over earlier-
submitted requests that are not Pre-Confirmed. Within classes of
requests (Pre-Confirmed or not confirmed), duration is the first
tiebreaker, followed by the highest price offered by the Eligible
Customer, followed by the date and time of the request.
(iii) If the Transmission System becomes oversubscribed, requests
for longer term service may preempt requests for shorter term service
up to the following deadlines: one hour before the commencement of
hourly service, 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 Applications, an Eligible Customer with a reservation for shorter
term service has the right of first refusal to match any longer term
reservation 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. 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 August 7, 2006 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.
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 more
economically by redispatching the Transmission Provider's resources
than through constructing Network Upgrades, it shall do so, provided
that the Eligible Customer agrees to compensate the Transmission
Provider pursuant to the terms of Section 27. 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

[[Page 32726]]

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. 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 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. Transmission customers may also batch requests and
schedules for hourly firm service to be provided on the same day.
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 Pre-
Confirmed Applications and second

[[Page 32727]]

to reservations with a longer duration of service. 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
reservation 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 August 7, 2006 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 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, or (4) transmission service for Network Customers from
non-designated resources. 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

[[Page 32728]]

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
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 redispatch its own
resources or 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. To the extent a Transmission Provider cannot redispatch its own
resources to provide the requested Firm Transmission Service, it shall
identify generators in other control areas that could relieve the
constraint and allow the Transmission Customer to seek redispatch with
Transmission Providers in adjacent Control Areas.
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

[[Page 32729]]

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 whether the Transmission Customer
commits to a Pre-Confirmed Request, i.e., will execute a Service
Agreement upon receipt of notification that the Transmission Provider
can provide the requested Transmission Service; and
(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 transmission 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

[[Page 32730]]

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 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. 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;
(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 whether the Transmission Customer
commits to a Pre-Confirmed Request, i.e., 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 2:00 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. 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

[[Page 32731]]

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 any system constraints and redispatch options,
including an estimate of the number of hours of redispatch that may be
required to accommodate the request for Transmission Service and a
preliminary estimate of the cost of redispatch, additional Direct
Assignment Facilities or Network Upgrades required to provide the
requested service. 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. 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

[[Page 32732]]

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.
(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.

[[Page 32733]]

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 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 that are
Affiliates of the Transmission Provider 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. Compensation to Resellers that are not Affiliates of
the Transmission Provider shall be at rates established by agreement
with 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. A Reseller should notify the Transmission Provider as soon as
possible after any assignment or transfer of service occurs but in any
event, notification must be provided prior to any provision of service
to the Assignee. 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
Parties through an amendment to the Service Agreement.

[[Page 32734]]

23.3 Information on Assignment or Transfer of Service
In accordance with Section 4, Resellers may 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 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 more economically by redispatching the
Transmission Provider's resources than by building new facilities or
upgrading existing facilities 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 Economy 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

[[Continued on page 32735]]

Notices For
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994

Preventing Undue Discrimination and Preference in Transmission Service

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