Preventing Undue Discrimination and Preference in Transmission Service

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[Federal Register: March 15, 2007 (Volume 72, Number 50)]
[Rules and Regulations]
[Page 12465-12514]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15mr07-26]

[[pp. 12465-12514]] Preventing Undue Discrimination and Preference in
Transmission Service

[[Continued from page 12464]]

[[Page 12465]]

Commission to act in a manner that facilitates the planning and
expansion of facilities to meet the reasonable needs of LSEs to satisfy
the service obligations of the LSEs. Southern contends that the NOPR
proposal would create administrative burdens on transmission providers,
potentially treat network service as an inferior product to long term
point-to-point transmission service, and introduce a substantial
deterrent against optimization of network resources by network customers.
1546. On the other hand, Great Northern initially requests that ATC
not be set aside for a former network resource in anticipation that it
might be designated as a network resource at some time in the future.
In order to ensure comparable treatment for all transmission service
customers, Great Northern argues, the Commission should place new
requests to designate network resources at the end of the transmission
queue, regardless of the prior designation of those resources. Great
Northern clarifies on reply that, while ATC should not be set aside for
former network resources in anticipation that it might be designated as
a network resource at some unspecified time in the future, it has no
objection to setting aside ATC to be used by a formerly designated
network resource after a temporary, specified period of undesignation
such as one month or one season.
1547. NorthWestern, in its reply comments, disagrees with Great
Northern's initial comments that new designations be placed at the end
of transmission service queue regardless of the prior designation of
those resources. NorthWestern argues that such a policy would unduly
discriminate against the network customer who is paying for the use of
the entire transmission system and grant an undue preference to the
point-to-point customer. NorthWestern also argues that the proposal
that ATC not be set aside for an undesignated network resource appears
to conflict with the Commission's standard interconnection procedures
for large and small generators. Once all upgrades specified through the
interconnection process have been installed, NorthWestern contends that
the generator can be specified as a network resource by any customer,
at the time of commercial operation for the generator or at any time in
the future.
1548. TAPS appears to support a requirement that transmission
customers get back in the queue when re-designating resources, so long
as the rules apply to transmission providers as well as network customers.
Commission Determination
1549. In response to the many requests and comments, we clarify
that a request for termination of a network resource that is
concurrently paired with a request to redesignate that resource at a
specific point in time will not result in the network customer
permanently forfeiting rights to use that resource as a designated
network resource. Any change in ATC that is determined by the
transmission provider to have resulted from the temporary termination
shall be posted on OASIS during this temporary period. We agree that
requiring network customers making temporary terminations to
permanently forfeit rights to use this ATC would significantly reduce
or eliminate firm third-party power sales. We emphasize, however, that
a request to terminate a network resource that is not accompanied with
a request to redesignate that resource at a specific point in time is
to be considered an indefinite termination. After an indefinite
termination of a resource, the network customer has no continuing
rights to the use of such resource and future requests to designate
that resource would be processed consistent with section 30.2 as a
designation of new network resource.
1550. We disagree with NorthWestern's argument that, once upgrades
specified through the interconnection process have been installed, the
generator can be specified as a network resource by any customer, at
the time of commercial operation of the generator or at any time in the
future. The Commission has long noted that the generator
interconnection process is separate and independent of the acquisition
of transmission service for the same generator.\895\ The fact that
system upgrades may be required to interconnect a generator does not
mean any network customer is entitled to the use of that generator at
all times, even in the event that the network customer indefinitely
terminates the designation of that resource. The integration of network
resources with different network customers presents different effects
and flows on the transmission system that must be evaluated by the
transmission provider.
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\895\ See, e.g., Order No. 2003 at P 118, 744.
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(3) Minimum Lead-Time
Comments
1551. EEI and Entergy argue that the Commission should not require
transmission providers or network customers to undesignate a network
resource for a specific amount of time prior to the commencement of an
off-system sale. In many instances, EEI argues, short-term firm power
sales are made with relatively little lead time, particularly after
events such as forced outages or unusual weather conditions. EEI and
PNM-TNMP argue that requiring transmission providers or network
customers to undesignate a specific amount of time prior to an off-
system sale would foreclose the possibility that firm sales could be
made with short lead times. That, EEI argues, would adversely affect
the sales market, without having any impact on ATC on the path used by
the network resource because the network resource would not be
undesignated. In EEI's view, imposing lead times on undesignations of
network resources would also result in treating network and native load
customers less favorably than point-to-point customers. EEI points out
that the pro forma OATT does not impose any minimum lead times on firm
redirects of point-to-point transmission service pursuant to section 22
of the pro forma OATT or reassignment of transmission service pursuant
to section 23 of the OATT, despite the fact that advance notice of
redirects might make the resultant ATC more marketable.
1552. Most commenters, however, appear to support the establishment
of a minimum 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, although they express
widely varying opinions on what period of time would be appropriate.
1553. Ameren and Pinnacle contend that the amount of time prior to
operation that the transmission provider and other network customers
should be required to terminate a network resource should be linked to
the frequency of the calculation that gets standardized in the ATC
process. Pinnacle contends that, if the undesignation and redesignation
are performed on OASIS as they propose, ATC could be recalculated and
posted immediately following the undesignation or redesignation. Ameren
contends that it cannot comment further until the parameters of the ATC
process are defined. FirstEnergy states that the amount of time should
be consistent with the time periods required in markets, and that
outside of markets, times should be established that coincide with such
markets. Southern argues that the current practice, under which a
resource is undesignated when

[[Page 12466]]

it schedules point-to-point transmission service for an off-system
sale, provides adequate time to ensure that the appropriate set of
network resources is included in the ATC calculation.
1554. PJM notes that, under its system, a generator resource with
excess capacity can undesignate the excess resource on a ``day ahead''
basis. PJM believes that this is the proper amount of time needed to
ensure resource adequacy. PJM argues that a generator should not, under
any circumstance, change the designation of its resource ``same day.''
1555. TranServ argues that, at a minimum, a request for
undesignation should be supplied no later than the firm scheduling
deadline so that released capacity may be acquired on a non-firm basis.
If that data were required to be submitted earlier than the scheduled
deadline, TranServ suggests the transmission provider may be able to
offer incremental capacity for firm sales. TranServ requests that the
Commission establish in the pro forma OATT some nominal timeframe for
network customers to provide to the transmission provider their planned
use of designated resources to serve loads.
1556. Nevada Companies requests that, due to some system
emergencies, force majeure events, and hourly scheduling of tie-line
changes, they be allowed to change undesignation of network resources
at any time to handle these types of events.
Commission Determination
1557. Commenters presented many alternative views in response to
the Commission's request in the NOPR for comments on the appropriate
minimum lead-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. In consideration of these comments,
the Commission finds that the appropriate requirement is that network
customers not be permitted to make firm third-party sales from any
designated network resource without (1) undesignating that resource for
the period of the third-party sale pursuant to pro forma OATT section
30.3 and (2) providing notice of such undesignation before the firm
scheduling deadline (10 a.m. the day before service commences). We find
that this requirement strikes the appropriate balance, allowing
undesignated capacity to be acquired on a non-firm basis but not
creating an undue adverse effect on third-party sales.
1558. We find it unnecessary to incorporate into the pro forma OATT
provisions relaxed rules for changing the undesignation of network
resources at any time to handle system emergencies, force majeure
events, forced outages or unusual weather conditions, as suggested by
some commenters. Other procedures such as those in NERC's standard for
Capacity & Energy Emergencies, EOP-002-2, or the possible use of
capacity benefit margin, are more appropriate to deal with legitimate
system emergencies. Outside the context of legitimate system
emergencies, network customers should rely on appropriate planning and
operation, rather than relaxed rules for designation of network resources.
1559. We disagree with EEI's argument that requiring a minimum
lead-time will result in treating network and native load customers
less favorably than point-to-point customers. In particular, EEI is
incorrect in its statement that the OATT does not impose any minimum
lead times on firm redirects of point-to-point transmission service or
reassignments of transmission service. Firm point-to-point customers
are also subject to deadlines for scheduling redirects pursuant to
section 22.2 of the pro forma OATT. Furthermore, we find that EEI has
provided no compelling evidence to support its argument that the
adverse impacts on the market for firm energy with short lead times
justifies having no minimum lead time.
(4) General
Comments
1560. Several commenters argue that the Commission should not
require network customers or the transmission provider to make formal
modifications to their designations of network resources when they make
firm sales to third parties from those resources.\896\ EEI and Southern
argue that the practice of most network customers and transmission
providers in the ten years since the Commission issued Order No. 888
has been that a network resource is undesignated for any period for
which the customer requests firm point-to-point transmission service
from the generator or a third party. This practice, EEI argues, has not
resulted in any adverse impacts on reliability or on the availability
of transmission service and that, to the contrary, selling energy from
network resources on a firm basis instead of a non-firm basis frees up
firm transmission capacity that otherwise would have to be reserved for
the network customer. EEI and NRECA contend that requiring formal
undesignations is substantially more cumbersome for network customers
and transmission providers making off-system sales.
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\896\ E.g., EEI, NRECA Reply, PNM-TNMP, and Southern.
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1561. Progress Energy and TranServ argue that network customers
should not have to go through the process of redesignating a network
resource as new when the network customer once again needs to use this
resource to serve network load. TranServ argues that such a transaction
is exactly analogous to a redirect of firm point-to-point service on a
firm basis and requests clarification of whether the provider should
evaluate a request to undesignate a network resource concomitantly with
the assessment of that same customer's point-to-point request, as is
done with redirects on a firm basis.
1562. NRECA states that the undesignation requirement is too
burdensome and, therefore, the Commission should adopt a comparability
requirement that would allow network customers to utilize the practice
that many public utility transmission providers use today: i.e., use
designated resources for firm off-system transactions or third party
uses without having to go through the designation, undesignation and
redesignation process. NRECA argues that existing scheduling procedures
have allowed transmission providers to deliver power from their
designated network resources for off-system merchant purposes reliably
and should perform equally well for network customers, provided they
still pay a point-to-point charge for the ``outbound'' leg of a
delivery to a neighboring network to serve the customer's network load
on the neighboring network. NRECA argues in its reply comments that,
whatever the Commission decides to do, comparability is the most
important principle when considering the undesignation policy and that
``grandfathering'' agreements which would allow transmission providers
to essentially get around this requirement would allow undue
discrimination to continue. EEI disagrees in its reply comments with
NRECA's assertion that transmission providers currently have an
advantage over network customers, arguing that the same standards apply
to the transmission provider's merchant function and network customers
when they seek to make off-system sales from network resources.
1563. PNM-TNMP contends that the Commission has held that formal
undesignation and redesignation are not required, so long as the
transmission

[[Page 12467]]

provider treats its own resources and the network resources of network
customers comparably. PNM-TNMP and Pinnacle further argue that to
require formal undesignation and redesignation would appear to do
nothing more than impose an extra layer of administration to the
management of network resources, making power sales more difficult and
potentially reducing financial benefits to end use customers.
Bonneville argues that the Commission's proposals regarding the use of
network resources for surplus sales are likely to raise the cost to
consumers.
1564. Duke requests that the Commission clarify that any product
that is not ``designatable'' as a network resource by a buyer may be
sold by a seller that happens to be a network customer, without having
to undesignate any network resources.
1565. Suez Energy NA requests that the Commission ensure that a
utility cannot use redesignation to hoard transmission capacity in
order to deprive independent power producers of access to the grid. It
contends that a utility could consistently hold transmission to serve
generation that never runs for economic reasons and, the day before
power flows, redesignate that transmission to accommodate a third-party
purchase, effectively using its ability to redesignate network
transmission capacity to hoard scarce ATC. In order to prevent
potential abuse, Suez Energy NA agrees with the NOPR proposal to
require transmission providers to use the same OASIS procedures to
designate and terminate network status for themselves that they apply
to network customers.
1566. If the Commission requires formal designations and
undesignations, EEI asks the Commission to clarify whether it is
changing its policy that it is not necessary to modify service
agreements in such circumstances in order to avoid requiring
transmission providers to make numerous filings amending service
agreements.\897\ If formal undesignations are required, EEI argues on
reply that each transmission provider would be required to submit a
revised application for network service under section 29.2 of the pro
forma OATT both at the time the resource was undesignated and at the
time that resource was redesignated. EEI also argues that formal
undesignation would require the execution and filing of revised network
service agreements reflecting the changes.
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\897\ See Virginia Electric and Power Co., 81 FERC ] 61,125 at
61,111-12 (1997), reh'g denied, 82 FERC ] 61,034 (1998).
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1567. South Carolina E&G argues in its reply comments that off-
system sales of firm power are typically in the form of a slice-of-
system sale. South Carolina E&G requests that the Commission provide
guidance for how to treat such a sale of power, suggesting that the
transmission provider be permitted to undesignate a slice of a system
sufficient to support the firm power sale and then, at the conclusion
of the sale, redesignate that slice of the system as a network resource.
1568. While generally supporting the Commission's proposal to
continue to allow network customers and the transmission provider, with
respect to its native load, to undesignate network resources to allow
them to make sales to third parties, some commenters seek certain
changes, consideration, or clarification by the Commission.\898\ EEI,
joined by TDU Systems on reply, argue that the Commission should modify
its statement that network customers should be permitted to undesignate
network resources ``on a short-term basis to make off system sales.''
They argue that nothing in Order No. 888, the Commission's decisions,
or the public interest requires that network resources be undesignated
only for short-term sales. They further argue that such sales need not
be ``off-system.'' Progress Energy argues that the Commission should
only allow transmission customers to undesignate network resources to
make firm off-system sales for a term which the transmission customer
has adequate generation reserves to serve its network load. In its
view, the transmission provider also must have the authority to deny
the designation or undesignation of the network resources if the
transmission provider determines that it needs the network resources to
preserve the reliability of its transmission system or to ensure that
there is sufficient transmission capability to support the requested
changes. NRECA disagrees on reply, arguing that granting transmission
providers the authority to deny undesignation requests would give them
too much discretion and the perfect opportunity to discriminate.
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\898\ E.g., EEI, Pinnacle, and Progress Energy.
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1569. Progress Energy agrees with the Commission that network
service involves the entire transmission provider's system and does not
involve a contract path like point-to-point service. It also agrees
that the delivery of a network resource once inside the system does not
need to be redirected. Progress Energy notes that peaking resources
have low capacity factors and, therefore, their transmission
reservations are frequently underutilized. They request that network
customers be given the ability to optimize their transmission purchases
by bringing energy into the host transmission provider's system from
other designated network resources in times when they are not using
their peaking designated resources.
1570. MDEA, Progress Energy, and Entergy request that, for
reliability and economic reasons, network customers be given the
flexibility to substitute new designated network resources without
abandoning the original transmission queue position of an existing
designated network resource.\899\ If the Commission does not change its
proposal in order to provide network customers with this flexibility,
Progress Energy contends that point-to-point service will be a superior
service to network service.
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\899\ In its reply comments, MDEA requests that any such
flexibility afforded to transmission providers also be available to
network customers on a non-discriminatory basis.
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1571. Entergy states that it is important for the Commission to
recognize that the undesignation of network resources can be used by
network customers as a means of allowing merchant generators the
opportunity to displace existing resources in serving network and
native load. It argues that the Commission should be wary of limiting
the ability of a network customer to undesignate network resources, as
any such restriction will have broader implications than just the
ability of network customers, including the transmission provider's
wholesale merchant function, to sell that resource off-system with
point-to-point service.
1572. Entergy also requests that the Commission clarify that, while
network customers cannot redirect network service, nothing in this
prohibition prevents transmission providers from studying requests to
designate new network resources as displacements of existing network
resources. It argues that preventing network customers from using
automated study functions would significantly hinder the ability of
these customers to substitute their existing long-term resources with
short-term purchases of energy and capacity from merchant generators
when it is economical to do so.
1573. TDU Systems argue that network customers (and transmission
providers to the extent they serve native load on other systems) should
be able to schedule output on a firm basis from

[[Page 12468]]

network resources on one system to serve their network loads on
neighboring systems without having to designate and redesignate network
resources among the various transmission providers' control areas. TDU
Systems state this would permit LSEs that serve across multiple systems
to come closer to replicating the economic dispatch of control area
operators, significantly reducing the cost of discharging their service
obligations to the customers they serve.
1574. Xcel opposes requiring a transmission customer to undesignate
a network resource even in a situation where the resource is used only
transiently to provide off-system sales, arguing that such policy would
have significant adverse consequences for customers across the country.
It points out that it is native load customers that frequently benefit
from purchase of economy energy and that, if an undesignation was
required to deliver economy energy, most such transactions likely would
not occur. Xcel also argues the NOPR concepts relating to designation
of network resources and justification of economy energy purchases are
irrelevant in the context of an RTO where energy is procured and
dispatched throughout the RTO on a security constrained economic basis.
1575. EEI, joined by TDU Systems on reply, requests that the
Commission clarify that any changes to the procedures for designating
and undesignating network resources apply only to designations made
after the Final Rule becomes effective, in order to avoid substantial
adverse impacts on the reliability of service to network and native
loads. Duke and Pinnacle request that the Commission require NAESB to
develop standards that address undesignation and redesignation and
allow sufficient time for the NAESB process and for OASIS tools to be
developed and approved, prior to the implementation of a new policy.
TranServ asks that the undesignation of network resources be supported
on OASIS.
Commission Determination
1576. We disagree with commenters arguing that formal
undesignations and/or redesignations of resources used to make firm
third-party sales should not be required. The undesignation and
redesignation requirements exists not only to promote reliability, but
also to prevent undue discrimination, promote comparable treatment of
customers, and increase the accuracy of ATC calculations. We find that
the interest in advancing these policy goals overrides the minimal
burden and cost that submitting undesignations and/or redesignations
entails. We disagree with Xcel's argument that most economy energy
purchases that benefit its native load customers likely will not take
place if undesignation of network resources is required prior to firm,
third-party sales. First, the requirement to undesignate network
resources only applies to firm sales, while typical non-firm economy
energy transactions would not require undesignation. Second,
undesignating a network resource is not unduly burdensome, consisting
only of electronically submitting several items of information, as
described above. Therefore, we do not believe that a transaction
prevented purely as a result of the requirement to undesignate network
resources would have provided any significant economic value had it
taken place.
1577. We find that requests to allow ``informal undesignations''
appear to be simply requests to not require undesignations at all.
Since the salient feature of requiring an undesignation is that the
proper account is taken of the effects on ATC, informal undesignations,
which do not take proper account of the fact that a resource is no
longer a designated network resource, appear to serve no purpose.
1578. With regard to PNM-TNMP's argument that the Commission has
held that formal undesignation and redesignation are not required, so
long as the transmission provider treats its own resources and the
network customer's resources comparably, we believe PNM-TNMP
misunderstands our policies. We note that PNM-TNMP provides no citation
to Commission precedent to support its statement.
1579. Duke requests clarification as to whether a network customer
must undesignate a network resource in order to make a third-party sale
from that resource if the third-party sale would not itself qualify to
be designated as a network resource. We reiterate the existing
requirement that designated network resources must not be committed for
sale to non-designated third-party load or include resources that
otherwise cannot be called upon to meet the network customer's network
load on a noninterruptible basis. We find that a resource is
``committed for sale to a non-designated third party load'' if a power
purchase agreement for the sale from that resource provides for
penalties if service to the third party is interrupted in order to
serve the designated network load.
1580. In response to comments by EEI, NRECA, and Suez Energy NA, we
reiterate that all parties, including transmission providers serving
their native loads, are subject to these requirements for designation
and undesignation of network resources. Section 28.2 of the pro forma
OATT clearly provides that transmission providers are required to
designate resources and loads in the same manner as any network
customer. We encourage parties suspecting that transmission providers
or other network customers are not conforming to the requirements for
designating or undesignating network resources to report their concerns
using the Commission's Enforcement Hotline.
1581. EEI has requested clarification of whether the Commission is
changing its policy that transmission providers do not need to modify
network service agreements when network resources are undesignated and
redesignated. We have not proposed and do not intend to begin requiring
that network customers file modified service agreements when network
resources are designated or undesignated. As we explained in Dayton
Power and Light Co.,\900\ ``changes in network resources may require
the customer to file a request under OASIS, but a change to the
information recorded initially in the network service agreement is not
a requirement.'' EEI also argues that, if formal undesignations are
required, then each transmission provider would be required to submit a
revised application for network service under section 29.2 of the pro
forma OATT, both at the time the resource was undesignated and the time
that resource was redesignated. We disagree. There is no requirement
that a transmission provider submit a revised application for network
service every time a resource is designated or undesignated.
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\900\ 93 FERC ] 61,331 at 62,128 (2000).
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1582. In response to a request by South Carolina E&G, we clarify
that firm third-party sales may be made from an undesignated portion of
a network customer's network resources (i.e., a ``slice-of-system
sale''), so long as all of the applicable requirements are met. In
particular, the network customer must submit undesignations for each
portion of each resource supporting the third-party sale. If the
undesignation is temporary, then the request must be accompanied by a
request to redesignate the resource(s) on a specific date. When the
undesignation takes effect, the network customer must update the
capacities specified in its list of designated network resources posted
on OASIS.
1583. We agree with EEI and TDU Systems' comments that there should be

[[Page 12469]]

no minimum term for undesignations. We also agree with EEI and TDU
Systems' arguments that network customers should not be restricted to
temporarily undesignating network resources only for use in off-system
sales, and clarify that network customers are not so restricted.
1584. We agree with Progress Energy that network customers should
only make firm third-party sales when they have sufficient generation
reserves to serve their loads. However, the purpose of the pro forma
OATT is to provide nondiscriminatory transmission access, not to
enforce generation adequacy requirements.
1585. With regard to Progress Energy's request for flexibility to
evaluate potential impacts to the transmission system related to the
undesignation and redesignation of network resources, we find that
situations where undesignations cannot be accommodated due to
transmission constraints should be extremely rare, such as highly-
extraordinary counterflow situations. In such rare situations, the
transmission provider should attempt to remedy the situation without
denying the undesignation. If it is determined that the resource cannot
be undesignated without jeopardizing reliability, then the transmission
provider may deny the request for undesignation.
1586. We share NRECA's concern that allowing transmission providers
to deny undesignations for reliability reasons could give a direct
market competitor a significant opportunity to discriminate, but must
weigh this concern against our significant interest in preserving
reliability. We point out that transmission providers denying requests
for service or changes to service because of reliability concerns must
post a description of such denials in accordance with section
37.6(e)(2) of the Commission's regulations.\901\ Again, we encourage
any parties with concerns about denials of service or changes to
service by a transmission provider for reasons of reliability to report
their concerns to the Commission's Enforcement Hotline.
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\901\ 18 CFR 37.6(e)(2).
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1587. We deny requests by MDEA, Progress Energy, and Entergy that
network customers be given the flexibility to substitute new designated
network resources without abandoning the original transmission queue
position of an existing designated network resource. These parties seem
to be requesting that a network customer be allowed to be ``first in
line'' to use the ATC freed up by an undesignation of a network
resource, as long as the network customer uses that ATC to designate an
alternate resource. We disagree. Granting this request would, without
any apparent justification, put point-to-point customers seeking ATC
freed up by an undesignation at a disadvantage. We also disagree that,
if the Commission does not allow network customers this flexibility,
point-to-point service will be a superior service to network service.
Progress Energy seems to be arguing that the point-to-point customer's
ability to engage in a redirect affords that customer more flexibility
than the network customer. We point out that redirects of point-to-
point service on a firm basis are only on an ``as-available'' basis.
Firm point-to-point customers cannot redirect unless ATC is available
to support such a redirect after all higher-priority requests have been
accommodated.
1588. Entergy has requested clarification that, while network
customers cannot redirect network service, nothing in this prohibition
prevents transmission providers from studying requests to designate new
network resources as displacements of existing network resources.
Although Entergy's request is unclear, we reiterate that redirects are
not allowed within the context of network service and that network
customers are not ``first in line'' to use ATC freed up by their
undesignation of another network resource. Such requests must be
processed taking proper account of all competing transmission service
requests of higher priority.
1589. We disagree with TDU System's argument that network customers
should be able to schedule output on a firm basis from network
resources on one system to serve their network loads on neighboring
systems without having to designate and redesignate network resources
among the various transmission providers' control areas. Allowing
network customers to not formally undesignate and redesignate network
resources, even only when using those resources to serve their network
loads on neighboring systems, will necessarily result in inaccurate
evaluations of ATC. We reiterate that the burden associated with
undesignating and redesignating the resources is particularly light and
find that requiring network customers to make temporary undesignations
when making third-party firm sales is thus justified in light of the
ATC-related benefits.
1590. Xcel argues that the concepts relating to designation of
network resources are irrelevant in the context of an RTO where energy
is procured and dispatched throughout the RTO on a security constrained
economic basis. We agree that Day 2 RTOs do not use the physical rights
model contemplated under the pro forma OATT and, hence, not all the
provisions discussed here are directly applicable to Day 2 markets.
However, as we explain in section IV.C.2, RTOs and ISOs must make the
necessary filings to comply with the Final Rule, or demonstrate that
their existing tariff provisions are consistent with or superior to the
terms of the revised pro forma OATT.
1591. We agree with parties arguing that network customers should
not be required to use the new NAESB processes and OASIS tools to be
developed in response to this section until such time as the NAESB
standards and OASIS functionality have been developed and implemented.
However, once the new standards and functionality are in place, network
customers must use these new procedures to undesignate (whether temporarily
or as part of an indefinite termination) any network resources, regardless
of the date that those resources were originally designated.
7. Clarifications Related to Network Service
a. Secondary Network Service
1592. Section 28.4 of the existing pro forma OATT allows a network
customer to deliver energy to its network load from non-designated
network resources on an as-available basis without additional charge,
referred to as secondary network service. In Order No. 888, the
Commission described such energy as non-firm economy energy purchases
used to displace firm network resources.\902\
---------------------------------------------------------------------------

\902\ Order No. 888 at 31,751.
---------------------------------------------------------------------------

1593. The use of secondary network service to deliver purchased
power when a network customer is making off-system sales has been
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.\903\ 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.\904\ In accepting
the settlement, the Commission stated that ``[i]t is axiomatic that the
native load priority

[[Page 12470]]

cannot be used to complete sales that are not necessary to serve native
load.'' \905\ 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.\906\
---------------------------------------------------------------------------

\903\ Idaho Power Co., 103 FERC ] 61,182 at P 2 (2003) (Idaho Power).
\904\ Id. at P 4.
\905\ Id.
\906\ MidAmerican Energy Co., 112 FERC ] 61,346 at P 6 (2005).
---------------------------------------------------------------------------

NOPR Proposal
1594. In the NOPR, the Commission proposed to clarify that a
network customer may not use secondary network service to import energy
onto its system to support an off-system sale if the purchased power
does not displace the customer's own higher cost generation. The
Commission therefore proposed to modify section 28.4 of the pro forma
OATT to state that a network customer may use secondary network service
only to deliver economy energy and 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. The Commission further explained that all
participants engaging in purchases for resale must compete on a
comparable basis and use point-to-point service to complete all
segments of a purchase for resale off-system.
(1) Overview
Comments
1595. Several commenters agree with the Commission and support the
proposed clarification regarding the use of secondary network
service.\907\ Alberta Intervenors state that such a restriction ensures
fair competition among network customers and preserves the entitlement
of native load customers.
---------------------------------------------------------------------------

\907\ E.g., Alberta Intervenors, Southern, Suez Energy NA, and TAPS.
---------------------------------------------------------------------------

1596. Other participants oppose the proposal, arguing that it is
too broad and would interfere with legitimate activity by network
customers.\908\ EEI points out that, if a network customer is using all
available network resources but is still purchasing energy from non-
designated network resources to meet its peak native load, the network
customer would need to rely on secondary service to transmit this
purchase. In EEI's view, the Commission's proposal would prevent this
customer from using secondary service for this non-economy energy,
thereby interfering with its service obligations. To avoid such cases,
EEI, Pinnacle, and PGP recommend that secondary service not be limited
to economy energy only. NRECA states that the Commission's proposed
limitation on the use of secondary service would prevent network
customers from meeting their native load obligations in cases of
extreme weather and power outages. NRECA asks the Commission to state
explicitly in section 28.4 of the pro forma OATT that secondary service
may not be used to facilitate off-system third party sales, but rather
must be used to import power needed to serve network load economically
and efficiently. Entergy suggests the Commission abandon the limitation
and specify simply that secondary service cannot be used to serve loads
other than the network or native load.
---------------------------------------------------------------------------

\908\ E.g., EEI, Entergy, Northwest Parties, NRECA, Pinnacle,
PGP, Southern, and Xcel.
---------------------------------------------------------------------------

1597. Others argue that the restriction of secondary service to
only economy energy would have unintended consequences regarding the
purchase of renewable resources. Emerald, Flathead, and the Northwest
Parties state that, for reasons of customer demand or contractual
obligation, network customers may be required to purchase renewable
power that generally is more expensive than traditional thermal or
hydro electric generation. These purchases could displace less
expensive non-renewable resources, resulting in the need for the
network customer to make off-system sales of the non-renewable
resources. Emerald, Flathead, and Northwest Parties suggest that the
Commission revise the definition of ``economy energy'' to include an
exception for renewable energy. TAPS raises a similar issue, asking the
Commission to clarify that economy purchases as well as substitute
resources qualify for use of secondary service.
1598. EEI argues that the proposed limitation on secondary service
would require all network customers to engage in a specific form of
Commission-regulated economic dispatch, while requiring transmission
providers to evaluate each resource and become ``dispatch police.''
Entergy, SPP, and PGP agree. They assert that calculating the ``cost''
of power is problematic, inherently subjective and burdensome because
transmission providers lack the necessary knowledge to perform this
analysis. EEI, Entergy, SPP, and PGP instead suggest that the
Commission conduct periodic audits of secondary service to ensure
compliance with the requirements of OATT section 28.4 rather than
transmission providers.
1599. Although Powerex supports the Commission's restriction on the
proper use of secondary service, it also states that determining
whether or not an import would qualify as ``economy energy'' would be
difficult. Powerex requests that the Commission implement specific
rules in advance of such transactions to resolve uncertainty. It
suggests a capacity test to prevent preferential acquisition of
generation capacity, a tariff prohibition on the use by the network
customer or its energy affiliates of any export transmission capacity
made available on another intertie, and the modification of business
practices governing curtailment. In reply, Alberta Intervenors agree
with Powerex's proposed changes to curtailment practices, but disagree
with the other two elements. Alberta Intervenors assert that the tariff
prohibition causes inefficient use of ATC and that the capacity test is
not a stand-alone test and, as a result, would only be helpful as a
supplement to the ``economy energy'' test.
1600. Some participants raise other issues not addressed in the
NOPR. South Carolina E&G asks that the Commission clarify its policy on
purchases of economy energy, as well as provide a clear definition of
the acceptable trading practices--notably parking, hubbing, and
lending--under the current pro forma OATT. Emerald and Flathead request
the Commission to revise the definition of ``network load'' in section
1.24 of the pro forma OATT to allow point-to-point and network service
to the same discrete point of delivery. Morgan Stanley asks that the
Commission explain why using secondary service to make an off-system
purchase while there is any off-system sale during the same interval is
improper and whether the Commission will prohibit such activity only if
the off-system purchase and sale are part of a single transaction.
Finally, Xcel argues that the concepts relating to designation of
network resources are irrelevant in the context of an RTO where energy
is procured and dispatched throughout the RTO on a security constrained
economic basis.
Commission Determination
1601. In general, the Commission agrees with parties that favor an
expansion of the proper use of secondary network service. Although we
affirm our finding in MidAmerican,\909\ the Commission

[[Page 12471]]

recognizes that there are instances outside the proposed definition of
economy energy that warrant the use of secondary service in order to
serve network loads reliably. The Commission therefore declines to
adopt the definition of economy energy proposed in the NOPR and,
instead, will retain the existing section 28.4 that permits use of
secondary network service ``to deliver energy to its Network Loads.''
---------------------------------------------------------------------------

\909\ MidAmerican Energy Co., 112 FERC ] 61,346 at P 6 (2005)
(MidAmerican). Following an audit, the Commission found 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. The Commission stressed that the use of
secondary network service is not for the purpose of serving off-
system sales. Id. at P 6. The modifications to section 28.4 adopted
in this Final Rule do not alter that limitation.
---------------------------------------------------------------------------

1602. With respect to Powerex's comments, we reject the requested
clarifications as Powerex has not fully supported the use of its
proposed capacity test or other measures and has not demonstrated that
such test would not preclude legitimate uses of this priority as noted
in the NOPR. If parties suspect inappropriate use of secondary network
service, they may report the suspected activity to the Commission's
Enforcement Hotline or file a compliant with the Commission pursuant to
FPA section 206. Furthermore, the Commission's staff will continue to
provide oversight of all tariff-related activities through its
enforcement program.
(2) ``On an as-available basis''
1603. Section 28.4 of the existing pro forma OATT allows a network
customer to use secondary network service to deliver 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.
NOPR Proposal
1604. In the NOPR, the Commission proposed to modify section 28.4
of the pro forma OATT to clarify that a network customer does not need
to file an application for network service to receive secondary
service. Instead, the customer must merely request such 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).
Comments
1605. TDU Systems requests that the Commission clarify that time
constraints located in OATT section 18.3 are not applicable to
secondary service. Section 18.3 provides that requests for non-firm
point-to-point service shall not be made before certain specified
periods (more than 60 days in advance for monthly service, more than 14
days in advance for weekly service, etc.). TDU Systems states that some
of its members currently use secondary service to access economy off-
system purchases where intervening transmission constraints preclude
the designation of those resources as network resources for long
periods of time. Application of the non-firm point-to-point service
request deadlines would impair TDU Systems' ability to rely on
secondary service in those instances since they would extend beyond the
timing requirements set forth in section 18.3.
Commission Determination
1606. The Commission clarifies that secondary service must be
requested in accordance with section 18, including the timing
restrictions set forth in section 18.3, of the pro forma OATT.
Secondary service is on an as-available basis, and network customers
should not be permitted to lock in such service in advance of other
non-firm uses of available transmission. Allowing lower-priority
secondary service to have a scheduling advantage over non-firm
transmission would be inappropriate and would discourage the use of
non-firm transmission service, thereby minimizing the revenue credits
from non-firm transmission service that benefit all firm transmission
customers.
(3) Redirect of Network Service
1607. 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. We
are aware, however, 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.
NOPR Proposal
1608. The Commission proposed to clarify that network customers may
not redirect network service in a manner comparable to redirect of
point-to-point service, as network service involves no identified
contract path and is, therefore, not a directable service. Should a
network customer wish to substitute one designated network resource for
another, the Commission stated that it must terminate the existing
resource and designate a new one. The Commission explained that the
network customer could also 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.
Comments
1609. MISO strongly supports the Commission's clarification stating
that network service is not a directable service and believes that the
proposal appropriately clarifies the Commission's policy on redirect
service. TDU Systems and NRECA, however, believe that the Commission
should allow redirects of network service to deliver an LSE's
resources. TDU Systems assert that redirect of network service is
critical to LSEs serving native load across multiple transmission
systems because it allows the amount of flexibility necessary to manage
power supply costs. In addition, in TDU Systems' view, redirects have
no effect on system reliability.
1610. EEI argues on reply that it is unclear why redirects of
network service should be allowed. The advantage of redirecting firm
point-to-point service is that the customer does not have to pay an
additional charge for transmission service. However, both TDU Systems
and NRECA agree that network customers should pay an additional charge
for transmission service from network resources to off-system loads.
1611. Sacramento alternatively recommends that the Commission
remove the ban on off-system sales in order to maximize efficiency in
allocating transmission capacity. Occidental requests that the
Commission place all transmission, including on behalf of native load,
under the OATT guidelines to ensure that service is provided in a non-
discriminatory fashion.
Commission Determination
1612. The Commission clarifies that network customers may not
redirect network service in a manner comparable to the way customers
redirect point-to-point service. Point-to-point service consists of a
contract-path with a designated point of receipt and point of delivery.
Network service has no identified contract-path and is therefore not a
directable service. Network service instead provides for the
integration of new network resources and permits designation of another
network resource, which has the same practical effect as redirecting
network service. If the customer wants to permanently

[[Page 12472]]

substitute one designated network resource for another, it should
terminate the designation of the existing network resource and
designate a new network resource. The customer could then simply
request to redesignate its original network resource, if it so desires,
by making a request to designate a new network resource. The ability of
a network customer to also temporarily substitute one designated
network resource for another is addressed in section V.D.6.
1613. The Commission rejects Sacramento's proposal to remove the
ban on off-system sales. Network service is not based upon making off-
system sales, but rather on integrating a network customer's resources
with its load. Transmission providers must take point-to-point
transmission service for off-system sales and network customers should
be treated comparably. The Commission also rejects Occidental's request
to place all transmission, including on behalf of native load, under
the pro forma OATT. In Order No. 888-A the Commission clarified that a
``transmission provider is not required to `take service' under its own
tariff for the transmission of power that is purchased on behalf of
bundled retail customers.'' \910\ However, the Commission required that
transmission providers, pursuant to section 28.2 of the pro forma OATT,
must designate network resources and network loads in the same manner
as any network customer. Occidental offers no explanation why the existing
requirement of section 28.2 is not sufficient to address its concerns.
---------------------------------------------------------------------------

\910\ Order No. 888-A at 30,216.
---------------------------------------------------------------------------

b. Behind the Meter Generation
1614. In Order No. 888, in response to customers with load served
by ``behind the meter'' generation that sought to eliminate such load
from their network calculation, the Commission found that a customer
may exclude a particular load at discrete points of delivery from its
load ratio share of the allocated cost of the transmission provider's
integrated system. The Commission determined, however, that customers
electing to do so must seek alternative transmission service, such as
point-to-point transmission service, for any load that has not been
designated as network load for network service.\911\ In Order No. 888-
A, the Commission stated that it would permit a network customer to
either designate all of a discrete load as network load under the
network integration transmission service or to exclude the entirety of
a discrete load from network service and serve such load with the
customer's behind the meter generation and/or through any point-to-
point transmission service.\912\
---------------------------------------------------------------------------

\911\ Order No. 888 at 31,736.
\912\ Order No. 888-A at 30,258-61.
---------------------------------------------------------------------------

1615. The Commission did not address the subject of behind the
meter generation in the NOPR. A few commenters nonetheless proposed
revisions to the pro forma OATT to require netting of a network
customer's behind the meter generation against their network load as
described in more detail below.
Comments
1616. Some commenters argue that, in order to meet the objective of
eliminating discrimination in the provision of open access transmission
service, the Commission must require comparable treatment between
retail native load and network customers by allowing network customers
to net behind the meter generation against their network load.\913\
Specifically, such commenters argue that the Commission should modify
the current pricing rules for network service to allow an LSE's load
ratio share to reflect the reduction in load caused by behind the meter
generation serving retail load.\914\ In support of this position, these
commenters argue that assigning transmission-related costs to customers
that do not rely on the transmission provider's system to serve load is
inconsistent with the Commission's cost-causation principles.\915\ For
example, CAC/EPUC contends that customer generation does not cause the
transmission provider to incur costs when power is not being sold to or
taken off the grid. Similarly, AMP-Ohio argues that it is inappropriate
to assign a full load ratio share of transmission-related costs to
behind the meter generation customers that do not use the network to
the full extent of their load ratio shares.\916\ Further, CAC/EPUC
asserts that measuring the customer's use of the transmission system at
the customer's meter would be appropriate as it would demonstrate that,
if no power flows to the customer from the grid occur, that customer
has not used nor caused costs to be incurred by the grid for the
delivery of its energy requirements.
---------------------------------------------------------------------------

\913\ E.g., TAPS, TDU Systems, AMP-Ohio, and CAC/EPUC.
\914\ TDU Systems and TAPS also cite Consumers Energy, 98 FERC ]
61,333 at 62,410 (2002) (requiring that a transmission provider's
retail load associated with behind the meter generation be included
in the transmission provider's load ratio share to ensure
comparability between transmission providers and network customers
in the calculation of load ratio share).
\915\ E.g., AMP-Ohio, CAC/EPUC, and TAPS.
\916\ Citing Occidental Chemical Corporation v. PJM
Interconnection, L.L.C., and Delmarva Power & Light Company, 102
FERC ] 61,275 at P 14 (2003) (``Access charges for use of PJM's
transmission system should be allocated to network customers based
on a network customer's actual use of PJM's system, consistent with
the principle of cost-causation.''); PJM Interconnection, L.L.C.,
107 FERC ] 61,113, at P 28 (2004).
---------------------------------------------------------------------------

1617. Some commenters note that the Commission has approved PJM
netting provisions that apply to behind the meter generation used by
non-retail and wholesale customers to serve load.\917\ These same
commenters further observe that PJM has filed with the Commission to
expand participation in its behind the meter generation netting program
to include municipal, electric cooperatives, and electric distribution
transmission customers who take network service on the PJM system
pursuant to a settlement agreement filed by PJM on October 24, 2005 in
Docket No. EL05-127-000.\918\
---------------------------------------------------------------------------

\917\ E.g., AMP-Ohio, TAPS, and TDU Systems (citing PJM
Interconnection, L.L.C., 107 FERC ] 61,113 (2004), reh'g denied, 108
FERC ] 61,032 (2004) (PJM)).
\918\ This settlement agreement was accepted in PJM
Interconnection, L.L.C., 113 FERC ] 61,279 (2005).
---------------------------------------------------------------------------

1618. Further, both TAPS and AMP-Ohio argue that behind the meter
generation provides benefits to the transmission provider that should
be taken into account as part of system planning obligations. For
instance, AMP-Ohio asserts that utility planning can and should be able
to take into account the ability of customers to reduce their load on
the system with behind the meter generation. TDU Systems also notes
PJM's representation that allowing municipal and electric cooperative
system participation in behind the meter generation netting programs
increased reliability and demand response opportunities on PJM's
system.\919\ Similarly, TAPS observes that PJM's rules reserve the
right to call upon non-retail behind the meter generation under certain
conditions.
---------------------------------------------------------------------------

\919\ PJM Interconnection, L.L.C., 113 FERC ] 63,024 (2005).
---------------------------------------------------------------------------

Commission Determination
1619. The Commission is not persuaded to require transmission
providers to allow netting of behind the meter generation against
transmission service charges to the extent customers do not rely on the
transmission system to meet their energy needs. Commenters in this
proceeding have not provided any different arguments that were not
fully considered and addressed in Order No. 888, et al. The existing
pro forma OATT already permits transmission

[[Page 12473]]

customers to exclude the entirety of a discrete load from network
service and serve such load with the customer's behind the meter
generation and through any needed point-to-point transmission service,
thereby reducing the network customer's load ratio share. Therefore,
the Commission's existing policy already provides customers with the
opportunity to reduce network service costs to the extent a customer is
not relying on the transmission system to meet its energy needs.\920\
As the Commission concluded in Order No. 888-A, transmission customers
ultimately must evaluate the financial advantages and risks and choose
to use either network integration or firm point-to-point transmission
service to serve load.\921\ We believe it is most appropriate to
continue to review alternative transmission provider proposals for
behind the meter generation treatment on a case-by-case basis, as the
Commission did in the PJM proceeding cited by the commenters.
---------------------------------------------------------------------------

\920\ We note that EEI responds to allegations of undue
discrimination in the calculation of load ratio share costs in the
OATT Definitions section of this Final Rule.
\921\ Order No. 888-A at 30,260-61.
---------------------------------------------------------------------------

8. Transmission Curtailments
1620. In the NOPR, the Commission proposed no changes to the pro
forma OATT with respect to curtailment provisions for point-to-point
service (set forth in sections 13.6 and 14.7) and network service (set
forth in section 33). These provisions establish the terms and
conditions under which a transmission provider may curtail service to
maintain reliable operation of the system. Though several commenters
claimed in response to the NOI that the reasons for transmission
curtailments are difficult to discern, they did not provide sufficient
detail to indicate whether that difficulty is a result of inadequate
disclosure regulations, inadequate compliance with those regulations,
or some other reason. Therefore, the Commission sought further comment
on whether requiring transmission providers to post additional
information would improve transparency and the ability of customers to
make use of that information. The Commission also declined in the NOPR
to propose generic penalties for improper transmission curtailments.
Comments
1621. APPA suggests that the Commission require transmission
providers to produce additional information regarding firm transmission
service curtailments, including all circumstances and events
contributing to the need for such firm service curtailments, specific
services and customers curtailed (including the transmission provider's
own retail loads), and the duration of all such curtailments. TAPS also
urges the Commission to move toward maximum transparency and require
that sufficient information be provided for a customer to evaluate
whether it has been treated fairly as compared to other users of the
system including the transmission provider. TDU Systems suggests that
the Commission require investigations into the need for network
upgrades when Level 5 Transmission Loading Relief (TLR) procedures are
repeatedly employed. It also suggests that all Level 5 TLRs be posted
on OASIS and filed with the Commission. EEI agrees that providing
customers with information on transmission curtailments may help to
reduce confusion and suspicion concerning curtailments and suggests the
Commission request WEQ (NAESB) to develop a more detailed template for
posting information on curtailments that will be more useful to customers.
1622. Southern and other commenters \922\ state that sufficient
information regarding curtailments of transmission service is already
available on OASIS and believe that the existing rules requiring
transmission providers to make curtailment data available on OASIS are
adequate. Nevada Companies request the Commission be very specific if
it decides to mandate additional reporting requirements in order to
remove the burden of potential confidentiality problems from the
reporting entity.
---------------------------------------------------------------------------

\922\ PNM-TNMP and TranServ.
---------------------------------------------------------------------------

1623. Powerex is concerned about inconsistent communication and
curtailment procedures. It recommends that the Commission require three
additional measures including: Early notice of curtailment through the
use of the ``recall'' function on OASIS; a requirement to provide
credits for curtailed service when non-firm point-to-point transmission
service is interrupted; and requiring pro rata curtailments made prior
to the energy scheduling and tagging deadline (e.g., 20 minutes before
the operating hour) to be based on reservation rather than schedule. In
its reply comments, Seattle states support of pro rata curtailments
based on reservations. TDU Systems recommend that the Commission
require transmission providers to refund transmission charges to
curtailed customers, to discourage transmission providers from
overselling their systems. On reply, EEI and PNM-TNMP urge the
Commission to reject the proposals to require transmission providers to
refund transmission service charges to curtailed customers. They state
that transmission providers are following ATC calculation procedures,
but the planning process is not structured to overbuild the system to
ensure that no curtailments occur. They also argue that the rate of
return permitted in existing cost of service regulation does not
account for the risk of loss of curtailment-related revenues. Northwest
IOUs request the Commission examine whether pro rata curtailments of
transactions to relieve transmission constraints unnecessarily impose
burdens on transmission customers, because different curtailments on
different paths have different effectiveness in relieving a given
transmission constraint.
1624. Manitoba Hydro notes that MISO is the only RTO in the Eastern
Interconnection that does not redispatch when constraints occur on non-
market to market flows. Manitoba Hydro therefore urges the Commission
to encourage implementation of redispatch to the fullest extent before
resorting to curtailment. Seattle also supports modifying the pro forma
OATT to require reliability redispatch. Seattle proposes that
redispatch costs should be allocated to all classes of customers, and
transmission providers' cost recovery should be allowed through
automatic adjustment clause-type formulas to ensure all such costs are
recovered. It suggests that routine maintenance outages are resulting
in curtailments, which is an indication that transmission service is
oversold. Seattle further suggests that transmission providers prepare
a quarterly incident report for redispatch events detailing
circumstances resulting in the redispatch, system status information,
power transfer distribution factors, generator offers for redispatch
and other information supporting redispatch determinations, including
the basis for selecting generators called for redispatch.
1625. APPA, EEI and others comment that the Commission should not
impose generic penalties for improper curtailments, but treat
violations on a case-by-case basis. To ensure compliance with
curtailment posting information, Southwestern Coop suggests that the
Commission adopt generic penalties for curtailment violations, claiming
that penalties for transmission provider curtailment discrimination
would provide incentives for compliance.

[[Page 12474]]

Commission Determination
1626. The Commission concludes that the posting of additional
curtailment information is necessary to provide transparency and allow
customers to determine whether they have been treated in the same
manner as other transmission system users, including customers of the
transmission provider. A primary goal of this rulemaking is to remove
opportunities for transmission providers to unduly discriminate in
favor of their own or their affiliates' use of the transmission system.
Making transparent details concerning transmission curtailments so that
regulators and customers can verify that the transmission provider
curtailed services in accordance with its OATT is entirely consistent
with this goal. Commenters who oppose greater curtailment transparency
offer no convincing evidence to suggest that any harm or hardship of
doing so outweigh the benefits.
1627. We agree with suggestions for the posting of additional
curtailment information on OASIS and, therefore, require transmission
providers, working through NAESB, to develop a detailed template for
the posting of additional information on OASIS regarding firm
transmission curtailments. Transmission providers need not implement
this new OASIS functionality and any related business practices until
NAESB develops appropriate standards. These postings must include all
circumstances and events contributing to the need for a firm service
curtailment, specific services and customers curtailed (including the
transmission provider's own retail loads), and the duration of the
curtailment. This information is in addition to the Commission's
existing requirements: (1) When any transmission is curtailed or
interrupted, the transmission provider must post notice of the
curtailment or interruption on OASIS, and the transmission provider
must state on OASIS the reason why the transaction could not be
continued or completed; (2) information to support any such curtailment
or interruption, including the operating status of facilities involved
in the constraint or interruption, must be maintained for three years
and made available upon request to the curtailed or interrupted
customer, the Commission's Staff, and any other person who requests it;
and, (3) 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.
1628. The Commission rejects TDU Systems' proposal to require
reports filed with the Commission regarding Level 5 TLRs or to require
transmission providers to conduct investigations into the need for
network upgrades when TLR 5 procedures are repeatedly employed. TDU
Systems' proposal is unnecessary at this time in light of our
requirement that OASIS templates for curtailment information be
developed that will report occurrences of all levels of TLRs. This will
enable the Commission and customers to monitor TLR patterns and
frequency. Furthermore, the requirements imposed in this Final Rule for
congestion studies as part of the coordinated, open and transparent
planning requirement will allow stakeholders in the transmission
provider's planning process to request studies of those portions of the
transmission system where they have encountered transmission problems
due to frequent and recurring constraints.
1629. The Commission rejects the three proposals suggested by
Powerex. First, it is not necessary to provide early curtailment
notification through the OASIS ``recall'' function since the OASIS
currently provides a curtailment notification function. Transmission
providers should continue to use the OASIS Schedule Details template to
post information on the scheduled uses of the transmission system and
any curtailments and interruption thereof. Second, with respect to
Powerex's request to credit customers when their non-firm point-to-
point transmission service is interrupted, we find it unnecessary to
modify the pro forma OATT to adopt such crediting procedures,
consistent with our finding in Order No. 888-A that proper crediting
would vary depending on the specific rate design a company uses.\923\
Third, we believe that pro-rating curtailments based on reservations
would have the potential to impair reliability since the amount of
capacity actually curtailed using this approach would not address
actual power flows and, therefore, may be less than required to relieve
the overloaded facility.
---------------------------------------------------------------------------

\923\ See Order No 888-A at 30,276. In Allegheny Power System,
Inc., 80 FERC ] 61,143 at 61,549 (1997), the Commission clarified
that where a transmission provider has not proposed an express
crediting provision for the interruption of non-firm point-to-point
customers, the transmission provider must compute its bill to an
interrupted non-firm customer as if the term of service actually
rendered were the term of service reserved. In other words, if a
customer with a weekly reservation was interrupted after one day,
its bill must be computed as if it had a daily reservation, and if a
customer with a daily reservation was interrupted after ten hours,
its bill must be computed using the hourly rate applied to ten hours
of service.
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1630. The Commission also rejects TDU Systems' recommendation to
refund transmission charges to curtailed customers as a means of
disciplining instances of improper curtailments or transmission
providers' overselling their systems. We also reject proposals to
remedy improper curtailments through refunds of transmission charges to
curtailed customers or imposing generic penalties. Rather, the
Commission believes that addressing allegations of inappropriate
curtailment practices or transmission providers overselling their
transmission system are more effectively administered by the Commission
on a case-by-case basis.
1631. With respect to the proposal to require redispatch to be
performed to the fullest extent prior to curtailments, Manitoba Hydro
itself notes that the proposal is intended to address curtailment and
redispatch practices unique to MISO. Therefore we conclude that
Manitoba Hydro's concerns are best addressed on a case specific basis.
1632. Regarding Seattle's proposal to require what it characterizes
as ``reliability redispatch'' to benefit and be paid by all customer
classes, we note that this proposal would require expansion of the
network service ``reliability redispatch'' provisions to apply to
point-to-point service as well. The network service ``reliability
redispatch'' provisions in pro forma OATT sections 33.2 and 33.3 were
established in Order No. 888 to ensure comparable reliable service to
network customers as the service that the transmission provider
provides to its bundled retail load. These redispatch procedures
further provide for redispatch of not just the transmission provider's
own resources, but all network resources, including those of network
customers, when required to maintain the reliability of the system and
avoid the need for curtailments. Seattle has not demonstrated that its
proposal to extend ``reliability redispatch'' for point-to-point
service is required to ensure comparable, not unduly discriminatory
transmission service and has not addressed why network customer
resources should be redispatched for the benefit of point-to-point
customer. Accordingly, we decline to adopt Seattle's proposal. We
discuss redispatch issues more broadly in section V.D.1 of this Final Rule.

[[Page 12475]]

9. Standardization of Rules and Practices
a. Business Practices
1633. In Order No. 888, the Commission required each public utility
that owns, controls, or operates facilities used for transmitting
electricity in interstate commerce to file, pursuant to 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 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.\924\ The Commission has applied this policy using a ``rule of
reason'' test.\925\
---------------------------------------------------------------------------

\924\ E.g., Cleveland v. FERC, 773 F.2d 1368, 1376 (D.C. Cir. 1985).
\925\ 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 with
only 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).
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NOPR Proposal
1634. In the NOPR, the Commission proposed not to modify its
existing policy regarding the inclusion of rules, standards and
practices in a transmission provider's OATTs. The Commission expressed
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 business practices and
respond to the requests of its customers. The Commission also expressed
a belief that requiring transmission providers to file all of their
rules, standards, and practices in their OATTs would be impractical and
potentially administratively burdensome.
1635. The NOPR further noted that there is broad consensus 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. The Commission agreed and proposed to
require transmission providers to post on OASIS all of their rules,
standards, and practices that relate to transmission services. The
Commission sought comment on how best to determine what ``relates'' to
transmission service to facilitate a consistent interpretation and to
minimize discretion on what rules, practice and standards should be
posted on OASIS.
1636. On the particular issue of creditworthiness and security
requirements, the Commission preliminarily concluded that the mere
posting of information on OASIS was insufficient. The Commission
proposed that each transmission provider's OATT 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.
The Commission therefore proposed 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. Consistent with the Creditworthiness Policy
Statement,\926\ the Commission proposed to require the new Attachment L
to include such qualitative and quantitative criteria necessary to
determine the level of secured and unsecured credit required, with
supplementation in a credit guide or manual to be posted on OASIS.\927\
The Commission sought comment on whether the proposal is unduly burdensome.
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\926\ Policy Statement on Electric Creditworthiness, 109 FERC ]
61,186 (2004) (Creditworthiness Policy Statement).
\927\ The Commission proposed 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.
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Comments
Included in Open Access Transmission Tariffs
1637. Many commenters express support for the continuation of the
current Commission policy which requires the inclusion in the
transmission provider's OATT of only those rules, standards and
practices that significantly affect transmission rates and
services.\928\ These commenters generally state that any rule,
practice, term or condition that could result in limiting access to
transmission services, including rates and charges for service, should
be included in the OATT and should be subject to Commission scrutiny.
Examples given include all rules and practices affecting calculation of
ATC, creditworthiness criteria, and rules or practices affecting the
transmission provider's regional planning process. Commenters argue
that Commission oversight is necessary to ensure that these rates,
charges, rules, practices, terms or conditions of transmission service
are reasonable and afford comparable treatment for wholesale customers.
---------------------------------------------------------------------------

\928\ E.g., ISO/RTO Council, CAISO, LDWP, MISO/PJM States, PGP,
and PNM-TNMP.
---------------------------------------------------------------------------

1638. Other commenters advocate further inclusion of rules,
standards and practices in the transmission provider's OATT. Morgan
Stanley believes that business practices manuals should be incorporated
into each OATT and filed with the Commission for approval. Morgan
Stanley states that if this is not required then, at a minimum, each
OATT should provide for a process to use when the transmission provider
wishes to amend its business practices manuals. For example,
transmission providers should provide notice to all affected parties of
an intent to make a change, a mechanism to receive stakeholder feedback
on the proposed change, and a minimum period of time between the final
implementation decision and the effective date of the proposed change
(e.g., 30-60 days after final decision). Southwestern Coop, however,
maintains that transmission providers should not be allowed to change
their rules, standards and practices that affect the justness and
reasonableness of OATTs without prior Commission review. Southwestern
Coop states that the Commission should require all rules, standards and
practices relating to transmission services to be included in the OATT
filed with the Commission, because otherwise it cannot ensure that
jurisdictional rates are just and reasonable.
Posted on OASIS
1639. Many commenters also express support for the proposed
requirement that all rules, standards and practices that are not
required to be included in a transmission provider's OATT and that
affect a transmission provider's provision of transmission service be
posted on OASIS.\929\ Commenters generally state that these postings
will allow for increased transparency, while affording the transmission
provider flexibility to make revisions rather than

[[Page 12476]]

having to amend the OATT each time a change occurs.
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\929\ E.g., CAISO, EEI, MidAmerican, MISO/PJM States, Nevada
Companies, PJM, Powerex, Santa Clara, Suez Energy NA, TDU Systems, and TAPS.
---------------------------------------------------------------------------

1640. Powerex argues that the transmission provider also should be
required to post data used to calculate ATC, any metrics the Commission
adopts regarding the transmission provider's performance of system
impact and facilities studies, information concerning both planned and
unplanned transmission outages, and a transmission provider's business
practices, tariff, organizational charts and job descriptions of its
employees.
1641. Southern takes issue with the use in the NOPR of the phrase
``all of their rules, standards and practices,'' stating that language
suggests that a transmission provider might be required to reduce each
detail of its business practices to writing, which could be overly
burdensome. In addition, Southern believes that any rule relating to
posting requirements on OASIS should have certain mechanisms to allow
the transmission provider to deviate from posted practices when
necessary. In contrast, ELCON states that any rule, standard or
practice used by the transmission provider and any of its employees to
approve or disapprove a request for service should be committed to
writing and posted. Similarly, TranServ argues that transmission
providers should be required to post on OASIS any criteria applied by
the transmission provider to any attribute of a transmission or
ancillary service request for the purpose of determining whether the
service request should be approved or denied.
1642. Northwest IOUs suggests that the Commission should adopt a
``rule of reason'' test for matters required to be posted on the OASIS
similar to the test applied to matters required to be included in the OATT.
Creditworthiness
1643. Several commenters support the inclusion of a separate
Attachment L to the pro forma OATT outlining creditworthiness
requirements, asserting that Attachment L will standardize credit
procedures and security requirements and increase transparency.\930\
Suez Energy NA states that the proposal is not unduly burdensome, that
the procedures proposed are not different from the Creditworthiness
Policy Statement or the procedures already imposed in individual cases,
and that the Commission is merely proposing to apply an existing
requirement in a non-discriminatory manner.
---------------------------------------------------------------------------

\930\ E.g., APPA, East Texas Cooperatives, Lassen, MISO/PJM
States, Nevada Companies, NRECA, PGP, Powerex, Southern, Suez Energy
NA, TANC, and TAPS.
---------------------------------------------------------------------------

1644. Other commenters propose modifications to the credit-related
proposals set forth in the NOPR. TAPS urges the Commission to require
the transmission provider to adopt a two-part creditworthiness
assessment in order to facilitate non-burdensome and fair assessment of
creditworthiness. TAPS recommends that a standard similar to the
Florida Power Corp. OATT be applied, which provides that customers with
``satisfactory long-term payment history'' and a minimum credit rating
of Baa2 (Moody's) or BBB (S&P) would not have to post any credit
security. If a customer fails to meet the threshold test, TAPS states
that the transmission provider would perform a transparent credit
assessment that is consistent with the Commission's Creditworthiness
Policy Statement and the credit policies developed for use in regional
transmission organizations such as MISO and SPP. According to TAPS,
since quantitative measures sometimes understate public power
creditworthiness, transmission providers will need to weigh qualitative
factors more heavily than quantitative factors in assessing public
power creditworthiness. For public entities that fail the threshold
test, TAPS states that transmission providers should use outstanding
bond indebtedness as a proxy for tangible net worth for those entities
whose energy and transmission service payments receive priority over
bond payments.
1645. PJM generally agrees with the creditworthiness proposals,
except for inclusion in the OATT of the actual detailed algorithms used
to calculate credit scores, stating that those algorithms, as the
Commission recognized,\931\ may change over time. In PJM's view,
requiring all such changes to be approved by the Commission would be
unnecessarily burdensome to both the Commission and the transmission
provider. PJM recommends that the overall framework of the credit
determinations be included in the OATT, while the detailed algorithms
be posted on OASIS to meet transparency goals. PJM also recommends that
the Commission accept, as an option, a regularly-updated posting on the
transmission provider's Web site of each customer's available credit
and collateral requirement as sufficient notification for most changes
in credit available and credit requirements. PJM further recommends
that only significant and sudden reductions in credit available (for
example, those greater than 25 percent within a one-month period) be
subject to an active notification requirement.
---------------------------------------------------------------------------

\931\ See NOPR at P 456.
---------------------------------------------------------------------------

1646. TVA recommends the Commission consider two fundamental
principles as it standardizes creditworthiness terms and conditions.
First, as long as qualitative factors are part of the equation (and TVA
agrees that they should be), TVA states that certain subjective
judgments by the transmission provider will be required. TVA encourages
the Commission to provide guidance on appropriate criteria to consider
in making these judgments, but not to remove entirely from the process
the flexibility necessary for individual assessments of customer
creditworthiness. Second, TVA states that transmission providers may
have to impose different security requirements as a result of
differences in statutes, regulations, or other legal requirements. For
example, TVA states that its ability to incur debt is limited by
section 15d(a) of the Tennessee Valley Authority Act \932\ and,
therefore, it may need to impose security requirements that are
stricter than those of a public utility, as the Commission has
previously recognized.\933\ TVA requests that the final rule respect
these differing legal obligations and provide corresponding flexibility
in credit decisions among transmission providers.
---------------------------------------------------------------------------

\932\ 16 U.S.C. 831n-4.
\933\ Citing East Ky. Power Coop., Inc., 114 FERC ] 61,035 at P
56 (2006).
---------------------------------------------------------------------------

1647. A number of commenters oppose the Commission's proposed
creditworthiness policy.\934\ In general, these commenters believe that
each transmission provider should have the flexibility to make and
change creditworthiness procedures without the delay of obtaining
Commission approval. They also argue that the Commission's goal of
transparency could be better achieved by requiring the posting of a
transmission provider's creditworthiness policy on OASIS.\935\ Xcel and
MidAmerican assert that the Commission's proposal would decrease a
transmission provider's ability to timely respond to changing market
and financial conditions and, therefore, creditworthiness and security
requirements should simply be posted on OASIS. Southern believes that
the Commission should permit but not require transmission providers to
file their creditworthiness and security procedures as part of their
OATTs.\936\

[[Page 12477]]

Southern also asks that the Commission allow a transmission provider,
in its compliance filing, to request a determination that its current
creditworthiness policies and practices are acceptable under the new
Commission policies. Similarly, ISO-New England states that this
rulemaking should not modify the ISO-New England Financial Assurance
and Billing Policies, which are already on file with the Commission.
---------------------------------------------------------------------------

\934\ E.g., MidAmerican, Southern, PNM-TNMP, NorthWestern, and Xcel.
\935\ E.g., PNM-TNMP, EEI, and MidAmerican.
\936\ Southern states that it already includes creditworthiness
and security requirements in its OATT since the Commission issued
its Creditworthiness Policy Statement.
---------------------------------------------------------------------------

1648. CAISO states that although the NOPR requirements concerning
credit and security requirements do not appear unduly burdensome, it is
concerned that the Commission may apply these requirements in a manner
that will impose an undue burden on transmission providers and
effectively eliminate the ability of transmission providers to
supplement basic elements with a credit guide or manual. CAISO and
MidAmerican further state that there is no legitimate reason to treat
credit policies and procedures any differently than the other rules,
practices and standards that the Commission permits to be included on
OASIS and does not require to be filed as part of the tariff. Santa
Clara recommends that if the Commission decides to require
creditworthiness and security policies to be posted on OASIS rather
than included in the OATT, then it should require at least a 30-day
notice period for changes in the credit policies.
Commission Determination
1649. The Commission adopts the NOPR proposal to continue to
require only those rules, standards, and practices that significantly
affect transmission service be incorporated into a transmission
provider's OATT. The Commission further affirms the use of a ``rule of
reason'' to determine what rules, standards, and practices
significantly affect transmission service and, as a result, must be
included in the transmission provider's OATT.
1650. 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 MISO's business practices
manuals 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 an FPA section 205 filing because ``they mostly involve general
operating procedures.'' 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. In that instance, the Commission found that the details
contained in the standards were practices that could significantly
affect the terms and conditions of service and, therefore, under the
Commission's ``rule of reason'' must be filed under section 205 of the
FPA.\937\
---------------------------------------------------------------------------

\937\ 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 (requiring that the SPP OATT provide
sufficient information for market participants to fully understand
SPP's implementation of an imbalance market), reh'g denied, 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).
---------------------------------------------------------------------------

1651. Comments received in response to the NOPR confirm that there
is broad support for the Commission's existing practice, requiring only
those rules, standards, and practices that significantly affect
transmission service, and the use of the ``rule of reason'' test to
identify those rules, standards, and practices. The Commission
disagrees with parties arguing that all of a transmission provider's
rules, standards, and practices should be incorporated into its OATT.
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.
1652. The Commission instead requires transmission providers to
post on their public Web sites all rules, standards, and practices that
relate to transmission service and provide a link to those rules,
standards, and practices on OASIS. We conclude that it would not be
appropriate to place the rules, standards, and practices only on OASIS
as some transmission providers use certificates to restrict access to
their OASIS sites. By providing a link on OASIS to the rules,
standards, and practices that are otherwise publicly posted, the
Commission ensures that all potential customers will have access to the
information necessary for them to understand the terms and conditions
of service. We amend section 4 of the pro forma OATT to expressly
establish this posting requirement.
1653. We note that we already require certain rules and practices
to be posted on OASIS.\938\ We find that it is now necessary to also
require that all rules, standards or business practices that relate to
the terms and conditions of transmission service, and how that
transmission service is provided to customers, to be detailed, clearly
stated on the transmission provider's public Web site, with a link to
this information on OASIS.\939\ We emphasize that this requirement
applies to all such rules, standards, and practices, currently written
or otherwise.\940\ While we acknowledge this requirement will result in
some burden to transmission providers, we find that this approach is
necessary to provide greater transparency and mitigate the potential
for undue discrimination against customers taking service under the
transmission provider's OATT. Further, our holding is not intended to
eliminate all discretion under the pro forma OATT; rather, we recognize
that certain tariff provisions require consideration of the specific
facts and circumstances related to particular service requests.\941\ We
merely require that, if the transmission provider uses standards, rules
or business practices to administer its OATT, such standards, rules or
business practices must be available for public inspection. Moreover,
we note that our actions here are consistent with actions we have taken
in recent proceedings. For example, the Commission has required that
certain business practices manuals be posted

[[Page 12478]]

and made available for public view on a permanent basis.\942\ As in
those cases, we find that making rules, standards, and practices
readily accessible will serve as a tool to supplement each transmission
provider's OATT and facilitate fair and open access to the transmission
grid.
---------------------------------------------------------------------------

\938\ See, e.g., Order No. 889 at 31,588-89; 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 at P 79.
\939\ If a particular rule, standard or practice conflicts with
an OATT provision, the OATT of course shall govern in all
circumstances. Moreover, as noted in the NOPR, we emphasize that
posting rules, practices and standards--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 their transmission provider, 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.
\940\ With respect to the business practices developed by NAESB,
there may be certain copyright restrictions that limit the
transmission provider's ability to post those practices on its own
Web site. In such instances, we expect that the transmission
provider will reference any NAESB practices it uses and provide a
link on its public Web site to the NAESB Web site in order to
provide interested parties with a means to access the copyrighted material.
\941\ The circumstances and manner in which a transmission
provider exercises its discretion under its OATT must be posted in
accordance with 18 CFR 37.6(4).
\942\ See, e.g., Midwest Independent Transmission System
Operator, Inc., 108 FERC ] 61,163 at P 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).
---------------------------------------------------------------------------

1654. To provide guidance to the transmission providers as to
whether a particular rule, standard, or practice ``relates to''
transmission service, and therefore warrants posting, the Commission
believes the MAPP Policies and Procedures for Transmission Operations
manual is a good example of the type of information that relates to the
terms and conditions of transmission service. For example, the MAPP
manual sets forth information supplementing its OATT pertaining to (1)
transmission service requests on the MAPP OASIS site, (2) the
retraction of an accepted or counteroffer transmission request, (3)
timing requirements for transmission service requests, (4) methods to
accommodate a firm transmission request with redispatch, and (5)
transmission service charge implementation procedures. Other examples
include detailed information regarding tagging, scheduling, billing and
other matters provided in other RTO manuals. This is the type of
information that clearly relates to transmission service and therefore
must be reduced to writing and publicly posted.
1655. We also agree with requests to require a transparent process
for amending rules, standards, and practices previously posted by a
transmission provider. We therefore require each transmission provider
also post on its public Web site (with a corresponding link on OASIS) a
statement of the process by which the transmission provider will amend
these rules, standards, and practices that are accessible via OASIS. As
part of this process, the transmission provider must specify a
mechanism to provide reasonable notice of any proposed changes to a
posted business practice and the respective effective date of such
change.\943\ We amend section 4 of the pro forma OATT to formalize this
posting requirement and obligate transmission providers to follow the
amendment procedures specified by the transmission provider. As with
the requirement to post the underlying standards, rules and practices,
we believe the amendment procedures required here will increase
transparency and help minimize opportunities for undue discrimination.
---------------------------------------------------------------------------

\943\ As part of their business practice amendment procedures,
transmission providers may adopt such additional procedures they
deem appropriate, such as opportunities for comment to proposed
changes to rules, standards, and practices.
---------------------------------------------------------------------------

1656. The Commission also adopts the NOPR proposal and amend the
pro forma OATT to include a new Attachment L.\944\ We find that the
transmission provider's basic credit standards significantly affect
transmission service and, therefore, must be included in the pro forma
OATT. This will ensure that all customers have clear information as to
the credit process and standards used by a transmission provider to
grant or deny transmission service and, in turn, will serve to prevent
undue discrimination and eliminate a potentially significant barrier to
entry in the provision of service. Most importantly, by making
Attachment L a part of the pro forma OATT, customers will have an
opportunity to comment on any changes to the standards proposed by a
transmission provider in a rate filing with the Commission.
---------------------------------------------------------------------------

\944\ As with new Attachment K to the pro forma OATT, regarding
transmission planning, we acknowledge that some transmission
providers may already have attachments to their OATTs labeled with
the letter ``L,'' in which case transmission providers are free to
label their credit procedures OATT attachment with the next
available letter.
---------------------------------------------------------------------------

1657. To that end, each transmission provider's Attachment L must
specify the qualitative and quantitative criteria that the transmission
provider uses to determine the level of secured and unsecured credit
required. Attachment L must also contain 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 will allow the transmission provider to supplement
Attachment L with a credit guide or manual to be posted on OASIS.
1658. We disagree with commenters that claim requiring this
information in an attachment to each transmission provider's OATT will
hinder the transmission provider's ability to timely respond to
changing market and financial conditions. Because Attachment L requires
only a summary of credit requirements and other information, we expect
the need to revise Attachment L will occur infrequently. As suggested
by PJM, detailed information, such as the algorithms used by the
transmission provider to determine credit scores, can be posted on
OASIS along with other information that relates to the provision of
transmission service. Thus, the requirement we are imposing should not
be overly burdensome.
1659. At the same time, we agree that transmission providers need
flexibility in determining credit requirements in light of qualitative
and quantitative factors, as we recognized in the NOPR and the
Creditworthiness Policy Statement. We believe the requirements adopted
in this Final Rule allow for such flexibility. By requiring
transmission providers to consider both quantitative and qualitative
factors, the particular circumstances surrounding public power entities
can be recognized. We agree, moreover, with TVA that the transmission
provider's credit policies must be consistent with its legal
obligations and expect that interested parties will bring any legal
conflicts to our attention on review of the transmission provider's
compliance filing.
1660. With regard to requests to find existing credit policies
consistent with the requirements of the Final Rule, all transmission
providers will be required to demonstrate compliance with all aspects
of the Final Rule either by implementing the reforms adopted today or
showing that departures are consistent with or superior to the terms
and conditions of the pro forma OATT, as modified by this Final Rule.
The procedural mechanisms for making such a showing provided for in
section IV.C above give transmission providers the opportunity to
demonstrate that retention of their existing credit practices is
appropriate.
1661. Finally, with regard to Santa Clara's request to require the
transmission provider to provide at least a 30-day notice period for
changes in creditworthiness and security policies that are posted on
OASIS, we explain above that each transmission provider must identify
and incorporate a specific process in its OATT for amending business
practices that are posted on OASIS. Such practices include those

[[Page 12479]]

that describe and implement its creditworthiness and security policies.
b. Liability and Indemnification
1662. In Order No. 888, the only liability provisions included in
the pro forma OATT related to force majeure and indemnification.\945\
Section 10.1 of the pro forma OATT provides that neither the
transmission provider nor the transmission customer will be considered
in default as to any obligation under the tariff if prevented from
fulfilling the obligation due to an event of force majeure. A party
whose performance under the tariff is hindered by an event of force
majeure, however, is required to make all reasonable efforts to perform
its obligations under the tariff. With respect to indemnification,
under section 10.2 of the pro forma OATT, the transmission customer
indemnifies the transmission provider against third party claims
arising from the transmission provider's performance of its obligations
under tariff on behalf of the transmission customer, except in cases of
negligence or intentional wrongdoing by the transmission provider.
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\945\ Order No. 888-B at 62,081
---------------------------------------------------------------------------

(1) Force Majeure
Comments
1663. Santa Clara queries whether the Commission intended to make
the transmission provider's performance of its obligations less
burdensome by using the phrase ``all reasonable efforts'' instead of
``due diligence'' in the force majeure provision in section 10.1 of the
pro forma OATT is. In either case, Santa Clara requests the Commission
to consider the use of the most stringent term when addressing a
transmission provider's obligation to perform under its tariff.
Commission Determination
1664. The Final Rule retains the current ``all reasonable efforts''
standard in the force majeure provision. Santa Clara does not explain
how the ``all reasonable efforts'' standard may be more or less
stringent than the ``due diligence'' standard. Further, as the
Commission explained in Order No. 888, this protection against
unexpected and unpredictable events is appropriately made available to
both the transmission provider and transmission customer. We therefore
find that the clarification requested by Santa Clara is unnecessary.
(2) Indemnification/Limitation of Liability
Comments
1665. Several commenters \946\ urge the Commission to change the
indemnification provision to protect transmission providers from
liability except in the case of gross negligence or intentional
misconduct, thereby exempting the transmission provider from liability
for acts of ordinary negligence. These commenters also request that the
Commission add to the pro forma OATT a new provision clarifying that
the transmission provider would not be liable to any transmission
customer or third party for direct, incidental, consequential,
indirect, or punitive damages arising from services provided under the
tariff, except in cases of gross negligence or intentional misconduct
(in which case, EEI, and Northwest IOUs propose, liability would be
limited to direct damages). These commenters note that the Commission
has allowed transmission providers this protection in the tariffs of
MISO, PJM, ISO New England, SPP, and their member transmission owners
and generators, but it has not fully explained its basis for treating
non-RTO member transmission providers differently from RTOs and ISOs.
EEI further notes that the Commission accepted similar liability
protection in the Large Generator Interconnection Agreement (``LGIA'')
and in natural gas pipeline tariffs.\947\ EEI requests that this
liability limitation be added to the pro forma transmission service
agreement that would apply to transmission customers acting in good
faith to carry out the directives of a transmission provider.
---------------------------------------------------------------------------

\946\ E.g., Southern, EEI, and Northwest IOUs.
\947\ Citing Article 18, Large Generator Interconnection
Agreement; ANR Pipeline Co., 98 FERC ] 61,218, order on tariff
filing, 100 FERC ] 61,132 (2002).
---------------------------------------------------------------------------

1666. With respect to third party indemnification, EEI notes that
the Commission reasoned in SPP that, even though a broader liability
limitation would relieve a transmission provider from liability for
ordinary negligence, that provision only applies to transmission
customers under the tariff. EEI states that there are many other
entities that could initiate legal action against the transmission
provider in connection with the provision of transmission service,
thereby making an adequate indemnification provision in the pro forma
OATT necessary for the same reasons as the limited liability provision.\948\
---------------------------------------------------------------------------

\948\ Citing Southwest Power Pool, Inc., 112 FERC ] 61,100 at P
39 (2005).
---------------------------------------------------------------------------

1667. EEI contends that the addition of the Commission's new EPAct
2005 authority to establish mandatory reliability standards to provide
open access transmission service to all customers, regardless of their
risk profile, makes it an appropriate time to revisit the liability
provisions in the OATT. According to EEI, a limitation on liability in
the pro forma OATT should be viewed as a necessary element of the
implementation of the Commission's reliability authority. Because
transmission providers cannot deny service to particular customers
based on the risk of potential damages, EEI and Southern assert that
all transmission providers should be protected from certain risks
associated with this obligation to serve. EEI argues that increased
protection from liability would lower the cost of capital for new
transmission projects and promote the expansion of transmission
infrastructure. EEI further argues that the technological complexity of
modern utility systems and the potential for service interruptions
unrelated to human errors justify liability limitations. According to
EEI, a limitation on liability to direct damages puts the risk on those
customers with special reliability needs, rather than spreading the
risk among all customers.
1668. EEI notes that the Commission has denied requests for
exemptions from liability for ordinary negligence in the
indemnification provision on the grounds that liability and
indemnification were ``separate issue[s]'' and that transmission
providers seeking liability protections could rely on state laws.\949\
EEI argues, however, that an OATT and the accompanying service
agreement constitute a contract between the transmission provider and
the customer that is established pursuant to federal law and, as a
result, it is not at all clear that a state law limitation on liability
would apply. Southern asserts that adopting liability limits would
provide uniformity, certainty, and reduce risk since reliance on state
law is an issue not free from doubt.
---------------------------------------------------------------------------

\949\ Citing Order No. 888-A at 30,301.
---------------------------------------------------------------------------

1669. Entegra argues on reply that the NOPR did not contemplate any
modification to these provisions of the pro forma OATT and neither EEI
nor Southern has established a nexus between such a modification and
the goals set forth in the NOPR. TDU Systems on reply similarly argue
that EEI's request is outside the scope of the rulemaking and neither
EEI nor Southern show a change in circumstance justifying a new limitation

[[Page 12480]]

on liability. Immunizing transmission providers from these liability
risks, TDU Systems contend, would simply transfer risk to customers
that have no control over the transmission provider's negligence.
Entegra and TDU Systems further argue that Southern previously sought
the same relief in a tariff filing rejected by the Commission less than
a year ago, stating that the Commission thus already rejected the
notion that Southern was similarly situated to the RTOs and ISOs that
have this protection.\950\ Entegra notes that Southern did not seek
rehearing of that order and its comments here are therefore an
impermissible collateral attack on a final Commission order. As for the
argument regarding EPAct 2005, TDU Systems note that the Commission
presumably was aware of its new reliability authorities when it issued
the Southern order four months after EPAct was enacted.
---------------------------------------------------------------------------

\950\ See Entegra Reply (citing Southern Company Services, Inc.,
113 FERC ]61,239 (2005)).
---------------------------------------------------------------------------

1670. TDU Systems also point out that the tariff language proposed
by EEI would not protect a transmission customer from being sued by a
third party for the negligence or willful misconduct of the
transmission provider. In such lawsuits, TDU Systems claim, a third
party would not be limited to direct damages. According to TDU systems,
any indemnification as between the transmission provider and the
transmission customer that is limited to direct damages would leave the
customer holding the bag for the indirect damages caused by the
transmission provider's negligence or willful misconduct.
Commission Determination
1671. We will retain the current liability protections in the pro
forma OATT for the same reasons that the Commission has rejected
similar past proposals. While the Commission explained in Order Nos.
888-A and 888-B that the pro forma tariff was not intended to address
liability issues, as EEI notes, the Commission stated that liability
was a separate issue from indemnification.\951\ The Commission further
explained that transmission providers were not precluded from relying
on state laws that protected utilities or others from claims founded in
ordinary negligence.\952\ The Commission declined to adopt a uniform
federal liability standard and decided that, while it was appropriate
to protect the transmission provider through force majeure and
indemnification provisions from damages or liability when service is
provided by the transmission provider without negligence, it would
leave the determination of liability in other instances to other
proceedings.\953\
---------------------------------------------------------------------------

\951\ See Order No. 888-A at 30,301 and Order No. 888-B at
62,081 (section 10.2 of the pro forma OATT).
\952\ Order No. 888-A at 30,301.
\953\ Order No. 888-B at 62,081.
---------------------------------------------------------------------------

1672. On the issue of a negligence standard for the indemnification
provision, we decline to depart from our policy set forth in Order No.
888, as affirmed in Order No. 888-A and subsequent orders.\954\ In
Order No. 888, the Commission stated:
---------------------------------------------------------------------------

\954\ See, e.g., Northeast Utilities Services Co., 111 FERC ]
61,333 (2005) (Northeast Utilities).

We have limited the indemnification portion of the provision so
that it is now only the transmission customer who indemnifies the
transmission provider from the claims of third parties. The customer
is taking service from the transmission provider and may
appropriately be asked to bear the risks of third-party suits
arising from the provision of service to the customer under the
tariff. We find that this new indemnification provision would be too
strict if it required customers to indemnify transmission providers
even in cases where the transmission provider is negligent.
Accordingly, the revised provision provides that the customer will
not be required to indemnify the transmission provider in the case
of negligence or intentional wrongdoing by the transmission provider.\955\
---------------------------------------------------------------------------

\955\ Order No. 888 at 31,765.

1673. The Commission subsequently addressed this issue in Northeast
Utilities. There, the Commission found that a broader customer
indemnification obligation that would include ordinary negligence would
not give any incentive to the transmission provider to avoid negligent
actions. In Northeast Utilities, the Commission explained again why it
permitted a gross negligence exception in the pro forma LGIA section
18.1 in order to further limit the transmission provider's liability.
As the Commission explained in Order No. 2003, interconnection warrants
a different standard because it presents a greater risk of liability
than exists for the provision of transmission service. The Commission
further found that because risk exposure can increase interconnection
costs, a broader indemnity standard is appropriate in the
interconnection context.\956\
---------------------------------------------------------------------------

\956\ Order No. 2003 at P 636; Order No. 2003-A at 31,162.
---------------------------------------------------------------------------

1674. Further, unlike Order No. 888 in which the transmission
customer indemnifies the transmission provider, in Order No. 2003 the
indemnity provision is expressly bilateral. In Order No. 2003 the
interconnecting generator and the transmission provider each
indemnifies the other from all damages to third parties arising under
the LGIA from conduct on behalf of the indemnifying party, except in
cases of gross negligence. Given that the indemnification provision in
the pro forma LGIA is bilateral, in contrast to the pro forma OATT, it
is reasonable to permit a gross negligence standard in the case of an
interconnection.
1675. We also reject commenters' assertions that the liability
standard the Commission has approved for RTOs/ISOs and gas pipelines is
appropriate for other transmission providers. In the Reliability Policy
Statement,\957\ the Commission stated that it would consider, on a
case-by-case basis, proposals by public utilities to amend their OATTs
to include limitations on liability. The Commission further noted that
while this issue has not been resolved on a standardized basis, the
Commission has entertained RTO transmission providers' specific
proposals to amend their OATTs to include provisions addressing
limitations on liability.\958\
---------------------------------------------------------------------------

\957\ Policy Statement on Matters Related to Bulk Power System
Reliability, 107 FERC ] 61,052 (2004) (Reliability Policy Statement).
\958\ Reliability Policy Statement at P 40 (citations omitted).
---------------------------------------------------------------------------

1676. In subsequent orders, the Commission found that the gross
negligence and intentional wrongdoing indemnification and liability
standard is appropriate for RTOs and ISOs. However, the Commission has
declined to extend this protection to all transmission providers. In
Southwest Power Pool, Inc., the Commission explicitly stated ``that our
acceptance here of the gross negligence and intentional wrongdoing
indemnity standard is limited to SPP, in its role as an RTO, and its
TOs; we do not intend to extend such protection to all transmission
providers.'' \959\ In Southern Company Services, Inc., the Commission
stated that:
---------------------------------------------------------------------------

\959\ 112 FERC ] 61,100 at P 39 (2005).

Having considered Southern Companies' proposed limitation on
liability and indemnification provisions pursuant to our Reliability
Policy Statement cited above, we find that Southern Companies have
not shown that they are similarly situated to the RTOs/ISOs they
cite in support. While Southern Companies claim that they ``may not
be protected by any State-regulated limitations on liability,''
Southern Companies offer no evidence to support this concern. The
Commission has provided such liability protection to RTOs/ISOs
because they were created by and solely regulated by the Commission,
and otherwise would be without limitations on liability. Southern
Companies have proffered no evidence of any

[[Page 12481]]

change in circumstances vis-[agrave]-vis their liability exposure
post-Order No. 888.\960\
---------------------------------------------------------------------------

\960\ 113 FERC ] 61,239 at P 7 (2005).

1677. Commenters offer no new arguments that demonstrate that they
are unable to rely on state laws, i.e., the state laws provide
inadequate protection. While EEI and Southern assert that there is
uncertainty in whether state law on liability would apply to a service
agreement between a transmission provider and a transmission customer,
we note that neither provide any evidence that transmission providers
are actually precluded from relying on state law for liability
protection. EEI and Southern thus fail to show that the potential for a
legal and regulatory gap is so great as to warrant inclusion of
liability protections in the pro forma OATT for all transmission
providers. In this regard, the Commission also finds without merit
assertions that increased liability protections in the pro forma OATT
should be viewed as a necessary element of the implementation of the
Commission's reliability authority. As none of the arguments proffered
by commenters persuade us to change our policy regarding liability
protections applicable to non-RTO and non-ISO transmission providers,
we decline to modify the liability protections in the pro forma OATT.
10. OATT Definitions
1678. In order to support the reforms adopted in this Final Rule
and otherwise clarify the requirements of the pro forma OATT, the
Commission adds and amends various definitions in the pro forma OATT,
as set forth below.
a. Affiliate
NOPR Proposal
1679. In the NOPR, the Commission proposed a new definition of
Affiliate incident to the proposed change to the pricing of reassigned
capacity.
Comments
1680. Some commenters request clarification that the proposed
definition of Affiliate would not apply to transmission-only
cooperatives or independent entities such as RTOs. NRECA asserts that
in Order No. 2004-A, the Commission concluded that ``[g]eneration and
transmission cooperatives (G&T) are not subject to the Standards of
Conduct consistent with the policies established under Order No. 888.''
NRECA asks for confirmation that distribution and generation and
transmission cooperatives will not be considered affiliates of each
other for OATT and Standards of Conduct purposes because recent
pleadings reveal that there continues to be confusion about this
definition. TranServ asks for clarification of the application of the
definition of ``affiliate'' with respect to a merchant affiliate of a
transmission provider that has turned over tariff administration
functions to an ISO, RTO, or other independent entity. PNM-TNMP
suggests that the definition of Affiliate be expanded or clarified to
encompass divisions of an entity that operate as a functional unit.
PNM-TNMP asserts that such a change would make clear that an Affiliate
includes not only separate legal entities, but also may apply to
divisions and functional units within the entity.
Commission Determination
1681. As discussed in section V.C.4, the Commission lifts the price
cap on reassigned transmission capacity for all transmission customers,
regardless of affiliation with the transmission provider. It is
therefore no longer necessary to define an affiliate for purposes of
that provision. The Commission nonetheless adopts the proposed
definition of Affiliate to implement the reforms associated with
distribution of operational penalties discussed in section V.C.5.b.
1682. With regard to the request that we clarify that an Affiliate
does not apply to transmission-only cooperatives, we agree with NRECA
that the Commission made clear in Order No. 888-A that there was no
corporate affiliation between G&T cooperatives and their member
distribution cooperatives.\961\
---------------------------------------------------------------------------

\961\ Order No. 888-A at 30,286 and 30,366.
---------------------------------------------------------------------------

1683. TranServ requests clarification regarding the use of the term
``affiliate'' in the context of a transmission owner that has turned
over operational control of its transmission facilities to an RTO, ISO,
or to an independent entity. We clarify that, for purposes of the
distribution of penalties, if such transmission owner is not required
to be a transmission provider under a Commission-approved tariff, the
merchant affiliate of such transmission owner would not be considered
to be an ``affiliate'' of the RTO, ISO, or independent entity under the
definition adopted in this Final Rule. The affiliation of a merchant to
a transmission owner does not establish an affiliation between such
merchant and the RTO, ISO, or independent entity transmission provider.
1684. As to PNM-TNMP's request that the definition of ``affiliate''
be expanded or clarified to encompass divisions of an entity that
operate as a functional unit, we note that PNM-TNMP's concern appears
to have been raised in the context of lifting the price cap for
capacity reassignment, initially proposed only for non-affiliated
transmission customers. We believe we have addressed PNM-TNMP's
concerns by lifting the price cap for capacity reassignment for all
customers, including affiliates of the transmission provider and the
transmission provider's merchant function.
b. Good Utility Practice
NOPR Proposal
1685. In the NOPR, the Commission proposed to incorporate the
definition of reliable operation from FPA section 215 in the definition
of Good Utility Practice in the pro forma OATT.
Comments
1686. No commenters oppose the Commission's proposal to modify the
definition of Good Utility Practice to reference the reliable operation
standard of FPA section 215.
Commission Determination
1687. The Commission adopts the NOPR proposal to incorporate the
definition of reliable operation from FPA section 215 in the definition
of Good Utility Practice in the pro forma OATT. FPA section 215(b)
obligates all users, owners and operators of the bulk power system to
comply with reliability standards that will take effect under that
section. Referencing section 215 in the definition of Good Utility
Practice is appropriate to ensure that the reliability standards
ultimately developed by the ERO and approved by the Commission are
reflected in the pro forma OATT.
c. Non-Firm Sales
NOPR Proposal
1688. The Commission proposed to add a definition for Non-Firm
Sales to clarify the treatment of such sales under section 30.4 of the
pro forma OATT.\962\ The Commission proposed defining a Non-Firm Sale
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.'' The Commission also proposed to
clarify that, for the purposes of applying

[[Page 12482]]

section 30.4, energy sales that can only be interrupted to maintain
system reliability would be considered firm sales.
---------------------------------------------------------------------------

\962\ Section 30.4 as proposed in the NOPR provides, in relevant
part, that ``[t]he Network Customer shall not operate its designated
Network Resources located in the Network Customer's or the
Transmission Customer'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.''
---------------------------------------------------------------------------

Comments
1689. Several commenters argue that the proposed definition of Non-
Firm Sales could impede a network customer's ability to obtain
transmission service for certain types of energy products. In
particular, Duke, EEI, and Southern question the treatment of power
purchase agreements with LD provisions under the proposed definition.
Duke contends that a contract with an LD provision might be
interruptible for any reason, but it would still provide for liability
in the form of LD payments. As a result, the LD contract might not fall
within the definition of a Non-Firm Sale. At the same time, network
customers can only designate resources from system purchases not linked
to a specific generating unit if the purchase power agreement is not
interruptible for economic reasons, does not excuse seller performance
for economic reasons, and requires the network customer to pay for the
purchase.
1690. Commenters are thus concerned that some contracts with LD
provisions may be too firm to be a Non-Firm Sale, but not firm enough
to be designated as a network resource. Duke argues that network
customers should be allowed to operate their Network Resources to both
serve load and sell a firm LD product. EEI is concerned that the
proposed definition of Non-Firm Sales would prohibit a network customer
from making an off-system sale of a firm LD product or any other
product that does not result in undesignation of a Network Resource,
given the restrictions set forth in section 30.4. Duke and EEI
therefore propose that a Non-Firm Sale should be defined as any sale
that is not sufficiently firm to be designated a Network Resource of
the purchasing entity. Raising concerns similar to those raised by Duke
and EEI, Southern proposes to define Non-Firm Sales as any sale that
does not commit the associated resource to a third party and otherwise
keeps the resource available for network service on a non-interruptible
basis.
1691. NRECA, however, argues that contracts with LD provisions are
typically considered firm products, so long as they cannot be curtailed
for economic reasons alone. NRECA requests that the Commission confirm
its understanding that the mere inclusion of an LD provision in a
contract does not make the sale non-firm, provided that the sale cannot
be curtailed only for economic reasons.
Commission Determination
1692. The Commission adopts the proposed definition of a Non-Firm
Sale and incorporates that defined term in section 30.4 of the pro
forma OATT. Network customers may use network resources for third party
sales only if the sale is on a non-firm basis. This ensures that the
network resource is available to serve the network load on an
uninterruptible basis. We conclude that it would be inappropriate, as
some commenters suggest, to relax the definition of a Non-Firm Sale to
include any sale that is not otherwise firm enough to be designated as
a network resource. We address the requirements for designation of
network resources in section V.D.6, concluding that not all contracts
with LD provisions are sufficiently firm to be eligible for
designation. There we explain that only LD provisions that provide for
``make whole'' remedies are sufficiently firm to be designated as
network resources. It does not follow, however, that all remaining
contracts with LD provisions are non-firm. The very existence of an LD
provision indicates that interruption of service will result in
liability and, thus, such contracts cannot automatically be considered
Non-Firm Sales for purposes of section 30.4. To allow otherwise would
create conflicting incentives for the network customer.
d. Pre-Confirmed Application
NOPR Proposal
1693. Incident to the proposal to give priority to requests that
are pre-confirmed, the NOPR proposed a new definition of Pre-Confirmed
Application.
Comments
1694. No commenters oppose the Commission's proposed definition of
a Pre-Confirmed Application.
Commission Determination
1695. The Commission adopts the proposed definition of Pre-
Confirmed Application in order to implement the reforms adopted above
regarding the priority of transmission service requests under the pro
forma OATT.
e. NOPR Proposals Not Adopted
Economy Energy
1696. The Commission also proposed in the NOPR to adopt a
definition of ``economy energy'' incident to its proposed changes to
section 28.4 regarding the use of secondary network service. As
discussed in section V.D.7, the Commission retains the existing
requirement in section 28.4 that permits use of secondary network
service ``to deliver energy to its Network Loads.'' The proposed
definition of ``economy energy'' is therefore unnecessary.
f. Commenter Proposals
1697. Several commenters request that the Commission amend or add
other definitions in the pro forma OATT.
(1) Network Transmission Service
Comments
1698. TDU Systems and Northwest Parties contend that, to help
eliminate undue discrimination, the Commission should modify the
definitions of ``network load'' and ``network operating committee'' in
the pro forma OATT. Although the pro forma OATT already defines
``network load'' to include wholesale native load, TDU Systems contend
that transmission providers frequently either give preference to their
own retail native load or ignore wholesale customer native load in
planning and expansion of the system and in ATC calculations for
processing transmission service requests. TDU Systems argue that
comparable treatment of wholesale native load and retail native load is
required in all respects in light of the definition of ``network
load.'' At the same time, TDU Systems argue that the definition of
``network load'' unreasonably restricts a transmission customer from
serving a part of its load at a given delivery point with non-network
resources since it provides that a customer ``may not designate only
part of the load at a discrete Point of Delivery.''
1699. Northwest Parties also assert that the Commission should
revise the definition of ``network load'' to permit point-to-point
service and network service to the same network load if the point-to-
point service is ignored in calculating load ratio share. Northwest
Parties also argue that the Commission should allow point-to-point and
network service to the same network load if the point-to-point service
is purchased as non-firm.
1700. EEI replies in opposition to TDU Systems' proposal to
eliminate the requirement that a network customer may designate only
part of its load delivery as a network load. EEI argues that TDU
Systems are incorrect in asserting that the definition of ``network
load'' prohibits a network customer from serving part of its load with
non-network resources and secondary network service to serve part, or even

[[Page 12483]]

all, of its network load. EEI contends that adoption of TDU Systems'
proposal would eliminate one of the fundamental principles on which
network service is founded: That the network customer must pay for
network service based on its entire load, including load served by
behind the meter generation, since the transmission provider must plan
its transmission system to serve the customer's entire load.
1701. PNM-TNMP agree on reply that Commission should reject a
change to the definition in the pro forma OATT regarding network load.
PNM-TNMP state that the proposal presupposes that transmission
providers discriminate against transmission customers and provides
preferential treatment to their own retail native load in terms of
planning and expansion of the system and in ATC calculations for
processing transmission service requests. PNM-TNMP contend that they
treat retail native load comparably with other network customers in all
aspects and believe that any problems encountered by a transmission
customer regarding undue discrimination should be addressed through the
enforcement or complaint process, and that a change to the pro forma
OATT is not warranted.
Commission Determination
1702. The Commission declines to modify the definitions of
``network load'' and ``network operating committee.'' The reforms
related to ATC calculation and transmission planning adopted in this
Final Rule adequately address the concerns regarding undue preference
of native load in those areas. With regard to the request to allow
network customers to serve part of their load with non-firm point-to-
point service and part with network service, the Commission already
determined in Order Nos. 888 and 888-A that a transmission customer is
not allowed to take a combination of both network and point-to-point
transmission service to serve the same discrete load.\963\ We are not
persuaded to modify that policy here.
---------------------------------------------------------------------------

\963\ See Order No. 888 at 31,736; Order No. 888-A at 30,259.
---------------------------------------------------------------------------

(2) Firm and Non-Firm Transmission Service
Comments
1703. Powerex contends that ``firm transmission service'' is not
adequately defined or sufficiently described in the pro forma OATT to
ensure that a transmission customer is not being required to pay for
firm service that is curtailed on a regular basis. For example, Powerex
states the Commission could require that firm transmission service be
available at least 95 percent of the time (excluding force majeure
curtailments) in order for transmission to be defined as ``firm.''
1704. Powerex also contends that ``non-firm transmission service''
is interpreted differently in different regions. In the Pacific
Northwest, Powerex asserts that non-firm service implies a lower
curtailment priority but only as a result of actual transmission system
constraints (i.e., once the operating hour has begun, higher priority
firm reservations cannot implement schedules over lower priority non-
firm reservation). In contrast, Powerex argues that, for some
transmission providers located in the Desert Southwest, transmission
capacity associated with firm service reservations that have capacity
schedules attached to them (e.g., to deliver operating reserves) can
also be sold as non-firm service that could be interrupted in the
operating hour by the firm reservation. Powerex believes that these two
types of service could be described as non-firm, non-interruptible (for
the Pacific Northwest) and non-firm, interruptible (for the Desert
Southwest).
Commission Determination
1705. The Commission finds that the clarifications proposed by
Powerex are unnecessary to remedy undue discrimination in the provision
of open access transmission service. In section V.D.8 of this Final
Rule, the Commission requires transmission providers to post additional
information regarding curtailments in order to provide transparency and
allow customers to determine whether they have been treated in the same
manner as other transmission system users. We conclude that existing
compliance and enforcement procedures, coupled with these new posting
requirements, are sufficient to address improper curtailments of service.
(3) System Impact Study
Comments
1706. Powerex urges the Commission to modify sections 1.47 and 17.5
of the pro forma OATT to clarify that transmission providers are not
required to perform system impact studies for short-term service
requests. Specifically, Powerex requests that the Commission amend the
definition of a ``system impact study'' to refer only to requests for
long-term firm point-to-point service or network service. Powerex
argues that short-term firm point-to-point service requests do not
require transmission providers to upgrade their systems and, as a
result, requiring system impact studies for short-term requests often
creates unnecessary burdens for transmission providers by mandating
them to use limited resources to perform studies that do not offer
significant benefits to customers. Powerex contends that the 60-day
study period is particularly ill-suited for short-term transmission
requests, most of which are for service that must commence within the
study period.
Commission Determination
1707. The Commission declines to modify the definition of ``system
impact study'' or otherwise modify section 17.5 to restrict system
impact studies only to exclude reference to short-term point-to-point
service. Regardless of the length of a service request, a transmission
provider must assess whether a system impact study is required to
evaluate the request for transmission service. Only upon the completion
of such an assessment will the transmission provider be able to
identify the impact a particular request will have on the grid. We
conclude that eliminating or shortening the system impact study period
could jeopardize system reliability and therefore reject the
modifications proposed by Powerex.
(4) Definitions for RTOs, ISOs and ITCs
Comments
1708. Wisconsin Electric and International Transmission argue that
the terms used in the pro forma OATT are inadequate when applied to RTO
regions, especially in MISO. International Transmission and Wisconsin
Electric assert that, in an RTO, the transmission provider and
transmission owner are separate entities with separate functions, thus
creating a need for separate definitions. They also contend that
additional definitions may be needed when the transmission owner is an
independent stand-alone transmission company operating within the RTO.
1709. Wisconsin Electric requests that the Commission define the
term ``transmission owner'' in the pro forma OATT and specify which of
its provisions are applicable to the transmission provider and which
apply to the ``transmission owner.'' Additionally, Wisconsin Electric
states that the pro forma OATT includes a definition for ``control
area'' and the NOPR refers to the geographic area served by
transmission providers as its control area, which in Wisconsin
Electric's view is inaccurate in the case of MISO. Wisconsin Electric
explains MISO has shifted to the use of the NERC

[[Page 12484]]

functional model and uses terms such as ``balancing authorities,''
``generator operators,'' ``reliability authorities,'' and the like.
Wisconsin Electric therefore requests that the Commission supplant the
term ``control area'' in the pro forma OATT with a term that is
predicated on the performance of a particular function, not the type of
entity performing the function.
1710. International Transmission does not object to the
Commission's proposal to largely retain the existing definitions set
forth in the pro forma OATT, but asserts that the Commission should
explicitly recognize in the Final Rule that such definitions may be
inadequate when applied to RTOs. International Transmission also asks
the Commission not to require RTOs with additional definitions in their
tariffs to remove those definitions when complying with the Final Rule
and, instead, expressly allow RTOs to propose additional definitions
that may be necessary.
Commission Determination
1711. As explained in section IV.C, all transmission providers--
including ISOs and RTOs--will have an opportunity to demonstrate that
departures from the pro forma OATT, as modified by this Final Rule, are
consistent with or superior to the terms and conditions of the pro
forma OATT. Proposals to amend terms such as ``control area'' or
``transmission owner'' based on a particular set of facts are best left
for case-by-case review.
(5) Other Definitions
Comments
1712. Ameren advocates the modification of a number of other pro
forma OATT definitions. Ameren proposes definitions for ``source'' and
``sink,'' as well as additional provisions in section 22.2 governing
source and sink of transmission. Ameren also requests clarification of
the word ``use'' in section 30.8, arguing that some entities have
assumed that ``use'' means scheduled amounts. Ameren argues for an
improved definition of ``transmission peak'' because the data necessary
no longer resides with the transmission owner in an RTO or ISO.
Finally, Ameren suggests a revised definition of ``long-term firm,''
which would include only contracts that are longer than one year, not
just one year or longer, arguing it would reduce the number of
contracts that are only one-year in length that are used in the
denominator for purposes of calculating the load ratio share and for
ratemaking purposes. On this latter point, Ameren asserts that such
contracts should be reflected as a revenue credit instead. In addition,
Ameren believes that the current definition of long-term firm point-to-
point service in section 1.18 of the pro forma OATT makes calculation
of load ratio share very difficult in the modern RTO/Seams Elimination
Cost Allocation (SECA) environment.
Commission Determination
1713. The Commission is not persuaded to adopt the revisions
proposed by Ameren. We believe that what constitutes source and sink is
sufficiently addressed in Order No. 888 and OASIS related proceedings
and we will not expand the discussion here.\964\ Order No. 888 also
made clear that there are no ``load ratio'' limitations on the use of
interfaces under section 30.8 of the pro forma OATT.\965\ Otherwise,
requests for interface capacity are subject to the pro forma OATT
procedures. Moreover, Ameren has failed to justify revising the
definition of ``transmission peak.'' While peak load data ultimately
resides with the RTO or ISO, each transmission provider coordinates
this type of data with RTO or ISO. Finally, we reaffirm that long-term
firm service is service with a term of one year or more. Modifying the
term of long-term service to reduce the number of contracts used in the
denominator for purposes of calculating the load ratio share and for
ratemaking purposes may affect how the transmission provider plans its
system to service customers and has not been justified.
---------------------------------------------------------------------------

\964\ Redirect-related issues are addressed in section V.D.4.
\965\ See Order No. 888 at 31,753-54; Order No. 888-A at 30,304-
5; see also Sierra Pacific Power Co., 81 FERC ] 61,136 at 61,139-40
(1997); New England Power Pool, 83 FERC ] 61,045 at 61,248 (1998).
---------------------------------------------------------------------------

E. Enforcement

1714. The Commission attaches substantial importance to
strengthening compliance with the OATT, on monitoring and auditing OATT
compliance, including its staff's efforts to resolve disputes about
compliance through the Enforcement Hotline and other dispute resolution
mechanisms, and on investigating potential and alleged OATT violations.
The expansion of the Commission's enforcement powers pursuant to EPAct
2005 directly augmented its ability to enforce the OATT by, among other
things, providing authority to assess civil penalties of up to $1
million for each day that an OATT violation continues. The Commission
intends to use its enforcement powers with respect to the OATT in a
fair and even-handed manner, pursuant to the principles set forth in
the Policy Statement on Enforcement.
1. General Policy
a. Compliance Review Regime
NOPR Proposal
1715. The Commission proposed to maintain a strong program to audit
compliance with the new pro forma OATT. The audit program would include
operational audits similar to past OATT compliance audits, during which
staff may collect information on implementation of a transmission
provider's OATT. The Commission stated that it would issue public
reports of audit results and noted that contested audits would be
subject to the Commission's Final Rule on contested operational
audits.\966\
---------------------------------------------------------------------------

\966\ See Procedures for Disposition of Contested Audit Matters,
Order No. 675, 71 FR 9698 (Feb. 27, 2006), FERC Stats. & Regs. ]
31,209 (2006) (Contested Audit Matters), order on rehearing and
clarification, Order No. 675-A, 71 FR 29779 (May 24, 2006), FERC
Stats. & Regs. ] 31,217 (2006).
---------------------------------------------------------------------------

Comments
1716. Most initial commenters support a strong staff audit
program.\967\ Other commenters counter that staff audits will not be
needed if the Commission issues a corrected pro forma OATT, especially
with respect to RTOs and ISOs.\968\ These commenters argue that formal
complaints, Enforcement Hotline calls and random audits sufficiently
inform staff of OATT compliance issues as to make additional staff
audits unnecessary. Southern asserts that, under the separation of
function policy, Commission audit staff should be separated from
investigative and enforcement staff. Particular commenters contend that
the Commission should focus compliance efforts on specific OATT
provisions, such as those concerning network service (Arkansas Cities),
or on structural issues such as independent planning and operation of
transmission facilities (Reliant). Nevada Companies suggests that the
Commission set up regional audit teams to foster strong working
relationships with transmission providers. EPSA asks the Commission to
adopt stronger measures than a staff audit program to monitor
compliance. EPSA's proposed measures include requiring transmission
providers to: designate compliance officers to report OATT violations
to company boards; undergo compliance audits by an

[[Page 12485]]

independent auditor in response to material violations; and hire an
independent administrator to oversee OATT compliance and regional
planning efforts if a transmission provider has not complied with its
new OATT within a specified period of time. In reply comments, MISO
opposes EPSA's proposal for a third-party compliance administrator for
RTOs and ISOs if they do not timely comply with new OATT provisions,
arguing that these entities already are independent administrators of
transmission grids and planning processes. MISO asserts that inserting
an ``independent'' authority over OATT compliance by RTOs and ISO would
create a superfluous bureaucratic layer. NRECA opposes EPSA's proposal
because a third-party compliance administrator or auditor would be too
expensive and the Commission cannot delegate its compliance authority.
---------------------------------------------------------------------------

\967\ E.g., APPA, AWEA, EEI, Morgan Stanley, NRG, Southern,
TAPS, and Williams.
\968\ E.g., Ameren, PNM-TNMP, and South Carolina E&G. In reply
comments, TDU Systems urge the Commission to reject this contention.
---------------------------------------------------------------------------

1717. Noting that the Commission required RTOs to undertake
extensive market monitoring in Order No. 2000, PJM states that the
Commission should require in the pro forma OATT a similar degree of
market monitoring in non-RTO areas to make available to Commission
staff information needed to ascertain market abuses in these areas. PJM
asserts that any such market monitoring should be performed by entities
independent of the non-RTO utilities, with Commission oversight.
Indicated Parties reply that RTOs' market monitors should examine
market power in transmission planning because RTOs delegate
transmission operations and planning duties to constituent transmission
owners that retain incentives to benefit affiliates or vertically-
integrated divisions.
Commission Determination
1718. The Commission adopts the NOPR proposal to emphasize a strong
staff audit program for compliance with OATT requirements, including
operational audits. Staff audits of OATT compliance may be random or
targeted with respect to the entities being audited or particular
provisions of the OATT that are scrutinized. Because its responsibility
is to assess and ensure compliance with the OATT, staff will maintain
discretion as to the entities it audits and the subject matter of these
audits. The Commission encourages transmission providers to designate
employees as compliance officers for the OATT or to conduct third-party
audits relating to OATT compliance when appropriate. However, we do not
believe that staff should forego an audit of an entity's OATT
compliance solely because a transmission provider has designated an
OATT compliance officer, engaged a third-party auditor, or transferred
transmission functions to an independent transmission coordinator. We
decline EPSA's proposal to require such actions, except on a case-by-
case basis when warranted.
1719. We disagree with PJM's request that the Commission require
third-party market monitoring to ascertain market abuses occurring with
respect to transmission providers outside RTOs and ISOs, subject to
Commission oversight. In a number of instances since 2000, the
Commission has established third-party monitoring of a transmission
provider located outside an RTO or ISO.\969\ These monitors were
established on a case-specific basis to address concerns related to the
transmission provider at issue. We have no evidence to support
requiring monitors for every transmission provider in the Nation.
Further, the Commission has access to substantial information on OATT
compliance by transmission providers that are not RTOs or ISOs through
their postings on OASIS, informal and formal complaints by customers,
and reports by market monitors for such transmission providers. Indeed,
the revised pro forma OATT will greatly enhance our oversight and
enforcement capabilities by increasing the transparency of many
critical functions under the pro forma OATT, such as ATC calculation
and transmission planning. PJM has not provided any evidence that the
enhanced transparency under the OATT, coupled with the Commission's own
monitoring and audits of OATT compliance and its enhanced enforcement
authority, will be insufficient to ascertain and deter OATT violations.
We do not object to the suggestion of Indicated Parties that RTO and
ISO market monitors examine market power in transmission planning, so
long as the market monitors' activities in this respect are consistent
with these roles as set forth in the applicable RTO and ISO tariffs.
---------------------------------------------------------------------------

\969\ See, e.g., Duke Power, 113 FERC ] 61,288 (2005);
MidAmerican Energy Holdings Co., 113 FERC ] 61,298 (2005).
---------------------------------------------------------------------------

1720. We do not agree with Southern's assertion that the
Commission's audit staff should be separated from its investigative and
enforcement staff. The Commission's separation of functions regulation
\970\ generally permits Commission auditors, investigators and
enforcement staff to speak freely to persons inside the Commission as
to the subject matter of their inquiries.\971\ Southern has not cited
any justification for restricting communications among these staff
members or from them to the Commission. To the contrary, a free flow of
communications among auditors and investigators, consistent with the
Commission's rule on staff separation of functions, should increase the
efficiency of the Commission staff's compliance program and enforcement
efforts.\972\
---------------------------------------------------------------------------

\970\ 18 CFR 385.2202.
\971\ Statement of Administrative Policy on Separation of
Functions, 101 FERC ] 61,340 at P 24-26 (2002).
\972\ See also Order No. 675-A at P 25-29 (the Commission's
regulation and policy statement on separation of functions remain
applicable following EPAct 2005, and efficiency and sound
administrative practice continue to favor the sharing of information
between the Commission's audit staff and investigative staff).
---------------------------------------------------------------------------

b. Use of Independent Third Party Audits
NOPR Proposal
1721. The Commission proposed not to mandate the use of third party
auditors and, instead, proposed that Commission staff conduct audits of
compliance with the pro forma OATT. The Commission stated that it may
require third party compliance audits as part of a compliance plan
following a Commission staff audit report. In response to situations
such as systematic OATT violations, a pattern of repeated violations,
or violations that require ongoing monitoring, the Commission could require
an audited party to hire a third party to continue compliance audits.
Comments
1722. Most initial commenters agree with the Commission's proposal
to require third-party audits only as part of an individual post-audit
compliance plan.\973\ EEI and Southwestern Coop submit that selection
of third-party auditors should be subject to Commission review and
approval, while South Carolina E&G cautions that the Commission should
carefully weigh the costs and benefits of independent auditors before
requiring their use. Southern suggests that third-party audits be
required only for systematic, egregious OATT violations. Entegra doubts
that third-party auditors can remedy patterns of discrimination by
transmission providers against independent merchant generators.
---------------------------------------------------------------------------

\973\ E.g., Alberta Intervenors, Arkansas Commission,
Constellation, EEI, EPSA, MISO/PJM States, Nevada Companies, PNM-
TNMP, South Carolina E&G, Southwestern Coop, and Suez Energy NA.

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

[[Page 12486]]

Commission Determination
1723. The Commission adopts the NOPR proposal not to require
generally the use of third party auditors to assess compliance with the
OATT. We believe that a requirement for the use of third-party audits
in compliance plans should depend on particular facts, including the
egregiousness and extent of violations found during a staff audit or
investigation and the appropriate scope or cost of a third-party audit.
As stated above, we encourage transmission providers to use third-party
compliance audits when appropriate to supplement our staff's audit efforts.
2. Civil Penalties
1724. In the NOI, the Commission asked for comment as to whether it
should address imposing remedies or penalties against transmission
providers as part of OATT reform. After the NOI, the Commission issued
its Policy Statement on Enforcement and, in response to specific
authority granted it in EPAct 2005, issued Order No. 670, the Anti-
manipulation Rule. \974\
---------------------------------------------------------------------------

\974\ Prohibition of Energy Market Manipulation, III FERC Stats.
& Regs. ] 31,202 (2006), order denying rehearing, 114 FERC ] 61,300 (2006).
---------------------------------------------------------------------------

a. Whether Civil Penalties Should Be Specified in the OATT NOPR Proposal
1725. Aside from operational penalties proposed in the NOPR, \975\
the Commission proposed not to establish a schedule of enforcement
remedies and sanctions in the pro forma OATT. Rather, the Commission
stated that it would address OATT violations and appropriate responses
on a case-by-case basis, consistent with the Policy Statement on
Enforcement. The Commission explained that it may impose civil
penalties when warranted, after consideration of applicable factors
listed in the Policy Statement on Enforcement; OATT violators also will
be expected to disgorge unjust profits when they can be determined or
reasonably estimated.
---------------------------------------------------------------------------

\975\ NOPR at P 384.
---------------------------------------------------------------------------

Comments
1726. The majority of parties filing comments on this issue agree
that the Commission should assess civil penalties on a case-by-case
basis under the guidance of the Policy Statement on Enforcement. \976\
Other commenters instead support incorporation in the pro forma OATT of
a schedule of significant remedies and sanctions for specific
violations to assure transparency and certainty as to situations in
which penalties would be assessed and to deter anticompetitive
behavior. \977\ EPSA advises that the Commission refrain from setting
pre-determined limits on penalty amounts because each violation of a
specific pro forma OATT provision may present different facts that may
warrant different outcomes. Nevada Companies suggest that the
Commission provide incentives to construct new transmission
infrastructure rather than implement an overbearing penalty regime because
additional transmission capacity itself will resolve many complaints.
---------------------------------------------------------------------------

\976\ E.g., APPA, EEI, EPSA, Nevada Companies, PNM-TNMP,
Southern, and Southwestern Coop. Southwestern Coop also urges speedy
review of violations and swift assessment of penalties. In reply
comments, Sacramento adds that the Commission may assess civil
penalties against a transmission provider that engages in unduly
discriminatory behavior in its transmission planning process.
\977\ E.g., Arkansas Commission and ELCON.
---------------------------------------------------------------------------

1727. Wisconsin Electric concludes that OATT violations by non-
profit RTOs and ISOs should not be subject to civil penalties because
they would be passed through to customers and not act as an effective
deterrent. \978\ Rather than assess a penalty in response to an RTO's
or ISO's OATT violation, Wisconsin Electric suggests that the
Commission could intensify oversight of an RTO's or ISO's OATT
compliance. NorthWestern comments, in contrast, that RTOs and ISOs
should not be exempted from civil penalty assessments for their OATT
violations, because these violations could have as much or more adverse
effects on transmission access or system reliability as would OATT
violations by other transmission providers.
---------------------------------------------------------------------------

\978\ Wisconsin Electric asserts that the Commission has
recognized this principle in other contexts, citing Financial
Reporting and Cost Accounting, Oversight and Recovery Practices for
Regional Transmission Organizations and Independent System
Operators, FERC Stats. & Regs. ] 35,546 at P 9 (2004).
---------------------------------------------------------------------------

1728. Several commenters support the Commission's proposal to
consider mitigating factors listed in the Policy Statement on
Enforcement in assessing civil penalties for OATT violations. \979\ In
this regard, EEI states that the Commission should clarify that when a
party engages in self-reporting, compliance programs or cooperation
with Commission staff, the Commission will recognize the party's
attorney-client privilege. \980\
---------------------------------------------------------------------------

\979\ E.g., Nevada Companies and PNM-TNMP.
\980\ EEI observes that the Commission held in its final rule on
contested audit procedures that ``an audited person who
appropriately interposes the attorney-client privilege will not be
considered non-cooperative.'' Contested Audit Matters at P 35.
---------------------------------------------------------------------------

1729. EEI suggests that the Commission establish ``safe harbors''
against civil penalties for OATT violations involving reasonable
interpretations of tariff provisions or for actions taken for
reliability purposes that are consistent with good utility practice.
PNM-TNMP and Southern ask the Commission to clarify that LSEs will not
be penalized for OATT violations for taking actions necessary to meet
their native load obligations since, pursuant to new FPA section 217,
\981\ LSEs should not be considered to have engaged in ``undue
discrimination or preference'' for certain actions required to serve
native load customers. TDU Systems argue in reply comments that a
``safe harbor'' approach could permit unduly discriminatory or
preferential behavior that would be penalized under a case-by-case
approach. Entegra replies that safe harbors for ``reasonable'' tariff
interpretations would give vertically-integrated utilities license to
discriminate against competitors, and suggests that the Commission
ensure that the OATT operates as a sword for attacking undue
discrimination, not as a shield for defending it. Occidental replies
that transmission providers with a Commission-approved independent
transmission coordinator should not be insulated from tariff-based
civil penalties and other sanctions.
---------------------------------------------------------------------------

\981\ 16 U.S.C. 824q(k).
---------------------------------------------------------------------------

Commission Determination
1730. Following enactment in EPAct 2005 of enhanced authority for
the Commission to assess civil penalties for violations of statutes it
administers and of regulations and orders under these statutes, the
Commission issued the Policy Statement on Enforcement to set forth how
it intends to use this authority consistent with the statute. \982\
Underlying this policy is the recognition that the appropriate basis
for assessment of a civil penalty for a violation is an examination of
the facts and circumstances relating to that violation, and the use of
discretion and flexibility to address it on its merits. This
examination includes a review of all applicable mitigating factors set
forth in the Policy Statement on Enforcement. While we understand that
establishing a schedule of civil penalties for violations of particular
provisions of the pro forma OATT would establish greater specificity
with respect to civil penalties, the Commission already concluded in
the Policy Statement on Enforcement that it would ``not prescribe
specific penalties or develop formulas for different violations.''
\983\ We see no justification to depart from

[[Page 12487]]

that decision with respect to violations of OATT provisions.
---------------------------------------------------------------------------

\982\ Policy Statement on Enforcement at P 1.
\983\ Id. at P 13.
---------------------------------------------------------------------------

1731. Several commenters ask that we establish specific ``safe
harbors'' or exemptions from assessment of civil penalties for OATT
violations in specific circumstances or with respect to specific types
of entities that may engage in OATT violations. We decline to create
automatic safe harbors for specific circumstances or specific types of
OATT violations. The creation of such exemptions would require us to
forego the examination of the specific circumstances of particular
violations that we described in the Policy Statement on Enforcement as
the touchstone of our policy in assessing civil penalties. Instead, we
will decide requests for leniency in particular cases by using the
principles set forth in the Policy Statement on Enforcement and
considering all applicable mitigating factors listed therein.\984\
---------------------------------------------------------------------------

\984\ We have also provided clarification on the procedures that
would apply to the assessment in formal proceedings of civil
penalties relating to OATT violations in our recent Statement of
Administrative Policy Regarding the Process for Assessing Civil
Penalties, 117 FERC ] 61,317 (2006).
---------------------------------------------------------------------------

1732. Likewise, we will not establish an automatic exemption from
civil penalty assessments for OATT violations committed by particular
types of entities such as non-profit RTOs and ISOs. The Commission
decided last year that it would not automatically exempt RTOs and ISOs
from penalties assessed by the Electric Reliability Organization or
Regional Entities for reliability violations pursuant to new FPA
section 215. In Order No. 672, the Commission stated, ``[w]hile we
recognize that RTOs and ISOs have some unique characteristics, we do
not believe that a generic exemption from any type of penalty is
appropriate for any entity, including an RTO or ISO.'' \985\ We believe
the same principle applies to civil penalties for OATT violations.
However, in assessing civil penalties for OATT violations, we will
consider all applicable facts relating to the violator, including the
effect of potential penalties on the financial viability of the
violator.\986\
---------------------------------------------------------------------------

\985\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval, and
Enforcement of Electric Reliability Standards, Order No. 672, 71 FR
8662 (Feb. 17, 2006), FERC Stats. & Regs. ] 31,204 at P 634 (2006),
order on reh'g, Order No. 672-A, FERC Stats. & Regs. ]
31,212 (2006).
\986\ Policy Statement on Enforcement at P 20. Cf. Order No.
672-A at P 56-57 (holding that for determining a penalty pursuant to
the FPA section 215 reliability program, circumstances such as
organization structure or non-for-profit status will be considered,
but that there should not be an automatic exemption from monetary
penalties for RTOs and ISOs).
---------------------------------------------------------------------------

1733. We agree with commenters who state that the Commission and
its staff should recognize the valid assertion of the attorney-client
privilege in the context of investigations, audits and other fact-
finding activities. As EEI points out, we recently stated with respect
to audits that we would not consider an entity to be uncooperative with
audit staff if the entity appropriately asserts that a communication or
document is covered by that privilege.\987\ We take the same position
with respect to investigations or other fact-finding undertakings with
respect to possible OATT violations.
---------------------------------------------------------------------------

\987\ Citing Contested Audit Matters at P 35.
---------------------------------------------------------------------------

1734. In the Policy Statement on Enforcement, however, the
Commission drew a distinction between cooperation, which we expect from
entities subject to the Commission's jurisdiction given their statutory
obligation to provide information to us, and ``exemplary'' cooperation,
which ``quickly ends wrongful conduct, determines the facts, and
corrects a problem.'' \988\ The Commission explained that we will give
some consideration to exemplary cooperation and indicated that one
example of such cooperation is a situation in which an entity being
investigated provides to staff internal investigations or audit reports
relating to misconduct. These investigations and reports may include
information that an entity could properly shield from disclosure
pursuant to the attorney-client privilege. We observe that an entity
that is in a position to assert this privilege validly also has the
option to waive it. If a waiver of attorney-client privilege, whether
related to an internal investigation or audit or not, assists staff in
ascertaining the facts relating to alleged or apparent misconduct, ends
misconduct quickly or otherwise substantially advances an investigation
or inquiry, that waiver may be an element in finding ``exemplary
cooperation'' as described in the Policy Statement on Enforcement.\989\
---------------------------------------------------------------------------

\988\ Policy Statement on Enforcement at P 26.
\989\ See In re PacifiCorp, 118 FERC ] 61,026 at P 3, 8 and
attached stipulation and consent agreement at P 24 (2007) (referring
to transmission provider's waivers of attorney-client privilege as
an element in making finding of exemplary cooperation with
investigation when approving settlement assessing civil penalty that
resolved a transmission provider's violations of its OATT, among
other matters); In re Entergy Services, Inc., 118 FERC ] 61,027 at P
15, 18 (2007) (same).
---------------------------------------------------------------------------

b. Whether Transmission Providers Should Be Subject to Revocation of
Market-Based Rates for OATT Violations
NOPR Proposal
1735. The Commission observed in the NOPR that some OATT
violations, after applying the factors in the Policy Statement on
Enforcement to all facts and circumstances, may merit revocation of
market-based rate authority. Before considering revoking an entity's
market-based rate authority for an OATT violation, the Commission
proposed that it must find a nexus between the specific facts relating
to the OATT violation and the entity's market-based rate authority. The
Commission also proposed that if it determines, as a result of a
significant OATT violation, to revoke the market-based rate authority
of a transmission provider within a particular market, each affiliate
of the transmission provider that possesses market-based rate authority
would have that authority revoked in that market, effective on the date
of revocation of the transmission provider's market-based rate authority.
Comments
1736. Most parties that submitted initial comments on this issue
support the Commission's conclusion that, in certain circumstances, it
may be appropriate to revoke the market-based rate authority of an
entity that engages in an OATT violation.\990\ The majority of these
commenters support the Commission's proposal to do so only if it finds
a nexus between the OATT violation and the entity's market-based rate
authority.\991\
---------------------------------------------------------------------------

\990\ E.g., EEI, ELCON, Morgan Stanley, Nevada Companies,
Northwest IOUs, Progress Energy, PNM-TNMP, Sempra Global, Southern,
and TDU Systems.
\991\ E.g., EEI, Nevada Companies, Northwest IOUs, Progress
Energy, PNM-TNMP, Sempra Global, and Southern.
---------------------------------------------------------------------------

1737. Some commenters oppose the requirement for a nexus between
the OATT violation and the entity's market-based rate authority because
the Commission has not stated what facts would be sufficient to show
such a nexus.\992\ EPSA and NRECA (in reply comments) contend that if
the Commission does not remove the ``nexus'' condition, it should
clarify what constitutes a ``nexus'' between an OATT violation and an
entity's market-based rate authority. Similarly, PNM-TNMP argues that
such a nexus must be clear and fact-specific, consistent with the
Policy Statement on Enforcement. TDU Systems contend in reply

[[Page 12488]]

comments that, at a minimum, a transmission provider or its affiliate
that has market-based rate authority must overcome a rebuttable
presumption that its OATT violation has the requisite ``nexus'' to
support revocation of such authority.
---------------------------------------------------------------------------

\992\ E.g., APPA.
---------------------------------------------------------------------------

1738. Other commenters argue that a serious OATT violation removes
the mitigation of transmission market power provided by adherence to an
OATT, thereby eviscerating one of the essential requirements for
market-based rate authority.\993\ EEI and PNM-TNMP reply that not every
OATT violation diminishes the availability of transmission service so
as to establish vertical market power.
---------------------------------------------------------------------------

\993\ E.g., APPA, EPSA, and TAPS.
---------------------------------------------------------------------------

1739. APPA and TDU Systems suggest in reply comments that the
proposed nexus condition would unduly limit any sanctions, because the
shareholders of the violator could still reap the benefits of such a
violation if an affiliate that did not have any knowledge of the OATT
violation could continue to engage in transactions under market-based
rate authority. According to APPA, this possibility could lessen the
incentive for senior management over a transmission provider and
affiliates to make OATT compliance a high priority. As such, APPA and
TAPS suggest that the Commission consider revoking a transmission
provider's market-based rate authority for a ``material'' OATT
violation that effectively denies, delays, or diminishes a customer's
access to transmission service essential to mitigating transmission
market power.
1740. TDU Systems caution that revocation of market-based rate
authority may not be sufficient to deter OATT violations if reversion
to cost-based rates may provide a transmission provider with the
ability to recover all costs and receive higher revenues than
competitive markets might otherwise produce. Therefore, TDU Systems ask
that the Commission consider assessment of civil penalties in addition
to revocation of market-based rate authority.
1741. The majority of commenters disagree, however, with the
Commission's proposal to revoke the market-based rate authority of all
affiliates of a transmission provider to the same extent that we revoke
that transmission provider's market-based rate authority.\994\ These
commenters assert that affiliates that have no knowledge of, or
involvement in, their affiliated transmission provider's unlawful
activities should not lose their market-based rate authority as a
result of the transmission provider's OATT violation. NRECA replies
that market-based rate authority is a privilege, not a right, and
asserts that the Commission should revoke market-based rate authority
in response to an OATT violation that indicates that a public utility
possesses market power.
---------------------------------------------------------------------------

\994\ E.g., EEI, Nevada Companies, Northwest IOUs, Progress
Energy, PNM-TNMP, Sempra Global, and Southern.
---------------------------------------------------------------------------

1742. APPA also suggests that, short of revocation of a
transmission provider's market-based rate authority in response to an
OATT violation, the Commission could condition that authority, or the
market-based rate authority of the transmission provider's affiliates.
APPA provides the following examples of such conditions: A requirement
to participate in joint planning of transmission facilities with the
transmission provider's network customers and offer these customers
appropriate credits under OATT section 30.9; an offer of joint
transmission ownership opportunities to LSEs for new transmission
facilities on reasonable terms and conditions; and an offer to network
service customers to participate in the ownership of the transmission
provider's existing transmission system on a load ratio share basis.
Commission Determination
1743. We adopt the NOPR proposal to revoke an entity's market-based
rate authority in response to an OATT violation only upon a finding of
a specific factual nexus between the violation and the entity's market-
based rate authority. We believe that the ``nexus condition'' is
required in order to ensure that our actions are not arbitrary or
capricious or based on an inadequate factual record. We note that in
this context the Commission has the burden to show a factual nexus. We
do not assign a burden on the violator to show the lack of this nexus.
1744. Determining what would be a sufficient factual nexus between
an OATT violation and revocation of the violator's market-based rate
authority is best left to a case-by-case consideration. The wide range
of positions among commenters on how to define a sufficient factual
nexus itself suggests that this finding is best made after review of a
specific factual situation. Some commenters assert that a finding of a
``serious'' or ``material'' violation of the OATT would be sufficient.
We disagree. While an entity's inconsequential OATT violation would not
serve as a basis for revoking that entity's market-based rate
authority, our view is that the nexus condition requires us to find
both that a substantial OATT violation has occurred and that the
violation either related to the exercise of the violator's market-based
rate authority or violated a specific condition of that authority.
1745. The Commission emphasizes that we have discretion to fashion
remedies for OATT violations that relate to the violator's market-based
rate authority in instances in which we do not find a factual nexus
justifying revocation of that authority. For example, in appropriate
circumstances, we may modify or add additional conditions to the
violator's market-based rate authority or impose other requirements to
help ensure that the violator does not commit future, similar
misconduct. Nor is revocation of market-based rate authority the only
action we may take to respond to an OATT violation that meets the nexus
condition. We will consider whether to impose sanctions such as
assessment of civil penalties for particularly serious OATT violations
in addition to revocation of the violator's market-based rate authority.
1746. We do not adopt our proposal from the NOPR to revoke the
market-based rate authority of each affiliate of a transmission
provider that loses its market-based rate authority within a particular
market as a result of an OATT violation. Rather, we will create a
rebuttable presumption that all affiliates of a transmission provider
should lose their market-based rate authority in each market in which
their affiliated transmission provider loses its market-based rate
authority as a result of an OATT violation. We will allow an affiliate
of a transmission provider to retain its market-based rate authority in
a market area if the affiliate overcomes the rebuttable presumption
with respect to that market area.
1747. We expect that the issue of potential revocation of market-
based rate authority will arise as a result of an OATT violation in a
market in which the transmission provider possesses transmission market
power through the ownership of transmission facilities in that market.
For these markets, we have evaluated whether a transmission provider
should receive authority to make sales of electric power for resale at
market-based rates using a four-prong analysis. In this analysis we
consider whether the transmission provider and its affiliates have
adequately mitigated market power in generation and transmission,
whether the transmission provider or its affiliates can erect other
barriers to entry, and whether there is evidence that the transmission
provider and its affiliates have engaged in

[[Page 12489]]

affiliate abuse or reciprocal dealing.\995\ In particular, we have long
held that the existence of an OATT is deemed to mitigate vertical
market power and transmission market power held by a transmission
provider and its affiliates in a particular market. An OATT violation
by a transmission provider in a market in which it possesses
transmission market power that merits revocation of the transmission
provider's market-based rate authority may call into question whether
the transmission provider's affiliates continue to qualify for market-
based rates in that market under the standards that we have
established.\996\ As a result, we believe that it is appropriate to
establish a presumption in this circumstance that if we find that a
transmission provider should lose its market-based rate authority in a
market in which it possesses transmission market power, we will revoke
the market-based rate authority in that market of all affiliates of the
transmission provider.
---------------------------------------------------------------------------

\995\ In our recent NOPR on market-based rates for wholesale
sales of electricity, the Commission proposed to discontinue
referring to affiliate abuse among a transmission provider and its
affiliates as a separate ``prong'' of our analysis of whether to
grant market-base rate authority. The Commission instead proposed to
address affiliate abuse by requiring that transmission providers and
their affiliates comply with restrictions and conditions set forth
in the regulations we propose in that proceeding. Market-Based Rates
for Wholesale Sales of Electric Energy, Capacity and Ancillary
Services by Public Utilities, 71 FR 33102 (Jun. 7, 2006), FERC
Stats. & Regs. ] 32,602 at P 13 (2006).
\996\ We observe that specific situations in which transmission
providers have agreed to resolve staff allegations that they engaged
in OATT violations have involved transactions with affiliates. See
Idaho Power (settlement of, among other issues, an Enforcement staff
allegation that a transmission provider permitted its merchant
function to request non-firm transmission to enable the merchant
function to make off-system sales that by definition were not used
to serve native load, so that the transmission did not qualify for
the ``native load'' priority specified in section 28.4 of the
transmission provider's OATT); Cleco Corp., 104 FERC ] 61,125 (2003)
(settlement between Enforcement staff and a utility holding company
and its subsidiaries relating, in part, to the provision by a
transmission provider of a unique type of transmission service that
was neither made available to non-affiliates nor included in its
FERC tariff); Tucson Electric Power Co., 109 FERC ] 61,272 (2004)
(operational audit in which staff found that, among other matters, a
transmission provider permitted its wholesale merchant function to
purchase hourly non-firm and monthly firm point-to-point
transmission service using an off-OASIS scheduling procedure while
the transmission provider did not post on its OASIS the availability
of capacity on these paths); South Carolina Electric & Gas Co., 111
FERC ] 61,217 (2005) (settlement of Enforcement staff allegation
that a transmission provider made available firm point-to-point
transmission service to its affiliated merchant function that did
not submit transmission schedules with specific receipt points for
the service as required by section 13.8 of the transmission
provider's OATT); and MidAmerican Energy Co., 112 FERC ] 61,346
(2005) (operational audit in which staff found, among other things,
that a transmission provider permitted its wholesale merchant
function to (a) use network transmission service to bring short-term
energy purchases onto its system while it simultaneously made off-
system sales, inconsistently with the preamble to Part III of the
transmission provider's OATT and section 28.6 of its OATT; and (b)
confirm firm network transmission service requests without
identifying a designated network resource or acquiring an associated
network resource, in some instances using this service to deliver
short-term energy purchases used to facilitate off-system sales,
inconsistent with section 29.2 or section 30.6 of the transmission
provider's OATT). See also Commission orders cited in note 989 supra.
---------------------------------------------------------------------------

1748. We are mindful, however, that the circumstances of a
particular affiliate may not always justify the imposition of a remedy
so severe as revocation of market-based rate authority in a particular
market when its affiliated transmission provider loses its market-based
rate authority in that market as a result of an OATT violation. To
afford due process to a transmission provider's affiliates in that
situation, and to ensure that a determination to revoke market-based
rate authority in a particular market for a transmission provider and
all of its affiliates that possess such authority is adequately based
upon record evidence and not arbitrary or capricious, we will allow an
opportunity for each such affiliate to make a showing that it should
retain its market-based rate authority or that enforcement action
against it should be less severe than revocation. The determination
whether an affiliate has overcome the rebuttable presumption depends on
an analysis of specific facts in the record. Relevant facts would
include, but are not limited to, whether: (1) The transmission provider
and the affiliate were under the same control; (2) the affiliate knew
of, participated in or was an accomplice to the OATT violation; (3) the
affiliate assisted the transmission provider in exercising market
power; or (4) the affiliate benefited from the violation.
c. Whether Certain OATT Violations Should Be Considered Market
Manipulation Under Section 222 of the FPA
NOPR Proposal
1749. The Commission proposed in the NOPR to decline to identify in
the pro forma OATT specific conduct that constitutes per se market
manipulation. The Commission proposed to consider on a case-by-case
basis, if and when they arise, whether specific circumstances relating
to OATT violations constitute market manipulation under the standards
set forth in Order No. 670.
Comments
1750. All commenters on this issue concur with a case-by-case
approach to it.\997\ Southwestern Coop suggests that, as the Commission
gains sufficient experience to describe particular misconduct as market
manipulation per se, it should identify such misconduct in the OATT.
While contending that the Commission should act with caution in listing
behaviors that constitute per se market manipulation in view of the
dynamic nature of markets, TDU Systems urge the Commission to specify
in the OATT that transmission planning misconduct could constitute a
form of market manipulation or abuse.
---------------------------------------------------------------------------

\997\ APPA, Nevada Companies, PNM-TNMP, Southwestern Coop, and
TDU Systems.
---------------------------------------------------------------------------

Commission Determination
1751. We adopt the NOPR proposal for a case-by case approach to
considering whether OATT violations may constitute market manipulation.
Without reference to a specific factual pattern developed in an
investigation or on-the-record proceeding, the Commission is not in a
position to identify market manipulation relating to OATT violations.\998\
---------------------------------------------------------------------------

\998\ Similarly, in issuing the Anti-manipulation Rule, we
declined to provide specific examples of what would constitute
market manipulation. Order No. 670 at P 64-67.
---------------------------------------------------------------------------

VI. Information Collection Statement

1752. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting, record keeping, and public
disclosure (collections of information) imposed by an agency.\999\
Pursuant to OMB regulations, the Commission is providing notice of its
proposed information collections to OMB for review under section
3507(d) of the Paperwork Reduction Act of 1995.\1000\
---------------------------------------------------------------------------

\999\ 5 CFR 1320.11.
\1000\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

1753. The Commission identifies the information provided under Part
35 subpart C as contained in FERC-516 and Part 37 as contained in FERC-
717. The Commission solicited comments 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 exchanges. The
Commission did not receive any specific comments regarding its burden
estimates. Where commenters raised concerns that specific information
collection requirements would be burdensome to implement, the

[[Page 12490]]

Commission has address those concerns elsewhere in the rule.
1754. The Commission estimates the burden for complying with the
Final Rule is as follows: \1001\
---------------------------------------------------------------------------

\1001\ These burden estimates applied only to the Final Rule 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....................... 116 1 25 2,900
Revision of Imbalance Charges................... 116 1 5 580
ATC revisions................................... 116 1 40 4,640
Planning (Attachment K)......................... 116 1 200 23,200
Congestion studies.............................. 116 1 300 34,800
Attestation of network resource commitment...... 116 1 1 116
Capacity reassignment........................... 116 1 100 11,600
Operational Penalty annual filing............... 116 1 10 1,160
Creditworthiness--include criteria in the tariff 116 1 40 4,640
---------------------------------------------------------------
Sub Total Part 35........................... .............. .............. .............. 83,636
----------------------------------------------------------------------------------------------------------------
Part 37 (FERC-717)
----------------------------------------------------------------------------------------------------------------
ATC-related standards:
NERC/NAESB Team to develop.................. 1 1 1,920 1,920
Review and comment by utility............... 116 1 20 2,320
Implementation by each utility.............. 116 1 40 4,640
Mandatory data exchanges........................ 116 1 80 9,280
Explanation of change of ATC values............. 116 1 100 11,600
Reevaluate CBM and post quarterly............... 116 1 20 2,320
Post OASIS metrics; requests accepted/denied.... 116 1 90 10,440
Post planning redispatch offers and reliability 116 1 20 2,320
redispatch data................................
Post curtailment data........................... 116 1 10 11,160
Post Planning and System Impact Studies......... 116 1 5 580
Posting of metrics for System Impact Studies.... 116 1 100 11,600
Post all rules to OASIS......................... 116 1 5 580
Sub Total (Part 37)......................... .............. .............. .............. 68,760
---------------------------------------------------------------
Total (Part 35 + Part 37)............... .............. .............. .............. 140,476
---------------------------------------------------------------
Recordkeeping................................... 116 1 40 4,640
----------------------------------------------------------------------------------------------------------------

1755. Information Collection Costs: No comments were received
regarding the Commission's estimate of costs to comply with these
requirements. The Commission has projected costs of compliance as follows:
Total Annual Hours for Collection:
Reporting + recordkeeping hours = 152,396 + 4,640 = 157,036 hours.
Cost to Comply:

Reporting = $17,373,144
hour), consultant ($150), technical ($80), and administrative support
($25))
Recordkeeping = $7,478,888
$78,880
Storage 8,000 sq. ft. x $925 (off site storage) = $7,400,000
Total costs = $24,852,024
Labor $ ($17,373,144 + $78,880) + Recordkeeping Storage Costs
($7,400,000)

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: The Federal Energy Regulatory
Commission adopts these 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 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 LSEs, (3)
to remedy certain portions of the pro forma OATT that may have
permitted utilities to

[[Page 12491]]

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 Final Rule 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.
1756. 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.
1757. 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) 395-3122, 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

1758. 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.\1002\ The
Commission concludes that neither an Environmental Assessment nor an
Environmental Impact Statement is required for this Final Rule 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.\1003\
---------------------------------------------------------------------------

\1002\ Regulations Implementing the National Environmental
Policy Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats.
& Regs. ] 30,783 (1987).
\1003\ 18 CFR 380.4(a)(15).
---------------------------------------------------------------------------

VIII. Regulatory Flexibility Act Analysis

1759. The Regulatory Flexibility Act of 1980 (RFA) \1004\ generally
requires a description and analysis of final 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 other than those that have received
waiver of the obligation to comply with Order Nos. 888 and 889. The
total number of public utilities that, absent waiver, would have to
modify their current OATTs by filing the revised pro forma OATT is
116.\1005\ Of these only six public utilities, or less than two
percent, have output of four million MWh or less per year.\1006\ The
Commission does not consider this a substantial number and, in any
event, each of these entities retains its rights to waiver of these
requirements.\1007\ 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. Accordingly,
the Commission certifies that the Final Rule will not have a
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

\1004\ 5 U.S.C. 601-612.
\1005\ The Commission has identified 116 transmission providers
with tariffs on file. We note that this figure is lower than our
initial estimate in the NOPR, based on FERC Form No. 1 and FERC Form
No. 1-F data.
\1006\ Id.
\1007\ 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); 15 U.S.C. 632(a)(1). In Mid-Tex Elec. Coop. v. FERC, 773
F.2d 327, 340-43 (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. Document Availability

1760. 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.
1761. 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.
1762. 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).

X. Effective Date and Congressional Notification

1763. These regulations are effective May 14, 2007. The Commission
has determined, with the concurrence of the Administrator of the Office
of Information and Regulatory Affairs of OMB, that this rule is not a
``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996. The Commission will submit
the Final Rule to both houses of Congress and to the General Accounting
Office.

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 the Commission.
Magalie R. Salas,
Secretary.

? In consideration of the foregoing, the Commission amends parts 35 and 37,

[[Page 12492]]

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 paragraphs (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 (Final Rule on
Open Access and Stranded Costs), as revised by the open access pro
forma tariff contained in Order No. 890, FERC Stats. & Regs. ] 31,241
(Final Rule on Open Access Reforms), or such other open access tariff
as may be approved by the Commission consistent with Order No. 888, FERC
Stats. & Regs ] 31,306 and Order No. 890, FERC Stats. & Regs. ] 31,241.
(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. 890,
FERC Stats. & Regs. ] 31,241, 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 May 14, 2007, it must file the revisions to the pro forma tariff
contained in Order No. 890, FERC Stats. & Regs. ] 31,241, pursuant to
section 206 of the FPA and accompanying rates pursuant to section 205
of the FPA in accordance with the procedures set forth in Order No.
890, FERC Stats. & Regs ] 31,241.
(iii) If a public utility owns, controls, or operates transmission
facilities used for the transmission of electric energy in interstate
commerce as of May 14, 2007, 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 May 14, 2007 the
revisions to the pro forma tariff contained in Order No. 890, FERC
Stats. & Regs. ] 31,241, 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. 890, FERC Stats. & Regs. ] 31,241, must
demonstrate that the deviation is consistent with the principles of
Order No. 888, FERC Stats. & Regs ] 31,036 and Order No. 890, FERC
Stats. & Regs. ] 31,241.
(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 transmission tariff
filed pursuant to this section.
(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 tariff, which
tariff must be the pro forma tariff contained in Order No. 888, FERC
Stats. & Regs. ] 31,036, as revised by the pro forma tariff contained
in Order No. 890, FERC Stats. & Regs. ] 31,241, or such other open
access tariff as may be approved by the Commission consistent with
Order No. 888, FERC Stats. & Regs. ] 31,036 and Order No. 890, FERC
Stats. & Regs. ] 31,241.
(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 May 14, 2007,
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 May 14,
2007, 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. 890, FERC Stats.
& Regs. ] 31,241, pursuant to section 206 of the FPA and accompanying
rates pursuant to section 205 of the FPA in accordance with the
procedures set forth in Order No. 890, FERC Stats. & Regs ] 31,241.
(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 open access transmission tariff filed pursuant
to this section for wholesale trades among the pool or system members.

[[Page 12493]]

(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 pro
forma tariff contained in Order No. 888, FERC Stats. & Regs. ] 31,036,
as revised by the pro forma tariff contained in Order No. 890, FERC
Stats. & Regs. ] 31,241, or such other open access tariff as may be
approved by the Commission consistent with Order No. 888, FERC Stats. &
Reg. ] 31,036 and Order No. 890, FERC Stats. & Regs. ] 31,241.
(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. 890, FERC Stats. & Regs. ] 31,241, pursuant to
section 206 of the FPA and accompanying rates pursuant to section 205
of the FPA in accordance with the procedures set forth in Order No.
890, FERC Stats. & Regs ] 31,241.
(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. 888, FERC
Stats. & Regs. ] 31,036, as revised by the pro forma tariff in Order
No. 890, FERC Stats. & Regs. ] 31,241, or any portions thereof, the
Commission-approved ISO or RTO may instead set forth such demonstration
in its filing pursuant to section 206 in accordance with the procedures
set forth in Order No. 890, FERC Stats. & Regs ] 31,241.
(d) Waivers. * * *
(1) No later than May 14, 2007, 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. 890, FERC Stats. & Regs. ] 31,241.
* * * * *
(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) through (b)(2)(iii) are revised.
? e. Paragraph (b)(3) is revised.
? f. Paragraphs (c)(2) and (c)(5) are revised.
? g. Paragraphs (e)(1) and (e)(2)(ii) are revised.
? h. Paragraph (e)(3)(ii) is revised.
? i. Paragraphs (h), (i) and (j) 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 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), as well as load forecast
assumptions) 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.
(iii) System planning studies, facilities studies, and specific
network impact studies performed for customers or the Transmission
Provider's own network resources are to be made publicly available in
electronic form on request and a list of such studies shall be posted
on the OASIS. A study 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. These studies are to be retained for five years.
(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.

[[Page 12494]]

(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 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) of this section are updated because of a change in
TTC by more than 10 percent, the Transmission Provider shall post a
brief, but specific, narrative explanation of the reason for the
update. This narrative should include, the specific events which gave
rise to the update (e.g., 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) and
new values for ATC on the path (as opposed to all points on the network).
(4) When the monthly and yearly capability posted under paragraphs
(b)(3)(i)(A) and (B) of this section remain unchanged at a value of
zero for a period of six months, the Transmission Provider shall post a
brief, but specific, narrative explanation of the reason for the
unavailability of ATC.
(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 every year.
(B) The Transmission Provider must post its practices for
reevaluating its CBM needs.
(iv) Daily load. The Transmission Provider must post on a daily
basis, its actual daily peak load for the prior day.
(c) * * *
(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 provide
a link to all of the rules, standards and practices that relate to
transmission services posted on the Transmission Providers' public Web
sites.
* * * * *
(5) Customers choosing to use the OASIS to offer for resale
transmission capacity they have purchased must post relevant
information to the same OASIS as used by the Transmission Provider from
whom the Reseller purchased the transmission capacity. This information
must be posted on the same display page, using the same tables, as
similar capability being sold by the Transmission Provider, and the
information must be contained in the same downloadable files as the
Transmission Provider's own available capability.
* * * * *
(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,
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) * * *

[[Page 12495]]

(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 and the Commission's Staff.
* * * * *
(3) * * *
(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) For all system impact studies completed more than 60 days after
receipt of an executed system impact study agreement, average number of
days study was delayed due to transmission customer's actions (e.g.,
delays in providing needed data),
(D) 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
(E) 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) For all facilities studies completed more than 60 days after
receipt of an executed facilities study agreement, average number of
days study was delayed due to transmission customer's actions (e.g.,
delays in providing needed data),
(D) 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,
(E) Mean cost of facilities studies completed by the Responsible
Party during the reporting quarter, and
(F) Mean cost of upgrades recommended in facilities studies
completed during the reporting quarter.
(vi) Service requests withdrawn from facilities study queue.
(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

[[Page 12496]]

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)(i) through paragraph (h)(3)(iv) 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.
(j) Posting redispatch data.
(1) The Transmission Provider must allow the posting on OASIS of
any third party offer to relieve a specified congested transmission
facility.
(2) The Transmission Provider must post on OASIS (i) its monthly
average cost of planning and reliability redispatch, for which it
invoices customers, at each internal transmission facility or interface
over which it provides redispatch service and (ii) a high and low
redispatch cost for the month for each of these same transmission
facilities. The transmission provider must post this data on OASIS as
soon as practical after the end of each month, but no later than when
it sends invoices to transmission customers for redispatch-related services.

? 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.

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

Appendix A: Summary of Compliance Filing Requirements

For a more detailed description of compliance obligations please
refer to the Final Rule paragraph number. For further information
related to the Final Rule, such as electronic versions of the pro forma
OATT showing tariff changes adopted in the Final Rule in redline/
strikeout format, and further information regarding docketing of
compliance filings and specific filing instructions, please visit our
Web site at the following location
http://www.ferc.gov/industries/electric/indus-act/oatt-reform.asp.

----------------------------------------------------------------------------------------------------------------
Deadline (days after publication in Federal Final rule
Register) Compliance action paragraph No.
----------------------------------------------------------------------------------------------------------------
30............................................ Optional Implementation FPA section 205 filings P 139
allowing transmission providers to propose
previously approved variations from the pro
forma OATT that have been affected by pro forma
OATT Final Rule reforms to remain in effect
subject to a demonstration that such variations
continue to be consistent with or superior to
the revised Final Rule pro forma OATT (non RTO/
ISO transmission providers). Such optional
filings must request a 90 day effective date to
facilitate Commission review under section 205.

[[Page 12497]]

60............................................ Non-ISO/RTO transmission providers submit FPA P 135
section 206 filings that contain the non-rate
terms and conditions set forth in Final Rule.
These filings need only contain the revised
provisions adopted in the Final Rule.
Transmission providers utilizing the optional
Implementation FPA section 205 filing described
above, need only submit tariff sheets necessary
to implement the remaining modifications
required under the Final Rule, i.e.,
modifications related to tariff provisions that
did not implicate previously-approved
variations.
75............................................ Transmission Providers must post a ``strawman'' P 443
proposal for compliance with each of the nine
planning principles adopted in the Final Rule.
This may be posted on the Transmission
Providers Web site or its OASIS site.
90............................................ NERC/NAESB status report and work plan for P 223
completion of ATC related business practices
and standards.
NAESB status report and work plan for completion P 141
of OASIS functionality or uniform business
practices (other than those related to ATC).
120........................................... Transmission Providers must submit redesigned P 263
transmission charges that reflect the Capacity
Benefit Margin set-aside through a limited
issue section 205 rate filing as part of their
initial ATC related compliance filings.
180........................................... Submit compliance filings with Attachment C P 140
(ATC) of the pro forma OATT.
210........................................... ISOs and RTOs, and transmission providers P 157, P 161
located within an ISO/RTO footprint, submit FPA
section 206 filings that contain the non-rate
terms and conditions set forth in the Final
Rule. These filings need only contain the
revised provisions adopted in the Final Rule or
a demonstration that previously approved
variations continue to be consistent with or
superior to the revised pro forma OATT.
210........................................... Submit compliance filings with Attachment K P 140, P 442
(Planning) of the pro forma OATT or RTOs and
ISOs file a demonstration that their planning
processes are consistent with or superior to
the planning principles in the Final Rule.
N/A........................................... Transmission Providers must file a revised P 325
Attachment C to incorporate any changes to
NERC's and NAESB's reliability and business
practice standards to achieve consistency in
ATC within 60 days of completion of the NERC
and NAESB processes.
N/A........................................... After the submission of FPA section 206 P 135
compliance filings, transmission providers may
submit FPA section 205 filings proposing rates
for the services provided for in the tariff, as
well as non-rate terms and conditions that
differ from those set forth in the Final Rule
if those provisions are ``consistent with or
superior to'' the pro forma OATT.
----------------------------------------------------------------------------------------------------------------

Appendix B: Commenting Party Acronyms

Initial Commenters
------------------------------------------------------------------------
Abbreviation Initial commenters
------------------------------------------------------------------------
Alberta Intervenors............... Alberta Intervenors (TransCanada
Energy Ltd., ENMAX Energy
Marketing, Inc.; EPCOR Merchant and
Capital, LP; and TransAlta
Corporation).
Alcoa............................. Alcoa Inc. and Alcoa Power
Generating Inc.
Allegheny......................... Allegheny Power and Allegheny Energy
Supply Company, LLC.
Ameren............................ Ameren Services Company.
American Transmission............. American Transmission Company LLC.
AMP-Ohio.......................... American Municipal Power-Ohio, Inc.
Anaheim........................... Cities of Anaheim, Azusa, Banning,
Colton, Pasadena, and Riverside,
California.
APPA.............................. American Public Power Association.
ARC............................... Alliance for Retail Choice.
Arkansas Commission............... Arkansas Public Service Commission.
Arkansas Municipal................ Arkansas Municipal Power
Association.
AWEA.............................. American Wind Energy Association.
Barrick........................... Barrick Goldstrike Mines Inc.
BART.............................. San Francisco Bay Area Rapid Transit
District.
Bonneville........................ Bonneville Power Administration.
BP Energy......................... BP Energy Company.
Bureau of Reclamation............. U.S. Bureau of Reclamation.
CAC/EPUC.......................... Cogeneration Association of
California (Coalinga Cogeneration
Co., Mid-Set Cogeneration Co., Kern
River Cogeneration Co., Sycamore
Cogeneration Co., Sargent Canyon
Cogeneration Co., Salinas River
Cogeneration Co., Midwest Sunset
Cogeneration Co. and Watson
Cogeneration Co.) and Energy
Producers and Users Coalition (Aera
Energy LLC, BP American, Inc.,
Chevron USA, Inc., ConocoPhilips
Co., ExxonMobil Power and Gas
Services, Inc., Shell Oil Products,
US, THUMS Long Beach Co.,
Occidental Elk Hills, Inc., and
Valero Refining Co.--California).
CAISO............................. California Independent System
Operator Corporation.
California Commission............. Public Utilities Commission of the
State of California.
Calpine........................... Calpine Corporation.
Chandley-Hogan.................... John D. Chandley and William W.
Hogan.

[[Page 12498]]

ColumbiaGrid...................... ColumbiaGrid Members (Bonneville
Power Administration; Avista Corp.;
Public Utility District No. 1 of
Chelan County, Washington; Public
Utility District No. 2 of Grant
County, Washington; Puget Sound
Energy, Inc.; Seattle City Light;
and Tacoma Power.
Community Power Alliance.......... Community Power Alliance Members
(Entergy, Progress Energy, Salt
River Project Agricultural
Improvement and Power District, and
Southern Co.).
Constellation..................... Constellation Energy Group, Inc.
CREPC............................. Committee on Regional Electric Power
Corp.
Dominion.......................... Dominion Resources Services, Inc.
(Armstrong Energy Limited
Partnership, LLLP; Dominion Energy
Marketing, Inc.; Elwood Energy,
LLC; Fairless Energy, LLC;
Pleasants Energy, LLC and Virginia
Electric and Power Co. d/b/a
Dominion Virginia Power).
Dow............................... Dow Chemical Corp.
Duke.............................. Duke Energy Corp.
E.ON.............................. E.ON U.S. LLC.
East Texas Cooperatives........... East Texas Electric Cooperative,
Inc.; Northeast Texas Electric
Cooperative, Inc.; Sam Rayburn
Generation and Electric
Cooperative, Inc. and Tex-La
Electric Cooperative of Texas, Inc.
Eastern North Carolina............ Eastern NC Towns (Towns of Black
Creek, NC; Lucama, NC;
Stantonsburg, NC).
EEI............................... Edison Electric Institute.
ELCON............................. Electricity Consumers Resource
Council, American Iron and Steel
Institute, and American Forest &
Paper Institute.
Emerald........................... Emerald People's Utility District.
Entegra........................... Entegra Power Group LLC and LS Power
Associates, L.P.
Entergy........................... Entergy Services, Inc.
EPSA.............................. Electric Power Supply Association.
Exelon............................ Exelon Corporation.
Fayetteville...................... Public Works Commission of the City
of Fayetteville, North Carolina.
Fertilizer Institute.............. Fertilizer Institute.
FirstEnergy....................... FirstEnergy Service Company (First
Energy Solutions; American
Transmission Systems, Inc.; Jersey
Central Power and Light Co.;
Metropolitan Edison Co.; and
Pennsylvania Electric Co.).
Flathead.......................... Flathead Electric Cooperative.
Florida Commission................ Florida Public Service Commission.
Florida Industrial Cogeneration Florida Industrial Cogeneration
Association. Association.
FMPA.............................. Florida Municipal Power Agency and
Midwest Municipal Transmission
Group.
Geothermal Producers.............. CE Generation, LLC; Ormat
Technologies, Inc.; Caithness
Energy, LLC; and Geothermal Energy
Association.
Grant............................. Grant County PUD, Chelan County PUD
and Pend Oreille County PUD.
Great Northern.................... Great Northern Power Development,
L.P.
Imperial.......................... Imperial Irrigation District.
Indianapolis Power................ Indianapolis Power & Light Co.
Indicated New York Transmission Central Hudson Gas & Electric Corp.;
Owners. Consolidated Edison Co. of New
York, Inc.; LIPA; New York Power
Authority; New York State Electric
& Gas Corp.; Orange and Rockland
Utilities, Inc.; and Rochester Gas
and Electric Corp.
International Transmission........ International Transmission Co. d/b/a
ITCTransmission and Michigan
Electric Transmission Co., LLC.
IRH Management.................... IRH Management Committee and the
Schedule 20A Service Providers.
ISO New England................... ISO New England, Inc. and New
England Power Pool.
ISO/RTO Council................... ISO/RTO Council.
Lassen............................ Lassen Municipal Utility District.
LDWP.............................. City of Los Angeles Department of
Water and Power.
LPPC.............................. Large Public Power Council.
Manitoba Hydro.................... Manitoba Hydro.
MDEA.............................. Mississippi Delta Energy Agency,
Clarksdale Public Utilities
Commission, and Public Service
Commission of Yazoo City.
MidAmerican....................... MidAmerican Energy Company and
PacifiCorp.
MISO.............................. Midwest Independent Transmission
System Operator, Inc.
MISO Transmission Owners.......... Midwest ISO Transmission Owners.
MISO/PJM States................... Organization of MISO States and
Organization of PJM States, Inc.
Morgan Stanley.................... Morgan Stanley Capital Group Inc.
NAESB............................. North American Energy Standards
Board.
NARUC............................. National Association of Regulatory
Utility Commissioners.
National Grid..................... National Grid USA.
NCEMC............................. North Carolina Electric Membership
Corporation.
NCPA.............................. Northern California Power Agency.
NERC.............................. North American Electric Reliability
Corporation.
Nevada Commission................. Public Utilities Commission of
Nevada.
Nevada Companies.................. Nevada Power Company and Sierra
Pacific Power Company.
New Jersey Board.................. New Jersey Board of Public
Utilities.
New Mexico Attorney General....... New Mexico Attorney General.
New York Commission............... New York State Public Service
Commission.

[[Page 12499]]

Newfoundland...................... Newfoundland and Labrador Hydro.
Newmont Mining.................... Newmont USA Limited, dba Newmont
Mining Corp.
Northeast Utilities............... Northeast Utilities Service Company
(Connecticut Light and Power Co.;
Western Massachusetts Electric Co.;
Public Service Co. of New
Hampshire; Holyoke Water Power Co.;
and Holyoke Power and Electric
Co.).
Northwest IOUs.................... Northwest Investor-Owned Utilities
(Avista Corp., Portland General
Electric Co., and Puget Sound
Energy, Inc.).
Northwest Parties................. Northwest Parties (Avista Corp.,
Bonneville Power Administration,
PacifiCorp, PNGC Power, Portland
General Electric Co., Public Power
Council, Public Utility Commission
of Oregon and Puget Sound Energy,
Inc.).
NorthWestern...................... NorthWestern Corporation.
NPPD.............................. Nebraska Public Power District.
NRECA............................. National Rural Electric Cooperative
Association.
NRG............................... NRG Energy, Inc.
NYAPP............................. New York Association of Public
Power.
Occidental........................ Occidental Chemical Corporation.
Oklahoma Commission............... Oklahoma Corporation Commission.
Old Dominion...................... Old Dominion Electric Cooperative.
Oversight Resources............... Oversight Resources, LLC.
PGP............................... Public Generating Pool and Chelan
County PUD.
Pinnacle.......................... Pinnacle West Capital Corporation;
Arizona Public Service Company; and
APS Energy Services Company, Inc.
PJM............................... PJM Interconnection, LLC.
PNM-TNMP.......................... Public Service Company of New Mexico
and Texas-New Mexico Power Company.
Powerex........................... Powerex Corp.
PPL............................... PPL Companies.
PPM............................... PPM Energy, Inc.
Progress Energy................... Progress Energy, Inc. (Carolina
Power & Light Co. d/b/a Progress
Energy Carolinas and Florida Power
Corp., d/b/a Progress Energy
Florida; and Progress Ventures,
Inc.).
Project for Sustainable FERC Project for Sustainable FERC Energy
Energy Policy. Policy (American Wind Energy
Association, Delaware Division of
the Public Advocate, Environmental
Law & Policy Center, Illinois
Citizens Utility Board, Natural
Resources Defense Council,
Northwest Energy Coalition, Office
of the Ohio Consumers' Counsel,
Pace Energy Project, Project for
Sustainable FERC Energy Policy,
Renewable Northwest Project, West
Wind Wires, and Wind on the Wires).
PSEG.............................. Public Service Electric and Gas
Company; PSEG Power LLC; and PSEC
Energy Resources & Trade LLC (PSEG
Companies).
Public Power Council.............. Public Power Council.
Reliant........................... Reliant Energy, Inc.
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.
SCE............................... Southern California Edison.
Seattle........................... City of Seattle--City Light
Department.
Sempra Global..................... Sempra Global.
South Carolina E&G................ South Carolina Electric & Gas
Company.
South Carolina Regulatory Staff... South Carolina Office of Regulatory
Staff.
Southern.......................... Southern Company Services, Inc.
Southwest Transmission............ Southwest Area Transmission Sub-
Regional Planning Group.
Southwestern Coop................. Southwestern Electric Cooperative,
Inc.
SPP............................... Southwest Power Pool, Inc.
Steel Manufacturers Association... Steel Manufacturers Association.
Suez Energy NA.................... Suez Energy North America, Inc.
Tacoma............................ Tacoma Power.
TANC.............................. Transmission Agency of Northern
California.
TAPS.............................. Transmission Access Policy Study
Group.
TDU Systems....................... Transmission Dependent Utilities
Systems.
TransAlta......................... TransAlta Energy Marketing (US) Inc.
TranServ.......................... TranServ International, Inc.
Tucson............................ Tucson Electric Power Company.
TVA............................... Tennessee Valley Authority.
Utah Municipals................... Utah Associated Municipal Power
Systems.
WAPA.............................. Western Area Power Administration.
WECC.............................. Western Electricity Coordinating
Council.
WestConnect....................... WestConnect Companies.
Western Governors................. Western Governors' Association.
Williams.......................... Williams Power Company, Inc.
Wisconsin Electric................ Wisconsin Electric Power Company.
WSPP.............................. Western Systems Power Pool, Inc.

[[Page 12500]]

Xcel.............................. Xcel Energy Services, Inc.
------------------------------------------------------------------------

Reply commenters
------------------------------------------------------------------------
Abbreviation Reply commenters
------------------------------------------------------------------------
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.
Barrick........................... Barrick Goldstrike Mines Inc.
Bonneville........................ Bonneville Power Administration.
CAISO............................. California Independent System
Operator Corporation.
California Commission............. Public Utilities Commission of the
State of California.
Canadian Electricity Association.. Canadian Electricity Association.
Chandley-Hogan.................... John D. Chandley and William W.
Hogan.
CMUA.............................. California Municipal Utilities
Association.
ColumbiaGrid...................... ColumbiaGrid Members (Bonneville
Power Administration; Avista Corp.;
Public Utility District No. 1 of
Chelan County, Washington; Public
Utility District No. 2 of Grant
County, Washington; Puget Sound
Energy, Inc.; Seattle City Light;
and Tacoma Power.
Community Power Alliance.......... Community Power Alliance Members
(Entergy, Progress Energy, Salt
River Project Agricultural
Improvement and Power District, and
Southern Co.).
Detroit Edison.................... Detroit Edison Co.
Duke.............................. Duke Energy Corp.
Dynegy............................ Dynegy Power Marketing, Inc.
East Texas Cooperatives........... East Texas Electric Cooperative,
Inc.; Northeast Texas Electric
Cooperative, Inc.; Sam Rayburn
Generation and Electric
Cooperative, Inc. and Tex-La
Electric Cooperative of Texas, Inc.
EEI............................... Edison Electric Institute.
ElectriCities..................... ElectriCities of North Carolina,
Inc.
Entegra........................... Entegra Power Group LLC and LS Power
Associates, L.P.
Entergy........................... Entergy Services, Inc.
EPSA.............................. Electric Power Supply Association.
Exelon............................ Exelon Corporation.
Fayetteville...................... Public Works Commission of the City
of Fayetteville, North Carolina.
Fertilizer Institute.............. Fertilizer Institute.
FMPA.............................. Florida Municipal Power Agency and
Midwest Municipal Transmission
Group.
Great Northern.................... Great Northern Power Development,
L.P.
Hoosier........................... Hoosier Energy Rural Electric
Cooperative, Inc.
H.Q. Energy....................... H.Q. Energy Services (U.S.), Inc.
Indianapolis Power................ Indianapolis Power & Light Co.
Industrial Customers of Northwest Industrial Customers of Northwest
Utilities. Utilities (Air Liquide; Air
Products; BPB Gypsum, Inc.; Blue
Heron Paper Company; Boeing; Boise
Cascade; CNC Containers, Northwest;
Chemi-Con Materials Corporation;
Dyno Nobel, Inc.; ConAgra Foods;
Eka Chemicals, Inc.; Evanite Fiber;
Georgia-Pacific; Grays Harbor
Paper, L.P.; Hewlett-Packard;
Inland Empire Paper Co.; Intel;
J.R. Simplot; Kimberly-Clark
Corporation; Longview Fibre;
Microsoft Corporation; Norpac
Foods; Noveon Kalama, Inc.; Oregon
Steel Mills; PCC Structurals, Inc.;
Ponderay Newsprint Co; Shell Oil
Products US; Simpson Paper; Simpson
Timber; Solar Grade Silicon LLC; SP
Newsprint Co.; Tesoro Refining and
Marketing Co.; Wah Chang; West Linn
Paper Company; Weyerhaeuser).
International Transmission........ International Transmission Co. d/b/a
ITCTransmission and Michigan
Electric Transmission Co., LLC.
ISO/RTO Council................... ISO/RTO Council.
Lassen............................ Lassen Municipal Utility District.
LPPC.............................. Large Public Power Council.
MAPP.............................. Mid-Continent Area Power Pool.
Mark Lively....................... Mark B. Lively.
MDEA.............................. Mississippi Delta Energy Agency,
Clarksdale Public Utilities
Commission, Public Service
Commission of Yazoo City, Arkansas
Electric Cooperative Corporation,
Municipal Energy Agency of
Mississippi, and Lafayette
Utilities System*.\1008\
MidAmerican....................... MidAmerican Energy Company and
PacifiCorp.
MISO.............................. Midwest Independent Transmission
System Operator, Inc.
Morgan Stanley.................... Morgan Stanley Capital Group Inc.
NARUC............................. National Association of Regulatory
Utility Commissioners.
NC Transmission Planning North Carolina Transmission Planning
Participants. Collaborative Participants.
NCPA.............................. Northern California Power Agency.
Newmont Mining.................... Newmont USA Limited, dba Newmont
Mining Corp.
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.

[[Page 12501]]

Northwest IOUs.................... Northwest Investor-Owned Utilities
(Avista Corp., Portland General
Electric Co., and Puget Sound
Energy, Inc.).
NorthWestern...................... NorthWestern Corporation.
NRECA............................. National Rural Electric Cooperative
Association.
Occidental........................ Occidental Chemical Corporation.
OG&E.............................. Oklahoma Gas and Electric Company.
Ohio Power Siting Board........... Ohio Power Siting Board, American
Municipal Power-Ohio, Inc. and
Buckeye Power, Inc.
Old Dominion...................... Old Dominion Electric Cooperative;
Southern Maryland Electric
Cooperative, Inc.; Allegheny
Electric Cooperative, Inc.; and
North Carolina Electric Membership
Corporation.
Omaha Public Power................ Omaha Public Power District.
Pennsylvania Commission........... Pennsylvania Public Utility
Commission.
PJM............................... PJM Interconnection, LLC.
PNM-TNMP.......................... Public Service Company of New Mexico
and Texas-New Mexico Power Company.
Powerex........................... Powerex Corp.
PPM............................... PPM Energy, Inc.
Progress Energy................... Progress Energy, Inc. (Carolina
Power & Light Co. d/b/a Progress
Energy Carolinas and Florida Power
Corp., d/b/a Progress Energy
Florida; and Progress Ventures,
Inc.).
Project for Sustainable FERC Project for Sustainable FERC Energy
Energy Policy. Policy (Delaware Division of the
Public Advocate, Environmental Law
& Policy Center, Fresh Energy,
Natural Resources Defense Council,
Northwest Energy Coalition, Pace
Energy Project, Project for
Sustainable FERC Energy Policy,
Renewable Northwest Project, West
Wind Wires, and Wind on the
Wires).*
Public Power Council.............. Public Power Council.
Sacramento........................ Sacramento Municipal Utility
District.
Salt River........................ Salt River Project Agricultural
Improvement and Power District.
Santa Clara....................... City of Santa Clara, California d/b/
a Silicon Valley Power.
Seattle........................... City of Seattle--City Light
Department.
Seminole.......................... Seminole Electric Cooperative, Inc.
South Carolina E&G................ South Carolina Electric & Gas
Company.
Southern.......................... Southern Company Services, Inc.
SPP............................... Southwest Power Pool, Inc.
Steel Manufacturers Association... Steel Manufacturers Association.
Strategic Energy.................. Strategic Energy, L.L.C.
TANC.............................. Transmission Agency of Northern
California.
TAPS.............................. Transmission Access Policy Study
Group.
TDU Systems....................... Transmission Dependent Utilities
Systems.
Transparent Dispatch Advocates.... PJM Interconnection, LLC; Electric
Consumers Resource Council;
Electric Power Supply Association;
Natural Resources Defense Council;
Renewable Northwest Project;
Project for Sustainable FERC Energy
Policy; Center for Energy
Efficiency & Renewable
Technologies; Shell Trading Gas and
Power Company; American Wind Energy
Association; and Exelon.
Utah Municipals................... Utah Associated Municipal Power
Systems.
WestConnect....................... WestConnect Companies.
Williams.......................... Williams Power Company, Inc.
Wolverine......................... Wolverine Power Supply Cooperative,
Inc.
WPS Companies..................... WPS Companies (Wisconsin Public
Service Corporation and Upper
Peninsula Power Company).
WSPP.............................. Western Systems Power Pool, Inc.
Xcel.............................. Xcel Energy Services, Inc.
------------------------------------------------------------------------

Technical Conference Commenters
------------------------------------------------------------------------
Abbreviation Technical conference commenters
------------------------------------------------------------------------
APPA*............................. American Public Power Association.
APS*.............................. Arizona Public Service Company.
Bonneville*....................... Bonneville Power Administration.
Constellation*.................... Constellation Energy Group, Inc.
EEI*.............................. Exelon Corporation on behalf of
Edison Electric Institute (EEI).
EPSA*\1009\....................... Electric Power Supply Association.
Exelon*........................... Exelon.
NAESB*............................ North American Energy Standards
Board.
NARUC*............................ National Association of Regulatory
Utility Commissioners.
National Grid*.................... National Grid USA.
National Grid/Central Hudson...... National Grid USA, Central Hudson
Gas & Electric Corporation, and
American Wind Energy.
NERC*............................. Prague Power, LLC, on behalf of the
North American Electric Reliability
Corporation.

[[Page 12502]]

New York Parties.................. Consolidated Edison Co. of New York,
Inc., Orange and Rockland
Utilities, Inc., New York Power
Authority, and Independent Power
Producers of New York, Inc.
NRECA*............................ Great River Energy on behalf of
National Rural Electric Cooperative
Association (NRECA).
NRG on behalf of EPSA*............ NRG Energy, Inc. on behalf of
Electric Power Supply Association
(EPSA).
PacifiCorp........................ PacifiCorp.
PJM*.............................. PJM Interconnection, LLC.
AWEA*............................. PPM Energy, Inc. on behalf of
American Wind Energy Association
Progress Energy*.................. Progress Energy, Inc. (Carolina
Power & Light Company, d/b/a.
Progress Energy Carolinas, Inc. and
Florida Power Corporation, d/b/a
Progress Energy Florida, Inc.).
Renewable Northwest Project*...... Renewable Northwest Project.
San Diego G&E..................... San Diego Gas & Electric Company.
TAPS*............................. Southern Minnesota Municipal Power
Agency and Transmission Access
Policy Study Group.
TDU Systems....................... Transmission Dependent Utilities
Systems.
South Carolina Regulatory Staff... South Carolina Office of Regulatory
Staff.
Southern*......................... Southern Company Services, Inc.
WECC*............................. Western Electricity Coordinating
Council.
Williams*......................... Williams Power.
Williams*......................... Williams Power Company, Inc.
Xcel*............................. Xcel Energy Services, Inc.
------------------------------------------------------------------------

Supplemental Commenters
------------------------------------------------------------------------
Abbreviation Supplemental commenters
------------------------------------------------------------------------
Alabama Commission................ Alabama Public Service Commission.
Ameren............................ Ameren Services Company.
APPA.............................. American Public Power Association.
Barrick........................... Barrick Goldstrike Mines Inc.
Bonneville........................ Bonneville Power Administration.
BP Energy......................... BP Energy Company.
California Commission............. Public Utilities Commission of the
State of California.
Community Power Alliance.......... Community Power Alliance Members
(Entergy, Progress Energy, Salt
River Project Agricultural
Improvement and Power District, and
Southern Co.).
Constellation..................... Constellation Energy Group, Inc.
Duke.............................. Duke Energy Corp.
E.ON.............................. E.ON U.S. LLC.
EEI............................... Edison Electric Institute.
Entergy........................... Entergy Services, Inc.
EPSA and AWEA..................... Electric Power Supply Association
and American Wind Energy
Association.
Florida Commission................ Florida Public Service Commission.
Georgia Commission................ Georgia Public Service Commission.
LPPC.............................. Large Public Power Council.
Mark Lively....................... Mark B. Lively.
MISO.............................. Midwest Independent Transmission
System Operator, Inc.
Nevada Companies.................. Nevada Power Company and Sierra
Pacific Power Company.
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.
NRECA............................. National Rural Electric Cooperative
Association.
OG&E.............................. Oklahoma Gas and Electric Company.
Pacific Coast Parties............. Pacific Coast Parties (Avista
Corporation, Bonneville Power
Administration, PacifiCorp,
Portland General Electric Company,
Puget Sound Energy, Inc., the
Sacramento Municipal Utility
District and the Transmission
Agency of Northern California).
PGP............................... Public Generating Pool.
Southwest Utilities............... Pinnacle West Companies, Public
Service Company of New Mexico,
Texas-New Mexico Power Company, and
UniSource Energy Corporation.
PNM-TNMP.......................... Public Service Company of New Mexico
and Texas-New Mexico Power Company.
Powerex........................... Powerex Corp.
PPL............................... PPL Companies.
PPM............................... PPM Energy, Inc.
Progress Energy................... Progress Energy, Inc. (Carolina
Power & Light Company, d/b/a.
Progress Energy Carolinas, Inc. and
Florida Power Corporation, d/b/a
Progress Energy Florida, Inc.).
Progress Energy and MidAmerican... Progress Energy, Inc. and
MidAmerican Energy Company.
Public Power Council.............. Public Power Council.
SEARUC............................ Southeastern Association of
Regulatory Utility Commissioners.
South Carolina E&G................ South Carolina Electric & Gas
Company.
South Carolina Regulatory Staff... South Carolina Office of Regulatory
Staff.

[[Page 12503]]

Southern.......................... Southern Company Services, Inc.
Tacoma............................ Tacoma Power.
TAPS.............................. Transmission Access Policy Study
Group.
TDU Systems....................... Transmission Dependent Utilities
Systems.
Transparent Dispatch Advocates.... Transparent Dispatch Advocates
(American Wind Energy Association;
Center for Energy Efficiency &
Renewable Technologies; Electric
Consumers Resource Council;
Electric Power Supply Association;
Exelon Corporation; Natural
Resources Defense Council; PJM
Interconnection, LLC; PPM Energy;
Project for Sustainable FERC Energy
Policy; Renewable Northwest
Project; and Shell Trading Gas and
Power Company)*\1010\
Western Governors................. Western Governors' Association.
Williams.......................... Williams Power Company, Inc.
WIRES............................. WIRES.
Xcel.............................. Xcel Energy Services, Inc.
------------------------------------------------------------------------

Appendix C: Pro Forma Open Access Transmission Tariff
---------------------------------------------------------------------------

\1008\ A ``*'' indicates that the composition of this group has
altered in the reply comment filing.
\1009\ A ``*'' indicates that this party submitted speaker
materials at the October 12 Technical Conference.
\1010\ A ``*'' indicates that the composition of this group has
altered in this filing.
---------------------------------------------------------------------------

Table of Contents

I. Common Service Provisions
1 Definitions
1.1 Affiliate
1.2 Ancillary Services
1.3 Annual Transmission Costs
1.4 Application
1.5 Commission
1.6 Completed Application
1.7 Control Area
1.8 Curtailment
1.9 Delivering Party
1.10 Designated Agent
1.11 Direct Assignment Facilities
1.12 Eligible Customer
1.13 Facilities Study
1.14 Firm Point-To-Point Transmission Service
1.15 Good Utility Practice
1.16 Interruption
1.17 Load Ratio Share
1.18 Load Shedding
1.19 Long-Term Firm Point-To-Point Transmission Service
1.20 Native Load Customers
1.21 Network Customer
1.22 Network Integration Transmission Service
1.23 Network Load
1.24 Network Operating Agreement
1.25 Network Operating Committee
1.26 Network Resource
1.27 Network Upgrades
1.28 Non-Firm Point-To-Point Transmission Service
1.29 Non-Firm Sale
1.30 Open Access Same-Time Information System (OASIS)
1.31 Part I
1.32 Part II
1.33 Part III
1.34 Parties
1.35 Point(s) of Delivery
1.36 Point(s) of Receipt
1.37 Point-To-Point Transmission Service
1.38 Power Purchaser
1.39 Pre-Confirmed Application
1.40 Receiving Party
1.41 Regional Transmission Group (RTG)
1.42 Reserved Capacity
1.43 Service Agreement
1.44 Service Commencement Date
1.45 Short-Term Firm Point-To-Point Transmission Service
1.46 System Condition
1.47 System Impact Study
1.48 Third-Party Sale
1.49 Transmission Customer
1.50 Transmission Provider
1.51 Transmission Provider's Monthly Transmission System Peak
1.52 Transmission Service
1.53 Transmission System
2 Initial Allocation and Renewal Procedures
2.1 Initial Allocation of Available Transfer Capability
2.2 Reservation Priority for Existing Firm Service Customers
3 Ancillary Services
3.1 Scheduling, System Control and Dispatch Service
3.2 Reactive Supply and Voltage Control From Generation or Other
Sources Service
3.3 Regulation and Frequency Response Service
3.4 Energy Imbalance Service
3.5 Operating Reserve--Spinning Reserve Service
3.6 Operating Reserve--Supplemental Reserve Service
3.7 Generator Imbalance Service
4 Open Access Same-Time Information System (OASIS)
5 Local Furnishing Bonds
5.1 Transmission Providers That Own Facilities Financed by Local
Furnishing Bonds
5.2 Alternative Procedures for Requesting Transmission Service
6 Reciprocity
7 Billing and Payment
7.1 Billing Procedure:
7.2 Interest on Unpaid Balances
7.3 Customer Default
8 Accounting for the Transmission Provider's Use of the Tariff
8.1 Transmission Revenues
8.2 Study Costs and Revenues
9 Regulatory Filings
10 Force Majeure and Indemnification
10.1 Force Majeure
10.2 Indemnification
11 Creditworthiness
12 Dispute Resolution Procedures
12.1 Internal Dispute Resolution Procedures
12.2 External Arbitration Procedures
12.3 Arbitration Decisions
12.4 Costs
12.5 Rights Under the Federal Power Act
II. Point-to-Point Transmission Service
13 Nature of Firm Point-to-Point Transmission Service
13.1 Term
13.2 Reservation Priority
13.3 Use of Firm Transmission Service by the Transmission Provider
13.4 Service Agreements
13.5 Transmission Customer Obligations for Facility Additions or
Redispatch Costs
13.6 Curtailment of Firm Transmission Service
13.7 Classification of Firm Transmission Service
13.8 Scheduling of Firm Point-To-Point Transmission Service
14 Nature of Non-Firm Point-to-Point Transmission Service
14.1 Term
14.2 Reservation Priority
14.3 Use of Non-Firm Point-To-Point Transmission Service by the
Transmission Provider
14.4 Service Agreements
14.5 Classification of Non-Firm Point-To-Point Transmission Service
14.6 Scheduling of Non-Firm Point-To-Point Transmission Service
14.7 Curtailment or Interruption of Service
15 Service Availability
15.1 General Conditions
15.2 Determination of Available Transfer Capability
15.3 Initiating Service in the Absence of an Executed Service Agreement
15.4 Obligation to Provide Transmission Service that Requires
Expansion or Modification of the Transmission System, Redispatch or
Conditional Curtailment

[[Page 12504]]

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
Points(s)
24.1 Transmission Customer Obligations
24.2 Transmission Provider Access to Metering Data
24.3 Power Factor
25 Compensation for Transmission Service
26 Stranded Cost Recovery
27 Compensation for New Facilities and Redispatch Costs
III. Network Integration Transmission Service
28 Nature of Network Integration Transmission Service
28.1 Scope of Service
28.2 Transmission Provider Responsibilities
28.3 Network Integration Transmission Service
28.4 Secondary Service
28.5 Real Power Losses
28.6 Restrictions on Use of Service
29 Initiating Service
29.1 Condition Precedent for Receiving Service
29.2 Application Procedures
29.3 Technical Arrangements to be Completed Prior to
Commencement of Service
29.4 Network Customer Facilities
29.5 Filing of Service Agreement
30 Network Resources
30.1 Designation of Network Resources
30.2 Designation of New Network Resources
30.3 Termination of Network Resources
30.4 Operation of Network Resources
30.5 Network Customer Redispatch Obligation
30.6 Transmission Arrangements for Network Resources Not
Physically Interconnected With the Transmission Provider
30.7 Limitation on Designation of Network Resources
30.8 Use of Interface Capacity by the Network Customer
30.9 Network Customer Owned Transmission Facilities
31 Designation of Network Load
31.1 Network Load
31.2 New Network Loads Connected With the Transmission Provider
31.3 Network Load Not Physically Interconnected With the
Transmission Provider
31.4 New Interconnection Points
31.5 Changes in Service Requests
31.6 Annual Load and Resource Information Updates
32 Additional Study Procedures for Network Integration
Transmission Service Requests
32.1 Notice of Need for System Impact Study
32.2 System Impact Study Agreement and Cost Reimbursement
32.3 System Impact Study Procedures
32.4 Facilities Study Procedures
32.5 Penalties for Failure to Meet Study Deadlines
33 Load Shedding and Curtailments
33.1 Procedures
33.2 Transmission Constraints
33.3 Cost Responsibility for Relieving Transmission Constraints
33.4 Curtailments of Scheduled Deliveries
33.5 Allocation of Curtailments
33.6 Load Shedding
33.7 System Reliability
34 Rates and Charges
34.1 Monthly Demand Charge
34.2 Determination of Network Customer's Monthly Network Load
34.3 Determination of Transmission Provider's Monthly
Transmission System Load
34.4 Redispatch Charge
34.5 Stranded Cost Recovery
35 Operating Arrangements
35.1 Operation Under The Network Operating Agreement
35.2 Network Operating Agreement
35.3 Network Operating Committee

Schedule 1

Scheduling, System Control and Dispatch Service

Schedule 2

Reactive Supply and Voltage Control From Generation Sources Service

Schedule 3

Regulation and Frequency Response Service

Schedule 4

Energy Imbalance Service

Schedule 5

Operating Reserve--Spinning Reserve Service

Schedule 6

Operating Reserve--Supplemental Reserve Service

Schedule 7

Long-Term Firm and Short-Term Firm Point-to-Point

Schedule 8

Non-Firm Point-to-Point Transmission Service

Schedule 9

Generator Imbalance Service

Attachment A

Form of Service Agreement for Firm Point-to-Point Transmission Service

Attachment A-1

Form of Service Agreement for the Resale, Reassignment or
Transfer of Long-Term 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

[[Page 12505]]

Attachment G

Network Operating Agreement

Attachment H

Annual Transmission Revenue Requirement for Network Integration
Transmission Service

Attachment I

Index of Network Integration Transmission Service Customers

Attachment J

Procedures for Addressing Parallel Flows

Attachment K

Transmission Planning Process

Attachment L

Creditworthiness Procedures

I. Common Service Provisions

1 Definitions

1.1 Affiliate
With respect to a corporation, partnership or other entity, each
such other corporation, partnership or other entity that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such corporation, partnership or
other entity.
1.2 Ancillary Services
Those services that are necessary to support the transmission of
capacity and energy from resources to loads while maintaining reliable
operation of the Transmission Provider's Transmission System in
accordance with Good Utility Practice.
1.3 Annual Transmission Costs
The total annual cost of the Transmission System for purposes of
Network Integration Transmission Service shall be the amount specified
in Attachment H until amended by the Transmission Provider or modified
by the Commission.
1.4 Application
A request by an Eligible Customer for transmission service pursuant
to the provisions of the Tariff.
1.5 Commission
The Federal Energy Regulatory Commission.
1.6 Completed Application
An Application that satisfies all of the information and other
requirements of the Tariff, including any required deposit.
1.7 Control Area
An electric power system or combination of electric power systems
to which a common automatic generation control scheme is applied in
order to:
1. Match, at all times, the power output of the generators within
the electric power system(s) and capacity and energy purchased from
entities outside the electric power system(s), with the load within the
electric power system(s);
2. Maintain scheduled interchange with other Control Areas, within
the limits of Good Utility Practice;
3. Maintain the frequency of the electric power system(s) within
reasonable limits in accordance with Good Utility Practice; and
4. Provide sufficient generating capacity to maintain operating
reserves in accordance with Good Utility Practice.
1.8 Curtailment
A reduction in firm or non-firm transmission service in response to
a transfer capability shortage as a result of system reliability conditions.
1.9 Delivering Party
The entity supplying capacity and energy to be transmitted at
Point(s) of Receipt.
1.10 Designated Agent
Any entity that performs actions or functions on behalf of the
Transmission Provider, an Eligible Customer, or the Transmission
Customer required under the Tariff.
1.11 Direct Assignment Facilities
Facilities or portions of facilities that are constructed by the
Transmission Provider for the sole use/benefit of a particular
Transmission Customer requesting service under the Tariff. Direct
Assignment Facilities shall be specified in the Service Agreement that
governs service to the Transmission Customer and shall be subject to
Commission approval.
1.12 Eligible Customer
i. Any electric utility (including the Transmission Provider and
any power marketer), Federal power marketing agency, or any person
generating electric energy for sale for resale is an Eligible Customer
under the Tariff. Electric energy sold or produced by such entity may
be electric energy produced in the United States, Canada or Mexico.
However, with respect to transmission service that the Commission is
prohibited from ordering by Section 212(h) of the Federal Power Act,
such entity is eligible only if the service is provided pursuant to a
state requirement that the Transmission Provider offer the unbundled
transmission service, or pursuant to a voluntary offer of such service
by the Transmission Provider.
ii. Any retail customer taking unbundled transmission service
pursuant to a state requirement that the Transmission Provider offer
the transmission service, or pursuant to a voluntary offer of such
service by the Transmission Provider, is an Eligible Customer under the
Tariff.
1.13 Facilities Study
An engineering study conducted by the Transmission Provider to
determine the required modifications to the Transmission Provider's
Transmission System, including the cost and scheduled completion date
for such modifications, that will be required to provide the requested
transmission service.
1.14 Firm Point-To-Point Transmission Service
Transmission Service under this Tariff that is reserved and/or
scheduled between specified Points of Receipt and Delivery pursuant to
Part II of this Tariff.
1.15 Good Utility Practice
Any of the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry during the
relevant time period, or any of the practices, methods and acts which,
in the exercise of reasonable judgment in light of the facts known at
the time the decision was made, could have been expected to accomplish
the desired result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Good Utility Practice is
not intended to be limited to the optimum practice, method, or act to
the exclusion of all others, but rather to be acceptable practices,
methods, or acts generally accepted in the region, including those
practices required by Federal Power Act section 215(a)(4).
1.16 Interruption
A reduction in non-firm transmission service due to economic
reasons pursuant to Section 14.7.
1.17 Load Ratio Share
Ratio of a Transmission Customer's Network Load to the Transmission
Provider's total load computed in accordance with Sections 34.2 and
34.3 of the Network Integration Transmission Service under Part III of
the Tariff and calculated on a rolling twelve month basis.

[[Page 12506]]

1.18 Load Shedding
The systematic reduction of system demand by temporarily decreasing
load in response to transmission system or area capacity shortages,
system instability, or voltage control considerations under Part III of
the Tariff.
1.19 Long-Term Firm Point-To-Point Transmission Service
Firm Point-To-Point Transmission Service under Part II of the
Tariff with a term of one year or more.
1.20 Native Load Customers
The wholesale and retail power customers of the Transmission
Provider on whose behalf the Transmission Provider, by statute,
franchise, regulatory requirement, or contract, has undertaken an
obligation to construct and operate the Transmission Provider's system
to meet the reliable electric needs of such customers.
1.21 Network Customer
An entity receiving transmission service pursuant to the terms of
the Transmission Provider's Network Integration Transmission Service
under Part III of the Tariff.
1.22 Network Integration Transmission Service
The transmission service provided under Part III of the Tariff.
1.23 Network Load
The load that a Network Customer designates for Network Integration
Transmission Service under Part III of the Tariff. The Network
Customer's Network Load shall include all load served by the output of
any Network Resources designated by the Network Customer. A Network
Customer may elect to designate less than its total load as Network
Load but may not designate only part of the load at a discrete Point of
Delivery. Where 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.
1.24 Network Operating Agreement
An executed agreement that contains the terms and conditions under
which the Network Customer shall operate its facilities and the
technical and operational matters associated with the implementation of
Network Integration Transmission Service under Part III of the Tariff.
1.25 Network Operating Committee
A group made up of representatives from the Network Customer(s) and
the Transmission Provider established to coordinate operating criteria
and other technical considerations required for implementation of
Network Integration Transmission Service under Part III of this Tariff.
1.26 Network Resource
Any designated generating resource owned, purchased or leased by a
Network Customer under the Network Integration Transmission Service
Tariff. Network Resources do not include any resource, or any portion
thereof, that is committed for sale to third parties or otherwise
cannot be called upon to meet the Network Customer's Network Load on a
non-interruptible basis.
1.27 Network Upgrades
Modifications or additions to transmission-related facilities that
are integrated with and support the Transmission Provider's overall
Transmission System for the general benefit of all users of such
Transmission System.
1.28 Non-Firm Point-To-Point Transmission Service
Point-To-Point Transmission Service under the Tariff that is
reserved and scheduled on an as-available basis and is subject to
Curtailment or Interruption as set forth in Section 14.7 under Part II
of this Tariff. Non-Firm Point-To-Point Transmission Service is
available on a stand-alone basis for periods ranging from one hour to
one month.
1.29 Non-Firm Sale
An energy sale for which receipt or delivery may be interrupted for
any reason or no reason, without liability on the part of either the
buyer or seller.
1.30 Open Access Same-Time Information System (OASIS)
The information system and standards of conduct contained in Part
37 of the Commission's regulations and all additional requirements
implemented by subsequent Commission orders dealing with OASIS.
1.31 Part I
Tariff Definitions and Common Service Provisions contained in
Sections 2 through 12.
1.32 Part II
Tariff Sections 13 through 27 pertaining to Point-To-Point
Transmission Service in conjunction with the applicable Common Service
Provisions of Part I and appropriate Schedules and Attachments.
1.33 Part III
Tariff Sections 28 through 35 pertaining to Network Integration
Transmission Service in conjunction with the applicable Common Service
Provisions of Part I and appropriate Schedules and Attachments.
1.34 Parties
The Transmission Provider and the Transmission Customer receiving
service under the Tariff.
1.35 Point(s) of Delivery
Point(s) on the Transmission Provider's Transmission System where
capacity and energy transmitted by the Transmission Provider will be
made available to the Receiving Party under Part II of the Tariff. The
Point(s) of Delivery shall be specified in the Service Agreement for
Long-Term Firm Point-To-Point Transmission Service.
1.36 Point(s) of Receipt
Point(s) of interconnection on the Transmission Provider's
Transmission System where capacity and energy will be made available to
the Transmission Provider by the Delivering Party under Part II of the
Tariff. The Point(s) of Receipt shall be specified in the Service
Agreement for Long-Term Firm Point-To-Point Transmission Service.
1.37 Point-To-Point Transmission Service
The reservation and transmission of capacity and energy on either a
firm or non-firm basis from the Point(s) of Receipt to the Point(s) of
Delivery under Part II of the Tariff.
1.38 Power Purchaser
The entity that is purchasing the capacity and energy to be
transmitted under the Tariff.
1.39 Pre-Confirmed Application
An Application that commits the Transmission Customer to execute a
Service Agreement upon receipt of notification that the Transmission
Provider can provide the requested Transmission Service.
1.40 Receiving Party
The entity receiving the capacity and energy transmitted by the
Transmission Provider to Point(s) of Delivery.
1.41 Regional Transmission Group (RTG)
A voluntary organization of transmission owners, transmission users
and other entities approved by the Commission to efficiently coordinate

[[Page 12507]]

transmission planning (and expansion), operation and use on a regional
(and interregional) basis.
1.42 Reserved Capacity
The maximum amount of capacity and energy that the Transmission
Provider agrees to transmit for the Transmission Customer over the
Transmission Provider's Transmission System between the Point(s) of
Receipt and the Point(s) of Delivery under Part II of the Tariff.
Reserved Capacity shall be expressed in terms of whole megawatts on a
sixty (60) minute interval (commencing on the clock hour) basis.
1.43 Service Agreement
The initial agreement and any amendments or supplements thereto
entered into by the Transmission Customer and the Transmission Provider
for service under the Tariff.
1.44 Service Commencement Date
The date the Transmission Provider begins to provide service
pursuant to the terms of an executed Service Agreement, or the date the
Transmission Provider begins to provide service in accordance with
Section 15.3 or Section 29.1 under the Tariff.
1.45 Short-Term Firm Point-To-Point Transmission Service
Firm Point-To-Point Transmission Service under Part II of the
Tariff with a term of less than one year.
1.46 System Condition
A specified condition on the Transmission Provider's system or on a
neighboring system, such as a constrained transmission element or
flowgate, that may trigger Curtailment of Long-Term Firm Point-to-Point
Transmission Service using the curtailment priority pursuant to Section
13.6. Such conditions must be identified in the Transmission Customer's
Service Agreement.
1.47 System Impact Study
An assessment by the Transmission Provider of (i) the adequacy of
the Transmission System to accommodate a request for either Firm Point-
To-Point Transmission Service or Network Integration Transmission
Service and (ii) whether any additional costs may be incurred in order
to provide transmission service.
1.48 Third-Party Sale
Any sale for resale in interstate commerce to a Power Purchaser
that is not designated as part of Network Load under the Network
Integration Transmission Service.
1.49 Transmission Customer
Any Eligible Customer (or its Designated Agent) that (i) executes a
Service Agreement, or (ii) requests in writing that the Transmission
Provider file with the Commission, a proposed unexecuted Service
Agreement to receive transmission service under Part II of the Tariff.
This term is used in the Part I Common Service Provisions to include
customers receiving transmission service under Part II and Part III of
this Tariff.
1.50 Transmission Provider
The public utility (or its Designated Agent) that owns, controls,
or operates facilities used for the transmission of electric energy in
interstate commerce and provides transmission service under the Tariff.
1.51 Transmission Provider's Monthly Transmission System Peak
The maximum firm usage of the Transmission Provider's Transmission
System in a calendar month.
1.52 Transmission Service
Point-To-Point Transmission Service provided under Part II of the
Tariff on a firm and non-firm basis.
1.53 Transmission System
The facilities owned, controlled or operated by the Transmission
Provider that are used to provide transmission service under Part II
and Part III of the Tariff.

2 Initial Allocation and Renewal Procedures

2.1 Initial Allocation of Available Transfer Capability
For purposes of determining whether existing capability on the
Transmission Provider's Transmission System is adequate to accommodate
a request for firm service under this Tariff, all Completed
Applications for new firm transmission service received during the
initial sixty (60) day period commencing with the effective date of the
Tariff will be deemed to have been filed simultaneously. A lottery
system conducted by an independent party shall be used to assign
priorities for Completed Applications filed simultaneously. All
Completed Applications for firm transmission service received after the
initial sixty (60) day period shall be assigned a priority pursuant to
Section 13.2.
2.2 Reservation Priority For Existing Firm Service Customers
Existing firm service customers (wholesale requirements and
transmission-only, with a contract term of five years or more), have
the right to continue to take transmission service from the
Transmission Provider when the contract expires, rolls over or is
renewed. This transmission reservation priority is independent of
whether the existing customer continues to purchase capacity and energy
from the Transmission Provider or elects to purchase capacity and
energy from another supplier. If at the end of the contract term, the
Transmission Provider's Transmission System cannot accommodate all of
the requests for transmission service, the existing firm service
customer must agree to accept a contract term at least equal to 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
or Other Sources.
The Transmission Provider is required to offer to provide (or offer
to arrange with the local Control Area operator as discussed below) the
following Ancillary Services only to the Transmission Customer serving
load within the Transmission Provider's Control Area (i) Regulation and
Frequency Response, (ii) Energy Imbalance, (iii) Operating Reserve--

[[Page 12508]]

Spinning, (iv) Operating Reserve--Supplemental, and (v) Generator
Imbalance. 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. A Transmission Customer that exceeds its firm reserved
capacity at any Point of Receipt or Point of Delivery or an Eligible
Customer that uses Transmission Service at a Point of Receipt or Point
of Delivery that it has not reserved is required to pay for all of the
Ancillary Services identified in this section that were provided by the
Transmission Provider associated with the unreserved service. The
Transmission Customer or Eligible Customer will pay for Ancillary
Services based on the amount of transmission service it used but did
not reserve.
If the Transmission Provider is a public utility providing
transmission service but is not a Control Area operator, it may be
unable to provide some or all of the Ancillary Services. In this case,
the Transmission Provider can fulfill its obligation to provide
Ancillary Services by acting as the Transmission Customer's agent to
secure these Ancillary Services from the Control Area operator. The
Transmission Customer may elect to (i) have the Transmission Provider
act as its agent, (ii) secure the Ancillary Services directly from the
Control Area operator, or (iii) secure the Ancillary Services
(discussed in Schedules 3, 4, 5, 6 and 9) from a third party or by
self-supply when technically feasible.
The Transmission Provider shall specify the rate treatment and all
related terms and conditions in the event of an unauthorized use of
Ancillary Services by the Transmission Customer.
The specific Ancillary Services, prices and/or compensation methods
are described on the Schedules that are attached to and made a part of
the Tariff. Three principal requirements apply to discounts for
Ancillary Services provided by the Transmission Provider in conjunction
with its provision of transmission service as follows: (1) Any offer of
a discount made by the Transmission Provider must be announced to all
Eligible Customers solely by posting on the OASIS, (2) any customer-
initiated requests for discounts (including requests for use by one's
wholesale merchant or an affiliate's use) must occur solely by posting
on the OASIS, and (3) once a discount is negotiated, details must be
immediately posted on the OASIS. A discount agreed upon for an
Ancillary Service must be offered for the same period to all Eligible
Customers on the Transmission Provider's system. Sections 3.1 through
3.7 below list the seven Ancillary Services.
3.1 Scheduling, System Control and Dispatch Service
The rates and/or methodology are described in Schedule 1.
3.2 Reactive Supply and Voltage Control from Generation or Other
Sources Service
The rates and/or methodology are described in Schedule 2.
3.3 Regulation and Frequency Response Service
Where applicable the rates and/or methodology are described in
Schedule 3.
3.4 Energy Imbalance Service
Where applicable the rates and/or methodology are described in
Schedule 4.
3.5 Operating Reserve--Spinning Reserve Service
Where applicable the rates and/or methodology are described in
Schedule 5.
3.6 Operating Reserve--Supplemental Reserve Service
Where applicable the rates and/or methodology are described in
Schedule 6.
3.7 Generator Imbalance Service
Where applicable the rates and/or methodology are described in
Schedule 9.

4 Open Access Same-Time Information System (OASIS)

Terms and conditions regarding Open Access Same-Time Information
System and standards of conduct are set forth in 18 CFR part 37 of the
Commission's regulations (Open Access Same-Time Information System and
Standards of Conduct for Public Utilities) and 18 CFR part 38 of the
Commission's regulations (Business Practice Standards and Communication
Protocols for Public Utilities). In the event available transfer
capability as posted on the OASIS is insufficient to accommodate a
request for firm transmission service, additional studies may be
required as provided by this Tariff pursuant to Sections 19 and 32.
The Transmission Provider shall post on its public Web site all
rules, standards and practices that (i) relate to the terms and
conditions of transmission service, (ii) are not subject to a North
American Energy Standards Board (NAESB) copyright restriction, and
(iii) are not otherwise included in this Tariff. The Transmission
Provider shall post on OASIS an electronic link to these rules,
standards and practices, and shall post on its public Web site an
electronic link to the NAESB Web site where any rules, standards and
practices that are protected by copyright may be obtained. The
Transmission Provider shall also make available on its public Web site
a statement of the process by which the Transmission Provider shall
add, delete or otherwise modify the rules, standards and practices that
are posted on its website. Such process shall set forth the means by
which the Transmission Provider shall provide reasonable advance notice
to Transmission Customers and Eligible Customers of any such additions,
deletions or modifications, the associated effective date, and any
additional implementation procedures that the Transmission Provider
deems appropriate.

5 Local Furnishing Bonds

5.1 Transmission Providers That Own Facilities Financed by Local
Furnishing Bonds
This provision is applicable only to Transmission Providers that
have financed facilities for the local furnishing of electric energy
with tax-exempt bonds, as described in Section 142(f) of the Internal
Revenue Code (``local furnishing bonds''). Notwithstanding any other
provision of this Tariff, the Transmission Provider shall not be
required to provide transmission service to any Eligible Customer
pursuant to this Tariff if the provision of such transmission service
would jeopardize the tax-exempt status of any local furnishing bond(s)
used to finance the Transmission Provider's facilities that would be
used in providing such transmission service.
5.2 Alternative Procedures for Requesting Transmission Service
(i) If the Transmission Provider determines that the provision of
transmission service requested by an Eligible Customer would jeopardize
the tax-exempt status of any local

[[Page 12509]]

furnishing bond(s) used to finance its facilities that would be used in
providing such transmission service, it shall advise the Eligible
Customer within thirty (30) days of receipt of the Completed
Application.
(ii) If the Eligible Customer thereafter renews its request for the
same transmission service referred to in (i) by tendering an
application under Section 211 of the Federal Power Act, the
Transmission Provider, within ten (10) days of receiving a copy of the
Section 211 application, will waive its rights to a request for service
under Section 213(a) of the Federal Power Act and to the issuance of a
proposed order under Section 212(c) of the Federal Power Act. The
Commission, upon receipt of the Transmission Provider's waiver of its
rights to a request for service under Section 213(a) of the Federal
Power Act and to the issuance of a proposed order under Section 212(c)
of the Federal Power Act, shall issue an order under Section 211 of the
Federal Power Act. Upon issuance of the order under Section 211 of the
Federal Power Act, the Transmission Provider shall be required to
provide the requested transmission service in accordance with the terms
and conditions of this Tariff.

6 Reciprocity

A Transmission Customer receiving transmission service under this
Tariff agrees to provide comparable transmission service that it is
capable of providing to the Transmission Provider on similar terms and
conditions over facilities used for the transmission of electric energy
owned, controlled or operated by the Transmission Customer and over
facilities used for the transmission of electric energy owned,
controlled or operated by the Transmission Customer's corporate
affiliates. A Transmission Customer that is a member of, or takes
transmission service from, a power pool, Regional Transmission Group,
Regional Transmission Organization (RTO), Independent System Operator
(ISO) or other transmission organization approved by the Commission for
the operation of transmission facilities also agrees to provide
comparable transmission service to the members of such power pool and
Regional Transmission Group, RTO, ISO or other transmission
organization on similar terms and conditions over facilities used for
the transmission of electric energy owned, controlled or operated by
the Transmission Customer and over facilities used for the transmission
of electric energy owned, controlled or operated by the Transmission
Customer's corporate affiliates.
This reciprocity requirement applies not only to the Transmission
Customer that obtains transmission service under the Tariff, but also
to all parties to a transaction that involves the use of transmission
service under the Tariff, including the power seller, buyer and any
intermediary, such as a power marketer. This reciprocity requirement
also applies to any Eligible Customer that owns, controls or operates
transmission facilities that uses an intermediary, such as a power
marketer, to request transmission service under the Tariff. If the
Transmission Customer does not own, control or operate transmission
facilities, it must include in its Application a sworn statement of one
of its duly authorized officers or other representatives that the
purpose of its Application is not to assist an Eligible Customer to
avoid the requirements of this provision.

7 Billing and Payment

7.1 Billing Procedure
Within a reasonable time after the first day of each month, the
Transmission Provider shall submit an invoice to the Transmission
Customer for the charges for all services furnished under the Tariff
during the preceding month. The invoice shall be paid by the
Transmission Customer within twenty (20) days of receipt. All payments
shall be made in immediately available funds payable to the
Transmission Provider, or by wire transfer to a bank named by the
Transmission Provider.
7.2 Interest on Unpaid Balances
Interest on any unpaid amounts (including amounts placed in escrow)
shall be calculated in accordance with the methodology specified for
interest on refunds in the Commission's regulations at 18 CFR
35.19a(a)(2)(iii). Interest on delinquent amounts shall be calculated
from the due date of the bill to the date of payment. When payments are
made by mail, bills shall be considered as having been paid on the date
of receipt by the Transmission Provider.
7.3 Customer Default
In the event the Transmission Customer fails, for any reason other
than a billing dispute as described below, to make payment to the
Transmission Provider on or before the due date as described above, and
such failure of payment is not corrected within thirty (30) calendar
days after the Transmission Provider notifies the Transmission Customer
to cure such failure, a default by the Transmission Customer shall be
deemed to exist. Upon the occurrence of a default, the Transmission
Provider may initiate a proceeding with the Commission to terminate
service but shall not terminate service until the Commission so
approves any such request. In the event of a billing dispute between
the Transmission Provider and the Transmission Customer, the
Transmission Provider will continue to provide service under the
Service Agreement as long as the Transmission Customer (i) continues to
make all payments not in dispute, and (ii) pays into an independent
escrow account the portion of the invoice in dispute, pending
resolution of such dispute. If the Transmission Customer fails to meet
these two requirements for continuation of service, then the
Transmission Provider may provide notice to the Transmission Customer
of its intention to suspend service in sixty (60) days, in accordance
with Commission policy.

8 Accounting for the Transmission Provider's Use of the Tariff

The Transmission Provider shall record the following amounts, as
outlined below.
8.1 Transmission Revenues
Include in a separate operating revenue account or subaccount the
revenues it receives from Transmission Service when making Third-Party
Sales under Part II of the Tariff.
8.2 Study Costs and Revenues
Include in a separate transmission operating expense account or
subaccount, costs properly chargeable to expense that are incurred to
perform any System Impact Studies or Facilities Studies which the
Transmission Provider conducts to determine if it must construct new
transmission facilities or upgrades necessary for its own uses,
including making Third-Party Sales under the Tariff; and include in a
separate operating revenue account or subaccount the revenues received
for System Impact Studies or Facilities Studies performed when such
amounts are separately stated and identified in the Transmission
Customer's billing under the Tariff.

9 Regulatory Filings

Nothing contained in the Tariff or any Service Agreement shall be
construed as affecting in any way the right of the Transmission
Provider to unilaterally make application to the Commission for a
change in rates, terms and conditions, charges, classification of
service, Service Agreement, rule or regulation under Section 205 of the
Federal Power Act and pursuant to the Commission's rules

[[Page 12510]]

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.
12.4 Costs
Each Party shall be responsible for its own costs incurred during
the arbitration process and for the following costs, if applicable:
1. The cost of the arbitrator chosen by the Party to sit on the
three member panel and one half of the cost of the third arbitrator
chosen; or
2. One half the cost of the single arbitrator jointly chosen by the
Parties.
12.5 Rights Under the Federal Power Act
Nothing in this section shall restrict the rights of any party to
file a Complaint with the Commission under relevant provisions of the
Federal Power Act.

II. Point-To-Point Transmission Service

Preamble

The Transmission Provider will provide Firm and Non-Firm Point-To-
Point Transmission Service pursuant to the applicable terms and
conditions of this Tariff. Point-To-Point Transmission Service is for
the receipt of capacity and energy at designated Point(s) of Receipt
and the transfer of such capacity and energy to designated Point(s) of
Delivery.

13 Nature of Firm Point-To-Point Transmission Service

13.1 Term
The minimum term of Firm Point-To-Point Transmission Service shall
be one day and the maximum term shall be specified in the Service
Agreement.
13.2 Reservation Priority
(i) Long-Term Firm Point-To-Point Transmission Service shall be
available on a first-come, first-served basis, i.e., in the
chronological sequence in which each Transmission Customer has
requested service.
(ii) Reservations for Short-Term Firm Point-To-Point Transmission
Service will be conditional based upon the length of the requested
transaction. However, Pre-Confirmed Applications for Short-Term Point-
to-Point Transmission Service will receive priority over earlier-
submitted requests that are not Pre-Confirmed and that have equal or
shorter duration. Among

[[Page 12511]]

requests with the same duration and pre-confirmation status (Pre-
Confirmed or not confirmed), priority will be given to an Eligible
Customer's request that offers the highest price, 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 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 or equal duration service and
lower price has the right of first refusal to match any longer term
request or equal duration service with a higher price before losing its
reservation priority. A longer term competing request for Short-Term
Firm Point-To-Point Transmission Service will be granted if the
Eligible Customer with the right of first refusal does not agree to
match the competing request within 24 hours (or earlier if necessary to
comply with the scheduling deadlines provided in section 13.8) from
being notified by the Transmission Provider of a longer-term competing
request for Short-Term Firm Point-To-Point Transmission Service. When a
longer duration request preempts multiple shorter duration requests,
the shorter duration requests shall have simultaneous opportunities to
exercise the right of first refusal. Duration, pre-confirmation status,
price and time of response will be used to determine the order by which
the multiple shorter duration requests will be able to exercise the
right of first refusal. After the conditional reservation deadline,
service will commence pursuant to the terms of Part II of the Tariff.
(iv) Firm Point-To-Point Transmission Service will always have a
reservation priority over Non-Firm Point-To-Point Transmission Service
under the Tariff. All Long-Term Firm Point-To-Point Transmission
Service will have equal reservation priority with Native Load Customers
and Network Customers. Reservation priorities for existing firm service
customers are provided in Section 2.2.
13.3 Use of Firm Transmission Service by the Transmission Provider
The Transmission Provider will be subject to the rates, terms and
conditions of Part II of the Tariff when making Third-Party Sales under
(i) agreements executed on or after [insert date sixty (60) days after
publication in Federal Register]
or (ii) agreements executed prior to
the aforementioned date that the Commission requires to be unbundled,
by the date specified by the Commission. The Transmission Provider will
maintain separate accounting, pursuant to Section 8, for any use of the
Point-To-Point Transmission Service to make Third-Party Sales.
13.4 Service Agreements
The Transmission Provider shall offer a standard form Firm Point-
To-Point Transmission Service Agreement (Attachment A) to an Eligible
Customer when it submits a Completed Application for Long-Term Firm
Point-To-Point Transmission Service. The Transmission Provider shall
offer a standard form Firm Point-To-Point Transmission Service
Agreement (Attachment A) to an Eligible Customer when it first submits
a Completed Application for Short-Term Firm Point-To-Point Transmission
Service pursuant to the Tariff. Executed Service Agreements that
contain the information required under the Tariff shall be filed with
the Commission in compliance with applicable Commission regulations. An
Eligible Customer that uses Transmission Service at a Point of Receipt
or Point of Delivery that it has not reserved and that has not executed
a Service Agreement will be deemed, for purposes of assessing any
appropriate charges and penalties, to have executed the appropriate
Service Agreement. The Service Agreement shall, when applicable,
specify any conditional curtailment options selected by the
Transmission Customer. Where the Service Agreement contains conditional
curtailment options and is subject to a biennial reassessment as
described in Section 15.4, the Transmission Provider shall provide the
Transmission Customer notice of any changes to the curtailment
conditions no less than 90 days prior to the date for imposition of new
curtailment conditions. Concurrent with such notice, the Transmission
Provider shall provide the Transmission Customer with the reassessment
study and a narrative description of the study, including the reasons
for changes to the number of hours per year or System Conditions under
which conditional curtailment may occur.
13.5 Transmission Customer Obligations for Facility Additions or
Redispatch Costs
In cases where the Transmission Provider determines that the
Transmission System is not capable of providing Firm Point-To-Point
Transmission Service without (1) degrading or impairing the reliability
of service to Native Load Customers, Network Customers and other
Transmission Customers taking Firm Point-To-Point Transmission Service,
or (2) interfering with the Transmission Provider's ability to meet
prior firm contractual commitments to others, the Transmission Provider
will be obligated to expand or upgrade its Transmission System pursuant
to the terms of Section 15.4. The Transmission Customer must agree to
compensate the Transmission Provider for any necessary transmission
facility additions pursuant to the terms of Section 27. To the extent
the Transmission Provider can relieve any system constraint by
redispatching the Transmission Provider's resources, it shall do so,
provided that the Eligible Customer agrees to compensate the
Transmission Provider pursuant to the terms of Section 27 and agrees to
either (i) compensate the Transmission Provider for any necessary
transmission facility additions or (ii) accept the service subject to a
biennial reassessment by the Transmission Provider of redispatch
requirements as described in Section 15.4. Any redispatch, Network
Upgrade or Direct Assignment Facilities costs to be charged to the
Transmission Customer on an incremental basis under the Tariff will be
specified in the Service Agreement prior to initiating service.
13.6 Curtailment of Firm Transmission Service
In the event that a Curtailment on the Transmission Provider's
Transmission System, or a portion thereof, is required to maintain
reliable operation of such system and the system directly and
indirectly interconnected with Transmission Provider's Transmission
System, Curtailments will be made on a non-discriminatory basis to the
transaction(s) that effectively relieve the constraint. Transmission
Provider may elect to implement such Curtailments pursuant to the
Transmission Loading Relief procedures specified in Attachment J. If
multiple transactions require Curtailment, to the extent practicable
and consistent with Good Utility Practice, the Transmission Provider
will curtail service to Network Customers and Transmission Customers
taking Firm Point-To-Point Transmission Service on a basis comparable
to the curtailment of service to the Transmission Provider's Native
Load Customers. All Curtailments will be made on a non-discriminatory
basis, however, Non-Firm Point-To-Point Transmission Service shall be
subordinate to Firm Transmission

[[Page 12512]]

Service. Long-Term Firm Point-to-Point Service subject to conditions
described in Section 15.4 shall be curtailed with secondary service in
cases where the conditions apply, but otherwise will be curtailed on a
pro rata basis with other Firm Transmission Service. When the
Transmission Provider determines that an electrical emergency exists on
its Transmission System and implements emergency procedures to Curtail
Firm Transmission Service, the Transmission Customer shall make the
required reductions upon request of the Transmission Provider. However,
the Transmission Provider reserves the right to Curtail, in whole or in
part, any Firm Transmission Service provided under the Tariff when, in
the Transmission Provider's sole discretion, an emergency or other
unforeseen condition impairs or degrades the reliability of its
Transmission System. The Transmission Provider will notify all affected
Transmission Customers in a timely manner of any scheduled Curtailments.
13.7 Classification of Firm Transmission Service
(a) The Transmission Customer taking Firm Point-To-Point
Transmission Service may (1) change its Receipt and Delivery Points to
obtain service on a non-firm basis consistent with the terms of Section
22.1 or (2) request a modification of the Points of Receipt or Delivery
on a firm basis pursuant to the terms of Section 22.2.
(b) The Transmission Customer may purchase transmission service to
make sales of capacity and energy from multiple generating units that
are on the Transmission Provider's Transmission System. For such a
purchase of transmission service, the resources will be designated as
multiple Points of Receipt, unless the multiple generating units are at
the same generating plant in which case the units would be treated as a
single Point of Receipt.
(c) The Transmission Provider shall provide firm deliveries of
capacity and energy from the Point(s) of Receipt to the Point(s) of
Delivery. Each Point of Receipt at which firm transmission capacity is
reserved by the Transmission Customer shall be set forth in the Firm
Point-To-Point Service Agreement for Long-Term Firm Transmission
Service along with a corresponding capacity reservation associated with
each Point of Receipt. Points of Receipt and corresponding capacity
reservations shall be as mutually agreed upon by the Parties for Short-
Term Firm Transmission. Each Point of Delivery at which firm transfer
capability is reserved by the Transmission Customer shall be set forth
in the Firm Point-To-Point Service Agreement for Long-Term Firm
Transmission Service along with a corresponding capacity reservation
associated with each Point of Delivery. Points of Delivery and
corresponding capacity reservations shall be as mutually agreed upon by
the Parties for Short-Term Firm Transmission. The greater of either (1)
the sum of the capacity reservations at the Point(s) of Receipt, or (2)
the sum of the capacity reservations at the Point(s) of Delivery shall
be the Transmission Customer's Reserved Capacity. The Transmission
Customer will be billed for its Reserved Capacity under the terms of
Schedule 7. The Transmission Customer may not exceed its firm capacity
reserved at each Point of Receipt and each Point of Delivery except as
otherwise specified in Section 22. The Transmission Provider shall
specify the rate treatment and all related terms and conditions
applicable in the event that a Transmission Customer (including Third-
Party Sales by the Transmission Provider) exceeds its firm reserved
capacity at any Point of Receipt or Point of Delivery or uses
Transmission Service at a Point of Receipt or Point of Delivery that it
has not reserved.
13.8 Scheduling of Firm Point-To-Point Transmission Service
Schedules for the Transmission Customer's Firm Point-To-Point
Transmission Service must be submitted to the Transmission Provider no
later than 10 a.m. [or a reasonable time that is generally accepted in
the region and is consistently adhered to by the Transmission Provider]
of the day prior to commencement of such service. Schedules submitted
after 10 a.m. will be accommodated, if practicable. Hour-to-hour
schedules of any capacity and energy that is to be delivered must be
stated in increments of 1,000 kW per hour [or a reasonable increment
that is generally accepted in the region and is consistently adhered to
by the Transmission Provider]. Transmission Customers within the
Transmission Provider's service area with multiple requests for
Transmission Service at a Point of Receipt, each of which is under
1,000 kW per hour, may consolidate their service requests at a common
point of receipt into units of 1,000 kW per hour for scheduling and
billing purposes. Scheduling changes will be permitted up to twenty
(20) minutes [or a reasonable time that is generally accepted in the
region and is consistently adhered to by the Transmission Provider]
before the start of the next clock hour provided that the Delivering
Party and Receiving Party also agree to the schedule modification. The
Transmission Provider will furnish to the Delivering Party's system
operator, hour-to-hour schedules equal to those furnished by the
Receiving Party (unless reduced for losses) and shall deliver the
capacity and energy provided by such schedules. Should the Transmission
Customer, Delivering Party or Receiving Party revise or terminate any
schedule, such party shall immediately notify the Transmission
Provider, and the Transmission Provider shall have the right to adjust
accordingly the schedule for capacity and energy to be received and to
be delivered.

14 Nature of Non-Firm Point-To-Point Transmission Service

14.1 Term
Non-Firm Point-To-Point Transmission Service will be available for
periods ranging from one (1) hour to one (1) month. However, a
Purchaser of Non-Firm Point-To-Point Transmission Service will be
entitled to reserve a sequential term of service (such as a sequential
monthly term without having to wait for the initial term to expire
before requesting another monthly term) so that the total time period
for which the reservation applies is greater than one month, subject to
the requirements of Section 18.3.
14.2 Reservation Priority
Non-Firm Point-To-Point Transmission Service shall be available
from transfer capability in excess of that needed for reliable service
to Native Load Customers, Network Customers and other Transmission
Customers taking Long-Term and Short-Term Firm Point-To-Point
Transmission Service. A higher priority will be assigned first to
reservations with a longer duration of service and second to Pre-
Confirmed Applications. In the event the Transmission System is
constrained, competing requests of the same Pre-Confirmation status and
equal duration will be prioritized based on the highest price offered
by the Eligible Customer for the Transmission Service. Eligible
Customers that have already reserved shorter term service have the
right of first refusal to match any longer term 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

[[Page 12513]]

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 May 14, 2007 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, (4) transmission service for Network Customers from non-
designated resources, or (5) transmission service for Firm Point-to-
Point Transmission Service during conditional curtailment periods as
described in Section 15.4. The Transmission Provider also will
discontinue or reduce service to the Transmission Customer to the
extent that deliveries for transmission are discontinued or reduced at
the Point(s) of Receipt. Where required, Curtailments or Interruptions
will be made on a non-discriminatory basis to the transaction(s) that
effectively relieve the constraint, however, Non-Firm Point-To-Point
Transmission Service shall be subordinate to Firm Transmission Service.
If multiple transactions require Curtailment or Interruption, to the
extent practicable and consistent with Good Utility Practice,
Curtailments or Interruptions will be made to transactions of the
shortest term (e.g., hourly non-firm transactions will be Curtailed or
Interrupted before daily non-firm transactions and daily non-firm
transactions will be Curtailed or Interrupted before weekly non-firm
transactions). Transmission service for Network Customers from
resources other than designated Network Resources will have a higher
priority than any Non-Firm Point-To-Point Transmission Service under
the Tariff. Non-Firm Point-To-Point Transmission Service over secondary
Point(s) of Receipt and Point(s) of Delivery will have a lower priority
than any Non-Firm Point-To-Point Transmission Service under the Tariff.
The Transmission Provider will provide advance notice of Curtailment or
Interruption where such

[[Page 12514]]

notice can be provided consistent with Good Utility Practice.

15 Service Availability

15.1 General Conditions
The Transmission Provider will provide Firm and Non-Firm Point-To-
Point Transmission Service over, on or across its Transmission System
to any Transmission Customer that has met the requirements of Section 16.
15.2 Determination of Available Transfer Capability
A description of the Transmission Provider's specific methodology
for assessing available transfer capability posted on the Transmission
Provider's OASIS (Section 4) is contained in Attachment C of the
Tariff. In the event sufficient transfer capability may not exist to
accommodate a service request, the Transmission Provider will respond
by performing a System Impact Study.
15.3 Initiating Service in the Absence of an Executed Service Agreement
If the Transmission Provider and the Transmission Customer
requesting Firm or Non-Firm Point-To-Point Transmission Service cannot
agree on all the terms and conditions of the Point-To-Point Service
Agreement, the Transmission Provider shall file with the Commission,
within thirty (30) days after the date the Transmission Customer
provides written notification directing the Transmission Provider to
file, an unexecuted Point-To-Point Service Agreement containing terms
and conditions deemed appropriate by the Transmission Provider for such
requested Transmission Service. The Transmission Provider shall
commence providing Transmission Service subject to the Transmission
Customer agreeing to (i) compensate the Transmission Provider at
whatever rate the Commission ultimately determines to be just and
reasonable, and (ii) comply with the terms and conditions of the Tariff
including posting appropriate security deposits in accordance with the
terms of Section 17.3.
15.4 Obligation To Provide Transmission Service That Requires Expansion
or Modification of the Transmission System, Redispatch or Conditional
Curtailment
(a) If the Transmission Provider determines that it cannot
accommodate a Completed Application for Firm Point-To-Point
Transmission Service because of insufficient capability on its
Transmission System, the Transmission Provider will use due diligence
to expand or modify its Transmission System to provide the requested
Firm Transmission Service, consistent with its planning obligations in
Attachment K, provided the Transmission Customer agrees to compensate
the Transmission Provider for such costs pursuant to the terms of
Section 27. The Transmission Provider will conform to Good Utility
Practice and its planning obligations in Attachment K, in determining
the need for new facilities and in the design and construction of such
facilities. The obligation applies only to those facilities that the
Transmission Provider has the right to expand or modify.
(b) If the Transmission Provider determines that it cannot
accommodate a Completed Application for Firm Point-To-Point
Transmission Service because of insufficient capability on its
Transmission System, the Transmission Provider will use due diligence
to provide redispatch from its own resources until (i) Network Upgrades
are completed for the Transmission Customer, (ii) the Transmission
Provider determines through a biennial reassessment that it can no
longer reliably provide the redispatch, or (iii) the Transmission
Customer terminates the service because of redispatch changes resulting
from the reassessment. A Transmission Provider shall not unreasonably
deny self-provided redispatch or redispatch arranged by the
Transmission Customer from a third party resource.
(c) If the Transmission Provider determines that it cannot
accommodate a Completed Application for Firm Point-To-Point
Transmission Service because of insufficient capability on its
Transmission System, the Transmission Provider will offer the Firm
Transmission Service with the condition that the Transmission Provider
may curtail the service prior to the curtailment of other Firm
Transmission Service for a specified number of hours per year or during
System Condition(s). If the Transmission Customer accepts the service,
the Transmission Provider will use due diligence to provide the service
until (i) Network Upgrades are completed for the Transmission Customer,
(ii) the Transmission Provider determines through a biennial
reassessment that it can no longer reliably provide such service, or
(iii) the Transmission Customer terminates the service because the
reassessment increased the number of hours per year of conditional
curtailment or changed the System Conditions.
15.5 Deferral of Service
The Transmission Provider may defer providing service until it
completes construction of new transmission facilities or upgrades
needed to provide Firm Point-To-Point Transmission Service whenever the
Transmission Provider determines that providing the requested service
would, without such new facilities or upgrades, impair or degrade
reliability to any existing firm services.
15.6 Other Transmission Service Schedules
Eligible Customers receiving transmission service under other
agreements on file with the Commission may continue to receive
transmission service under those agreements until such time as those
agreements may be modified by the Commission.
15.7 Real Power Losses
Real Power Losses are associated with all transmission service. The
Transmission Provider is not obligated to provide Real Power Losses.
The Transmission Customer is responsible for replacing losses
associated with all transmission service as calculated by the
Transmission Provider. The applicable Real Power Loss factors are as
follows: [To be completed by the Transmission Provider].

16 Transmission Customer Responsibilities

16.1 Conditions Required of Transmission Customers
Point-To-Point Transmission Service shall be provided by the
Transmission Provider only if the following conditions are satisfied by
the Transmission Customer:
(a) The Transmission Customer has pending a Completed Application
for service;
(b) The Transmission Customer meets the creditworthiness criteria
set forth in Section 11;
(c) The Transmission Customer will have arrangements in place for
any other transmission service necessary to effect the delivery from
the generating source to the Transmission Provider prior to the time
service under Part II of the Tariff commences;
(d) The Transmission Customer agrees to pay for any facilities
constructed and chargeable to such Transmission Customer under Part II
of the Tariff, whether or not the Transmission Customer takes service
for the full term of its reservation;
(e) The Transmission Customer provides the information required by
the Transmission Provider's planning process established in Attachment
K; and
(f) The Transmission Customer has executed a Point-To-Point Service

[[Continued on page 12515]]

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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