| Promoting Wholesale Competition Through Open Access Services by Public Utilities
Recovery of Stranded Costs by Public Utilities and Transmitting Utilities | Docket No. RM95-8-000 Docket No. RM94-7-001 |
The Commission proposed in the NOPR a two-stage implementation process that would apply to all transmission- owning public utilities that do not have non-discriminatory open access transmission tariffs on file on the effective date of the final rule. As proposed in the NOPR, public utilities already in compliance with the rule would not be subject to the two-stage process.
In Stage One, the Commission proposed to put into effect tariffs for network and point-to-point services, which include ancillary transmission services. These tariffs would specify the minimum terms and conditions of service needed to eliminate undue discrimination, and were proposed to be effective 60 days after the effective date of the final rule. Because the proposed pro forma tariffs did not contain specific rates, the Commission proposed to itself establish, for each affected public utility, just and reasonable rates for network service, point-to-point service, and six identified ancillary services. These rates were to be incorporated into each utility's tariffs.
In Stage Two, which was to begin 61 days after the effective date of the final rule, parties would have been allowed to propose changes to the rates, terms, and conditions for service under utilities' transmission tariffs pursuant to sections 205 and 206 of the FPA.
The commenters are split on the two-stage implementation procedure proposed in the NOPR. Commenters in favor of the proposed procedure believe that a two-stage process is necessary to put basic open access tariffs in place without delay. 505/ Florida Power Corp and NIEP state that a longer implementation procedure would create a discriminatory situation for utilities that have filed open access tariffs versus those that have not. Other commenters, however, contend that the proposed Stage One rates would be just and reasonable only as an interim measure; therefore, the period during which such rates are effective should be limited. 506/
Those commenters that oppose the two-stage implementation process do so for a variety of reasons. 507/ Many transmission customers believe that Stage One rates will be much higher than the rates they pay now. Several commenters warn that the implementation plan may not be practical if the Commission is inundated with filings at the beginning of Stage Two. 508/ Some commenters expressing concerns about transmission pricing policy believe that in the NOPR the Commission intended to establish the Stage One rate method as its own official pricing policy, while other commenters argue that the Stage One rates demonstrate that broad pricing policy reform is needed as part of an open access rule.
Some commenters express concern about the timing of Stage One. Carolina P&L complains that the proposed implementation date is far too aggressive and proposes a one-year delay between the final rule and its implementation. Montana Power states that Stage One tariffs cannot be implemented in 60 days if any sort of functional unbundling is required. It insists that utilities should be given, at a minimum, 180 days in which to hire and train new employees and to install new equipment. Dayton P&L believes that Stage One tariffs should not be imposed until experience is gained with voluntarily-filed open access tariffs, but recommends further development of the tariffs for guidance purposes. It also requests that the Commission delay implementation of mandatory open access transmission until meaningful appellate review has taken place. Seattle suggests that the rate determination methods be phased in, so that the forced filing of transmission tariffs does not cause immediate and major shifts in cost allocation between old and new customers.
A few commenters express concern about the applicability of the implementation process. EEI and Consumers Power state that utilities that have already filed open access tariffs should have the option to use the two-stage implementation procedure so that they can obtain the terms and conditions of the NOPR tariffs without having to make a full-blown rate case filing. Citizens Utilities asks that small distribution public utilities be exempt from Stage One if such entities can demonstrate that they do not use their own transmission systems to provide network service. Alternatively, it asks that application of Stage One to small public utilities be deferred until 60 days after they receive a section 211 request. Oglethorpe states that the proposed method of Stage One pricing is not appropriate for electric cooperatives that receive financing from the Rural Utilities Service (formerly the Rural Electrification Administration).
In light of the many concerns raised regarding the proposed implementation process, the need to have adequate open access tariffs on file for all public utilities as soon as possible, the large number of utilities that have already filed some form of open access tariffs, and the desire to give public utilities flexibility to propose their own rates to be used in conjunction with the minimum non-rate terms and conditions necessary to ensure comparable service, we have decided to modify our proposed procedures. The details of the revised procedures are discussed below. In addition, special implementation requirements for coordination arrangements (power pools, public utility holding companies, and bilateral coordination arrangements) are discussed in Section IV.F.
Implementation of the Rule will vary slightly for those public utilities that tendered for filing open access tariffs before the date of issuance of this Rule (including newly- tendered applications that have not been accepted for filing before the issuance of this rule) and those public utilities that did not tender open access tariffs before the issuance of this Rule. The former group is hereinafter referred to as Group 1 public utilities, while the latter group is referred to as Group 2 public utilities.
Group 1 public utilities will be required, within 60 days following publication of the Final Rule in the Federal Register, to make section 206 compliance filings that contain the non-rate terms and conditions set forth in the Final Rule pro forma tariff and identify any terms and conditions that reflect regional practices, as discussed below. Attached as Appendix E to this Rule is a list of Group 1 public utilities.
As to rates, we note that a transmission tariff rate is already in effect for all Group 1 public utilities, except for the few with recently-tendered applications that have not yet been accepted for filing. Most of these rates have been suspended, accepted for filing, set for hearing, and made subject to refund. Some have been accepted outright. Still others are the product of rate settlements.
We anticipate that our mandated changes in non-rate terms and conditions are compatible with the rate proposals already filed by Group 1 public utilities. Consequently, we are not going to divert the industry's resources by mandating any rate changes to fine-tune these interim tariffs. Should, however, a Group 1 public utility determine that certain rate changes are necessitated by the revised non-rate terms and conditions, it may file a new rate proposal under FPA section 205. Such filings must be "conforming" 509/ under the Transmission Pricing Policy Statement and must be made no later than 60 days after publication of the Final Rule in the Federal Register. Intervenors may raise any concerns with the filings within 15 days after such filings. 510/ We hereby impose a blanket suspension for any filings by Group 1 public utilities proposing rate changes necessitated by the new non-rate terms and conditions. These rates will go into effect, subject to refund, 60 days after publication of this Rule in the Federal Register (the same day on which the non-rate terms and conditions of the Final Rule pro forma tariff go into effect). 511/
If the Final Rule tariff's non-rate terms and conditions do not in the opinion of the utility necessitate a change in current rates, then the current rates will continue in effect under whatever refund conditions, if any, now apply to those rates.
Group 2 public utilities will be treated the same as Group 1 public utilities with regard to non-rate terms and conditions, but will be treated slightly differently from Group 1 as to rates, since Group 2 utilities have not filed any proposed rates. We will require these utilities to either: (i) within 60 days following publication of the Final Rule in the Federal Register, make section 206 compliance filings that contain the non-rate terms and conditions set forth in the Final Rule pro forma tariff and identify any terms and conditions that reflect regional practices, as discussed below; and (ii) within 60 days following publication of the Final Rule in the Federal Register, make section 205 filings to propose rates for the services provided for in the tariff, including ancillary services; or (iii) make a "good faith" request for waiver. The rates must meet the standards for conforming proposals in the Commission's Transmission Pricing Policy Statement and comply with the guidance concerning ancillary services set forth in this order.
Attached to this Rule as Appendix F is a list of Group 2 public utilities.
Intervenors may raise any concerns with these filings within 15 days after the filing. 512/ We hereby impose a blanket suspension for all such rate filings; they will go into effect, subject to refund, 60 days after the publication of this Rule in the Federal Register (the same day on which the terms and conditions of the compliance tariffs go into effect). 513/
We have built a degree of flexibility into the tariffs to accommodate regional and other differences. Certain non-rate Final Rule pro forma tariff provisions specifically allow utilities either to follow the terms of the provision or to use alternatives that are reasonable, generally accepted in the region, and consistently adhered to by the transmission provider (e.g., time deadlines for scheduling changes, time deadlines for determining available capacity). In addition, other tariff provisions require utilities to follow Good Utility Practice. The definition of "Good Utility Practice," contained in Section 1.14 of the Final Rule pro forma tariff, states that it "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." Thus, where public utilities are permitted to follow regional practices, and elect to do so within 60 days of the date of publication of the Final Rule in the Federal Register, they should identify the regional practices in their compliance tariff filings.
We recognize that there may be circumstances in which a public utility believes that the Final Rule pro forma tariff does not provide sufficient flexibility or that the utility can propose superior non-rate terms and conditions. Thus, once the compliance tariff and conforming rates go into effect, which will be 60 days after publication of this Rule in the Federal Register, a public utility (either Group 1 or Group 2) may file pursuant to section 205 a tariff with terms and conditions that differ from those set forth in this Rule, provided that it: (1) serves a copy of its filing on all wholesale customers for whom it has provided transmission service since March 29, 1995 (the date of the Open Access NOPR) and on the state agencies that regulate public utilities in the states where those customers are located; (2) identifies all deviations from its compliance tariff in its letter of transmittal; (3) provides, to the extent practical, a redlined version of the tariff; and (4) demonstrates that such terms and conditions are consistent with, or superior to, those in the compliance tariff. However, it may not seek to litigate fundamental terms and conditions set forth in the Final Rule. 514/ In addition, the public utility may file whatever rates it believes are appropriate, consistent with the Transmission Pricing Policy Statement.
Finally, as noted above, several commenters propose that public utilities that own few transmission facilities be granted waiver, or that application of the Rule to such utilities be deferred until 60 days after they receive a section 211 request. As discussed more fully in Section IV.K.2., we find that it is reasonable to permit certain public utilities for good cause shown to file, within 60 days after this Rule is published in the Federal Register, requests for waiver from some or all of the requirements of this Rule. The filing of a request in good faith for a waiver from the requirement to file an open access tariff will eliminate the requirement that such public utility make a compliance filing unless thereafter ordered by the Commission to do so. It will not, however, exempt such public utility from providing, upon request, transmission services consistent with the requirements of the Final Rule.
Convergence Research - 5/2/96