75 FERC 61,080

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

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

ORDER NO. 888
FINAL RULE
(Issued April 24, 1996)

I. INTRODUCTION/SUMMARY

Open Access

Transmission/Local Distribution

Stranded Costs

Environmental Issues

Conclusion

II. PUBLIC REPORTING BURDEN

A. Docket No. RM95-8-000 (Open Access Final Rule)

B. Docket No. RM94-7-001 (Stranded Cost Final Rule)

III. BACKGROUND

A. Structure of the Electric Industry at Enactment of Federal Power Act

B. Significant Changes in the Electric Industry

C. The Public Utility Regulatory Policies Act and the Growth of Competition

D. The Energy Policy Act

E. The Present Competitive Environment

1. Use of Sections 211 and 212 to Obtain Transmission Access

2. Commission's Comparability Standard

3. Lack of Market Power in New Generation

4. Further Commission Action Addressing a More Competitive Electric Industry

5. Events Since Issuance of Open Access NOPR

F. Need for Reform

IV. DISCUSSION

A. Scope of the Rule

1. Introduction

2. Functional Unbundling

3. Market-based Rates

4. Merger Policy

5. Contract Reform

6. Flow-based Contracting and Pricing

B. Legal Authority

1. Bases for Legal Authority

2. Response to Commenters Opposing our Legal Authority

C. Comparability

1. Eligibility to Receive Non-discriminatory Open Access Transmission

2. Service that Must be Provided by Transmission Provider

3. Who Must Provide Non-discriminatory Open Access Transmission

4. Reservation of Transmission Capacity by Transmission Customers

5. Reservation of Transmission Capacity for Future Use by Utility

6. Capacity Reassignment

7. Information Provided to Transmission Customers

8. Consequences of Functional Unbundling

D. Ancillary Services

1. Definitions and Descriptions

3. Unbundling and Bundling Ancillary Services

4. Reassignment of Ancillary Services

5. Pricing of Ancillary Services

6. Accounting for Ancillary Services

E. Real-Time Information Networks

F. Coordination Arrangements

G. Pro Forma Tariff

Unified Pro Forma Tariff

1. Tariff Provisions That Affect The Pricing Mechanism

2. Priority For Obtaining Service

3. Curtailment Provisions

4. Specific Tariff Provisions

H. Implementation

I. Federal and State Jurisdiction: Transmission/Local Distribution

J. Stranded Costs

1. Justification for Allowing Recovery of Stranded Costs

2. Cajun Electric Power Cooperative, Inc. v. FERC 590/

3. Responsibility for Wholesale Stranded Costs (Whether to Adopt Direct Assignment to Departing Customers)

4. Recovery of Stranded Costs Associated With New Wholesale Requirements Contracts

5. Recovery of Stranded Costs Associated With Existing Wholesale Requirements Contracts

6. Recovery of Stranded Costs Caused by Retail-Turned-Wholesale Customers

7. Recovery of Stranded Costs Caused by Retail Wheeling

8. Evidentiary Demonstration Necessary - Reasonable Expectation Standard

9. Calculation of Recoverable Stranded Costs

10. Stranded Costs in the Context of Voluntary Restructuring

11. Accounting Treatment for Stranded Costs

12. Definitions, Application, and Summary

K. Other

1. Information Reporting Requirements for Public Utilities

2. Small Utilities

3. Regional Transmission Groups

4. Pacific Northwest

5. Power Marketing Agencies

6. Hydroelectric Power

7. Residential Customers

V. ENVIRONMENTAL STATEMENT

SUMMARY

A. The Environmental Impact Statement

B. Major Issues

C. Commission Conclusions

DISCUSSION

A. Compliance With NEPA Requirements

B. Analysis of Alternatives

C. The Scope of the FEIS

D. Economic and Environmental Impacts of the Rule

E. Mitigation Analysis

F. Coastal Zone Management Act Issue

CONCLUSION

VI. REGULATORY FLEXIBILITY ACT CERTIFICATION

A. Docket No. RM95-8-000 (Open Access Final Rule)

1. Public utilities

2. Non-public utilities

B. Docket No. RM94-7-001 (Stranded Cost Final Rule)

1. Public utilities

2. Non-public utilities

C. Conclusion

VII. INFORMATION COLLECTION STATEMENT

PART 35 -- FILING OF RATE SCHEDULES

Convergence Research - 5/2/96