Promoting a Competitive Market for Capacity Reassignment, 58293-58303 [2010-23836]
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Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Rules and Regulations
2. On page 52859, in the second
column, in the fourth line of the
heading, remove ‘‘FAA–2008–0118’’ and
add in its place ‘‘FAA–2008–0188.’’
■ 3. On page 52859, in the second
column, in the fifth line of the heading,
remove ‘‘13–34, 47–29, and 91–318’’ and
add in its place ‘‘47–29.’’
■ 4. On page 52859, in the third column,
in the second paragraph under
SUPPLEMENTARY INFORMATION, in the
twelfth line, remove ‘‘February 29, 2010’’
and add in its place ‘‘February 29, 2012.’’
■
Issued in Washington, DC, on September
20, 2010.
Dennis R. Pratte, II,
Acting Director, Office of Rulemaking.
[FR Doc. 2010–23964 Filed 9–23–10; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 35
[Docket No. RM10–22–000; Order No. 739]
Promoting a Competitive Market for
Capacity Reassignment
September 20, 2010.
Federal Energy Regulatory
Commission.
ACTION: Final rule.
AGENCY:
The Federal Energy
Regulatory Commission lifts the price
cap for all electric transmission
customers reassigning transmission
capacity based on the Commission’s
experience to date and a two-year study,
released April 15, 2010. The removal of
the price cap is intended to help
SUMMARY:
58293
facilitate the development of a market
for electric transmission capacity
reassignments as a competitive
alternative to transmission capacity
acquired directly from the transmission
owner.
DATES: Effective Date: This rule will
become effective September 24, 2010.
FOR FURTHER INFORMATION CONTACT:
Laurel Hyde (Technical Information),
Office of Energy Market Regulation,
Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502–
8146.
A. Cory Lankford (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC
20426, (202) 502–6711.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Jon Wellinghoff,
Chairman; Marc Spitzer, Philip D. Moeller,
John R. Norris, and Cheryl A. LaFleur.
Paragraph
Nos.
I. Background ..........................................................................................................................................................................................
II. Discussion ..........................................................................................................................................................................................
A. Removal of the Price Cap ..........................................................................................................................................................
1. Comments .............................................................................................................................................................................
2. Commission Determination .................................................................................................................................................
a. Removal of the Price Cap .............................................................................................................................................
b. Implementation of the Requirement ............................................................................................................................
B. Non-Rate Reforms to Promote Secondary Market ....................................................................................................................
1. NOPR Proposal .....................................................................................................................................................................
2. Comments .............................................................................................................................................................................
3. Commission Determination .................................................................................................................................................
III. Information Collection Statement ....................................................................................................................................................
IV. Environmental Analysis ...................................................................................................................................................................
V. Regulatory Flexibility Act .................................................................................................................................................................
VI. Document Availability .....................................................................................................................................................................
VII. Effective Date and Congressional Notification ..............................................................................................................................
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1. Based on the Commission’s
experience to date and a two-year study,
released April 15, 2010,1 the Federal
Energy Regulatory Commission in this
Final Rule makes permanent the lifting
of price caps for transmission customers
reassigning electric transmission
capacity. This action is intended to
facilitate the development of a market
for electric transmission capacity
reassignments as a competitive
alternative to primary transmission
capacity.
I. Background
2. In Order No. 888, the Commission
concluded that a transmission
provider’s pro forma Open Access
Transmission Tariff (OATT) must
permit explicitly the voluntary
reassignment of all or part of a holder’s
1 FERC Staff, Staff Findings on Capacity
Reassignment (2010), available at https://
www.ferc.gov (Staff Report).
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firm point-to-point capacity rights to
any eligible customer.2 The Commission
also found that allowing holders of firm
transmission capacity rights to reassign
that transmission capacity would help
parties manage the financial risks
associated with their long-term
commitment, reduce the market power
of transmission providers by enabling
customers to compete, and foster
efficient transmission capacity
allocation.
2 Promoting Wholesale Competition Through
Open Access Non-Discriminatory Transmission
Services by Public Utilities; Recovery of Stranded
Costs by Public Utilities and Transmitting Utilities,
Order No. 888, 61 FR 21540 (May 10, 1996), FERC
Stats. & Regs. ¶ 31,036, at 31,696 (1996), order on
reh’g, Order No. 888–A, 62 FR 12274 (March 14,
1997), FERC Stats. & Regs. ¶ 31,048 (1997), order
on reh’g, Order No. 888–B, 81 FERC ¶ 61,248
(1997), order on reh’g, Order No. 888–C, 82 FERC
¶ 61,046 (1998), aff’d in relevant part sub nom.
Transmission Access Policy Study Group v. FERC,
225 F.3d 667 (DC Cir. 2000), aff’d sub nom. New
York v. FERC, 535 U.S. 1 (2002).
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3. With respect to the appropriate rate
for transmission capacity reassignment,
the Commission concluded it could not
permit reassignments at market-based
rates because it was unable to determine
that the market for reassigned
transmission capacity was sufficiently
competitive so that resellers would not
be able to exert market power. Instead,
the Commission capped the rate at the
highest of: (1) The original transmission
rate charged to the purchaser (assignor);
(2) the transmission provider’s
maximum stated firm transmission rate
in effect at the time of the reassignment;
or (3) the assignor’s own opportunity
costs capped at the cost of expansion
(price cap). The Commission further
explained that opportunity cost pricing
had been permitted at ‘‘the higher of
embedded costs or legitimate and
verifiable opportunity costs, but not the
sum of the two (i.e., ‘or’ pricing is
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permitted; ‘and’ pricing is not).’’ 3 In
Order No. 888–A, the Commission
explained that opportunity costs for
transmission capacity reassigned by a
customer should be measured in a
manner analogous to that used to
measure the transmission provider’s
opportunity cost.4
4. To foster the development of a
more robust secondary market for
transmission capacity, the Commission,
in Order No. 890, concluded that it was
appropriate to lift the price cap for all
transmission customers reassigning
transmission capacity.5 The
Commission stated that this would
allow transmission capacity to be
allocated to those entities that value it
most, thereby sending more accurate
price signals to identify the appropriate
location for construction of new
transmission facilities to reduce
congestion.6 The Commission also
found that market forces, combined
with the requirements of the pro forma
OATT as modified in Order No. 890,
would limit the ability of resellers,
including affiliates of the transmission
provider, to exert market power.
5. To enhance oversight and
monitoring activities, the Commission
adopted reforms to the underlying rules
governing transmission capacity
reassignments.7 First, the Commission
required that all resales or
reassignments of transmission capacity
be conducted through or otherwise
posted on the transmission provider’s
OASIS on or before the date the
reassigned service commences.8 Second,
the Commission required that assignees
of transmission capacity execute a
service agreement prior to the date on
which the reassigned service
commences.9 Third, in addition to
existing OASIS posting requirements,
the Commission required transmission
providers to aggregate and summarize in
an electric quarterly report the data
contained in these service agreements.10
3 Order No. 888, FERC Stats. & Regs. ¶ 31,036 at
31,740.
4 Order No. 888–A, FERC Stats. & Regs. ¶ 31,048
at 30,224.
5 Preventing Undue Discrimination and
Preference in Transmission Service, Order No. 890,
72 FR 12266 (March 15, 2007), FERC Stats. & Regs.
¶ 31,241, at P 808 (2007), order on reh’g, Order No.
890–A, 73 FR 2984 (January 16, 2008), FERC Stats.
& Regs. ¶ 31,261 (2007), order on reh’g, Order No.
890–B, 123 FERC ¶ 61,299 (2008), order on reh’g,
Order No. 890–C, 126 FERC ¶ 61,228 (2009), order
on clarification, Order No. 890–D, 129 FERC ¶
61,126 (2009).
6 Order No. 890, FERC Stats. & Regs. ¶ 31,241 at
P 808.
7 Id. P 815.
8 Id.
9 Id. P 816.
10 Id. P 817.
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6. The Commission also directed staff
to closely monitor the reassignmentrelated data submitted by transmission
providers in their quarterly reports to
identify any problems in the
development of the secondary market
for transmission capacity and, in
particular, the potential exercise of
market power.11 Thus, the Commission
directed staff to prepare, within six
months of receipt of two years of
quarterly reports, a report summarizing
its findings.12 In addition, the
Commission encouraged market
participants to provide feedback
regarding the development of the
secondary electric transmission capacity
market and, in particular, to contact the
Commission’s Enforcement Hotline if
concerns arise.
7. In Order No. 890–A, the
Commission affirmed its decision to
remove the price cap on reassignments
of electric transmission capacity but
granted rehearing to limit the period
during which reassignments may occur
above the cap.13 The period was limited
so that the Commission could review
the Staff Report to see if changes were
needed based on the actual operation of
the reassignment program. Accordingly,
the Commission amended section 23.1
of the pro forma OATT to reinstate the
price cap as of October 1, 2010.14
8. The Commission also clarified that,
as of the effective date of the reforms
adopted in Order No. 890, all
reassignments of electric transmission
capacity must take place under the
terms and conditions of the
transmission provider’s OATT. As a
result, there was no longer a need for
the assigning party to have on file with
the Commission a rate schedule
governing reassigned capacity. To the
extent that a reseller has a market-based
rate tariff on file, the provisions of that
tariff, including a price cap or reporting
obligations, will not apply to the
reassignment since such transactions no
longer take place pursuant to the
authorization of that tariff.
9. In Order No. 890–B, the
Commission clarified that the pro forma
OATT does not, and will not, permit the
withholding of transmission capacity by
the transmission provider and that it
effectively establishes a price cap for
long-term reassignments at the
transmission provider’s cost of
expanding its system.15 The
Commission further found that the fact
that a transmission provider’s affiliate
may profit from congestion on the
system does not relieve the transmission
provider of its obligation to offer all
available transmission capacity and
expand its system as necessary to
accommodate requests for service.16 The
Commission pointed out that customers
that do not wish to participate in the
secondary market may continue to take
service from the transmission provider
directly, just as if the price cap had not
been lifted.17
10. With regard to the Staff Report,
the Commission clarified that staff
should focus on the competitive effects
of removing the price cap for reassigned
electric transmission capacity.18 The
Commission stated that staff should
consider the number of reassignments
occurring over the study period, the
magnitude and variability of resale
prices, the term of the reassignments,
and any relationship between resale
prices and price differentials in related
energy markets. In addition, the
Commission directed staff to examine
the nature and scope of reassignments
undertaken by the transmission
provider’s affiliates and include in its
report any evidence of abuse in the
secondary market for transmission
capacity, whether by those affiliates or
other customers.
11. The Commission also granted
rehearing and directed each
transmission provider to include in its
electric quarterly report the identity of
the reseller and indicate whether the
reseller is affiliated with the
transmission provider.19 The
Commission also directed each
transmission provider to include in its
electric quarterly reports the rate that
would have been charged under its
OATT had the secondary customer
purchased primary service from the
transmission provider for the term of the
reassignment.20 The Commission
directed transmission providers to
submit this additional data for all
resales during the study period and to
update, as necessary, any previouslyfiled electric quarterly reports on or
before the date they submitted their next
electric quarterly reports.
12. On April 15, 2010, Commission
staff published its report on the twoyear study period.21 The Staff Report
took a comprehensive look at electric
point-to-point transmission capacity
16 Id.
17 Id.
11 Id.
P 820.
12 Id.
13 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261
at P 388, 390.
14 Id. P 390.
15 Order No. 890–B, 123 FERC ¶ 61,299 at P 78.
PO 00000
Frm 00010
P 79.
P 83.
19 Id. P 84.
20 Id.
21 FERC Staff, Staff Finding on Capacity
Reassignment (2010), available at https://
www.ferc.gov (Staff Report).
18 Id.
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reassignment that occurred over the
period from the second quarter of 2007
through the fourth quarter of 2009. Staff
examined all reported electric
transmission reassignments during this
period on both a national and a regional
basis. These almost 35,000 transactions
encompassed 65 TWh of total volume
transferred. Staff looked at the data in a
number of ways, in order to better
understand the market and to look for
evidence of abuse. In doing so, staff
looked at the magnitude and variability
of resale prices, and focused on trends
in those numbers over time and by
region. Staff compared resale prices to
the maximum tariff rates that would
have otherwise been in effect for those
transactions. Further, staff looked at
reassignments by term—hourly, daily,
monthly, and yearly and looked at
differences in term by transmission
provider and by volume. Where the
receipt and delivery points of
transactions had reported price indices
with sufficient data, staff compared the
prices of reassignments to the energy
market spread (differential in prices
between the two locations) over the
same time periods.
13. Staff also compared resale prices
for transactions involving affiliates
versus non-affiliates. Staff compared the
rate of transactions above the cap for
both affiliates and non-affiliates. Staff
looked for additional forms of affiliate
abuse such as a transmission provider
providing preferential treatment in the
allocation of reassigned capacity to an
affiliate. Staff also checked for
complaints of the abuse in affiliate
transactions, as well as for capacity
reassignment in general.
14. Two weeks after the release of the
Staff Report, based on the Commission’s
experience in the natural gas
transportation market and the Staff
Report’s conclusion that the secondary
market had grown substantially and that
resale prices reflected market
fundamentals rather than the exercise of
market power, the Commission issued a
Notice of Proposed Rulemaking (NOPR)
proposing to lift the price cap for all
electric transmission customers
reassigning transmission capacity
beyond October 1, 2010. In addition, the
Commission proposed to direct
transmission providers to submit
corresponding revisions to their OATTs
within 30 days of publication of the
Final Rule in the Federal Register. The
Commission also sought comment as to
whether there are any other reforms that
it should undertake to create a more
efficient and vibrant secondary market
for electric transmission capacity. In
response to these NOPR proposals, the
Commission received comments from
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13 parties, which are addressed
below.22
II. Discussion
A. Removal of the Price Cap
1. Comments
15. Several commenters support the
Commission’s proposal to remove the
price cap on transmission reassignments
permanently.23 They contend that
removal of the cap will encourage the
development of a more robust secondary
market, resulting in appropriate price
signals and an efficient allocation of
transmission capacity. Cargill comments
that the resale of transmission capacity
at negotiated rates is consistent with
other Commission reforms in favor of
market-based pricing.
16. Despite their general support for
the Commission’s proposal, EPSA and
PG&E raise concerns about the staff
study and the need for transparency.
EPSA states that the Staff Report shows
some gaps that will require further
analysis; such as limited numbers of
transmission providers reported and the
majority of transactions being from
Bonneville. PG&E expresses a lingering
concern about the potential for
transmission service providers to raise
power prices in locations where there is
insufficient competition. EPSA and
PG&E urge the Commission to continue
to monitor the capacity reassignment
market as it matures so that the
Commission will be informed and
therefore able to direct necessary
reforms to the market, as the needed
reforms reveal themselves. EPSA further
urges the Commission to look at ways of
increasing transparency for transmission
capacity available for reassignments as a
way of promoting the secondary market
for reassignment. Powerex comments
that there are already a number of
safeguards including requirements that
transmission providers report
reassignments on their systems on
OASIS and in the electronic quarterly
reports (EQR) that should help limit
abuses. Similarly, Seattle comments that
reconciliation of EQRs, audits, and
OASIS transactions would go a long
way to ensure that resale markets are
functioning without affiliate abuse.
17. Bonneville agrees that lifting the
price cap on transmission capacity
reassignments appears to support the
goal of a more robust secondary market
for that capacity but asks the
Commission to recognize the position of
non-jurisdictional entities, such as
22 A
list of commenters is provided in Appendix
58295
itself. Bonneville contends that nonjurisdictional entities may have to place
conditions upon the removal of the cap
in order to obtain reciprocity and
comply with their applicable statutory
requirements. Bonneville contends that
if its administrator determines that
behavior associated with transmission
capacity reassignments is occurring on
its system in a manner that frustrates or
is otherwise inconsistent with the
administrator’s statutory requirements
to make all excess capacity available to
utilities on a fair and nondiscriminatory
basis, the administrator must be able to
act promptly to stop that behavior.
Thus, Bonneville suggests that any
revision to section 23 of Bonneville’s
OATT permanently lifting the price cap
must be conditioned upon the
administrator’s express authority to
carry out this mandate including the
right to reinstate the cap expeditiously
if necessary.
18. Other commenters argue against
removal of the price cap, contending
that staff’s two-year study provides
insufficient evidence to support a
finding that the secondary market is
sufficiently competitive to lift the price
caps or that market forces or other
factors will be effective to adequately
protect consumers.24 These commenters
point out that, although the Final Rule
would apply to an estimated 132 public
utilities, the Staff Report included data
from only 26 with 79 percent of the
reported transactions coming from
Bonneville. These commenters also
point out that the study was performed
during a recession with concomitant
reductions in the demand for electricity,
and that Bonneville is atypical, given
that it is dependent on large
hydroelectric projects. APPA further
comments that because there were so
few sales made during the study period
by affiliates above the rate cap, it would
appear that reinstitution of the cap
would not significantly dampen resales
of capacity by affiliates of transmission
providers.
19. TAPS states that the staff study
did not examine both prices offered and
accepted such that the Commission
could determine the level of market
interest in reassigned capacity, whether
prices increased, the cause of price
changes, and whether those prices
remained in the zone of reasonableness.
It notes that the staff study compared
resale prices during the study period to
the tariff rate, but not to the opportunity
cost cap, which is likely higher. It
argues that accordingly, the study does
not show that the price cap constrained
A.
23 E.g. Bonneville, Cargill, EPSA, FIEG, PG&E,
PGE, Powerex, Seattle.
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24 E.g. APPA, NRECA, SCE, TAPS, Outland, and
TDU Systems.
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any prices, and thus it prevents a
finding that the price cap is unjust and
unreasonable. SCE requests that the
Commission reconcile its proposal with
findings in the Staff Report that removal
of the price cap does not appear to be
primarily responsible for the observed
growth in the secondary market. It also
states that the Staff Report did not
definitively conclude that there was not
abuse by resellers, even in a period with
very low demand and no supply
scarcity. SCE states that this is not
sufficient evidence to lift the price cap.
APPA, SCE and TAPS suggest that, if
the Commission wishes to lift the price
cap, it should only do so as a
continuation of the experiment.
20. NRECA, TAPS, and TDU Systems
argue that the Staff Report does not
provide a sufficient factual basis for the
Commission to conclude that the OATT
section 23.1, which reinstates the price
cap on October 1, 2010, is unjust and
unreasonable or to conclude that
proposed revision is just and
reasonable. Moreover, TAPS and TDU
Systems comment that market-based
reassignment of transmission capacity
should not be available to entities to the
extent they lack market-based rate
authority in the area in which the
transmission reservation is located. TDU
Systems states that each secondary
transmission capacity market should be
looked at individually, and that there is
no single, national market for secondary
transmission capacity rights. It
questions why the Staff Report
considers Public Service of New
Hampshire (PSNH) to be an aberration,
while the nearby Central Vermont
Public Service Corporation (Central
Vermont) system is presented as
representing national trends.
21. TAPS and TDU Systems further
contend that, to permit market-based
rates, the Commission remains bound
by the requirement that market-based
rates be supported by empirical proof
that existing competition would ensure
that the actual price is just and
reasonable.25 TDU Systems comments
that courts have held that
undocumented reliance on market
forces is insufficient grounds for
authorizing market-based rates.26
Moreover, TAPS and TDU Systems
argue that the Commission has a
requirement to make an ex ante finding
of the absence of market power and
sufficient post-approval requirements.27
SCE agrees that the Commission should
25 Citing Farmers Union Cent. Exch., Inc. v. FERC,
734 F.2d 1486, 1510 (DC Cir. 1984)(Farmers Union).
26 Citing Transwestern Pipeline, 43 FERC ¶
61,240, at 61,250 (1988).
27 Citing California ex. Rel. Lockyer v. FERC, 383
F.3d 1006, 1013 (9th Cir. 2004).
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engage in an ex ante competitive
analysis to find that the transmission
reseller lacks market power, or take
sufficient steps to mitigate market
power, as well as adopt sufficient postapproval reporting requirements.
22. Outland states that the pilot
project has allowed resellers to acquire
capacity ‘‘for pennies and then hold up
the first renewable energy generator that
comes along looking to use it.’’ 28 It
states that parties acquire transmission
when they do not need it for a real
generation project, to the detriment of
real projects.
23. NRECA, TAPS, and TDU Systems
urge the Commission, at a minimum, to
retain the price cap on transmission
capacity reassignments for transmission
provider affiliates and retail/merchant
functions. TAPS states that the pattern
of affiliate pricing reveals more about
corporate strategy selected by a few
corporate entities and general
conditions during an atypical period,
than confirming the Commission’s
assumption that the rates for primary
capacity or competition in the
reassignment market will restrain
prices. It states that assuming that the
customer may always take service from
the transmission provider directly is
cold comfort if the available capacity
has been assigned to the transmission
provider’s affiliate. NRECA states that a
larger portion of affiliate than nonaffiliate transactions occurred over the
cap, and points to the PSNH system
where all reported transactions
originated with an affiliate and occurred
over the price cap.
24. In its supplemental comments,
Powerex expresses concern that
Bonneville might reinstate the price cap
as of October 1, 2010, regardless of
Commission action in this proceeding.
Powerex asks the Commission to
address the possible adverse
consequences of non-jurisdictional
transmission providers reinstating price
caps on transmission reassignments and
to provide guidance to customers
seeking to reassign transmission on the
systems of non-jurisdictional
transmission providers that elect not to
adopt any reforms the Commission
directs. To address this issue, Powerex
requests the Commission to clarify that
its seller-specific market-based rate
schedule for transmission reassignment
remains operative. Alternatively,
Powerex seeks guidance on how to price
capacity reassignments based on the
customer’s opportunity cost capped at
the transmission provider’s cost of
expansion.
28 Outland
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2. Commission Determination
a. Removal of the Price Cap
25. The Commission hereby adopts its
NOPR proposal to lift the price cap for
all reassignments of electric
transmission capacity to become
effective October 1, 2010. Removal of
the price cap will help foster the
development of a more robust secondary
market for transmission capacity
because point-to-point transmission
service customers will have increased
incentives to resell their service
whenever others place a higher value on
it. Existing transmission, therefore, may
be put to better, more efficient use.
26. Moreover, removal of the price
cap will promote the efficient
construction of new capacity. Prices
serve as signals indicating where
capacity shortages exist and where
potentially profitable construction can
take place. The Commission has
previously addressed the need for new
transmission and established incentives
for its construction.29 Removing the
price cap on sales of secondary electric
transmission capacity is one way to
create the proper incentives for new
transmission investment in this
industry. Areas with congestion tend to
have higher prices and thus signal the
need for investment.30 However, if
prices for reassigned capacity exceed
the cost of construction of new
transmission, the customer could
request service from the transmission
provider which would support
investment in new transmission and
lower costs prospectively by relieving
constrained transmission capacity.
Thus, the price of reassigned capacity
will remain effectively capped at the
cost of new transmission. We therefore
reaffirm the Commission’s finding in
Order No. 890–A that removal of the
price cap for reassigned capacity will
help establish a competitive market for
secondary transmission capacity that
will send more accurate signals and that
such price signals will promote more
efficient use of the electric transmission
system.31
27. Our continued regulatory
oversight will also limit the potential for
the exercise of market power. We are
29 Promoting Transmission Investment through
Pricing Reform, Order No. 679, 71 FR 43294 (July
31, 2006), FERC Stats. & Regs. ¶ 31,222 (2006),
order on reh’g, Order No. 679–A, 72 FR 1152
(January 10, 2007), FERC Stats. & Regs. ¶ 31,236
(2006), order on reh’g, 119 FERC ¶ 61,062 (2007).
30 See Interstate Nat’l Gas Ass’n of America v.
FERC, 285 F.3d 18, 32–34 (DC Cir. 2002) (INGAA)
(‘‘[B]rief spikes in moments of extreme exigency are
completely consistent with competition, reflecting
scarcity rather than monopoly.’’).
31 Order No. 890–A, FERC Stats. & Regs. ¶ 31,261
at P 388.
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not deregulating or otherwise adopting
market-based rates for the provision of
transmission service under the pro
forma OATT. Transmission providers
will continue to be obligated to offer
available transfer capability to
customers, including available transfer
capability associated with purchased
but unused capacity. Transmission
providers also will continue to be
obligated to construct new facilities to
satisfy requests for service if those
requests cannot be satisfied using
existing capacity. Furthermore, the rates
for transmission service provided under
the pro forma OATT will continue to be
determined on a cost-of-service basis
unless the transmission provider can
demonstrate, on a case-specific basis,
that it lacks market power. Nothing in
this Final Rule affects the obligations of
transmission providers to offer service
under the pro forma OATT at cost-based
rates. The availability of firm and nonfirm service from transmission
providers, therefore, will limit the
ability of reassignors to exercise market
power. In INGAA, the Court of Appeals
for the District of Columbia Circuit
recognized that the maintenance of
regulated rates for primary service
would protect against the potential for
the exercise of market power in the
capacity release market.32
28. The Commission disagrees with
suggestions that affiliates of the
transmission provider be treated
differently than non-affiliated customers
with respect to reassignments of
transmission capacity. The
Commission’s Standards of Conduct are
designed to prevent the transmission
provider and its affiliate from acting in
concert to exercise market power.33
32 285 F.3d at 32 (‘‘[i]f holders of firm capacity do
not use or sell all of their entitlement, the pipelines
are required to sell the idle capacity as interruptible
service to any taker at no more than the maximum
rate—which is still applicable to the pipelines’’); see
also, Promotion of a More Efficient Capacity
Release Market, Order No. 712, 73 FR 37058 (June
30, 2008), FERC Stats. & Regs. ¶ 31,271, at P48–49
(2008), order on reh’g, Order No. 712–A, FERC
Stats. & Regs. ¶ 31,284 (2008).
33 See Standards of Conduct for Transmission
Providers, Order No. 717, 73 FR 63796 (October 27,
2008), FERC Stats. & Regs. ¶ 31,280 (2008), order
on reh’g, Order No. 717–A, 74 FR 54463 (October
22, 2009), FERC Stats. & Regs. ¶ 31,297 (2009),
order on reh’g, Order No. 717–B, 129 FERC ¶ 61,123
(2009), order on reh’g, Order No. 717–C, 131 FERC
¶ 61,045 (2010). The Commission’s Standards of
Conduct establish that a transmission provider must
(1) treat all customers, affiliated and non-affiliated,
on a not unduly discriminatory basis, (2) not make
or grant any undue preference or advantage to any
person, and (3) not subject any person to any undue
prejudice or disadvantage with respect to
transmission of electric energy. This would include
avoiding undue prejudice or disadvantage in the
initial allocation of capacity to affiliates, thereby
allowing those affiliates to gain market power and
then to exercise it when reassigning capacity.
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Commenters did not identify any
affiliate concerns that these obligations,
along with the monitoring discussed
below, would not address.
29. The Commission takes seriously
the possibility that resellers may
attempt to exercise market power in the
secondary market for transmission. We
continue to find, however, that the
regulatory protections in place and our
increased oversight of this market will
limit the potential for market power
abuse. Prices for secondary transmission
capacity may rise above prices for
primary transmission capacity but this
alone does not indicate an abuse of
market power. On the contrary, courts
have recognized that prices in a
competitive market should rise during
periods when capacity is truly scarce in
order to ensure that transmission
capacity is being allocated
appropriately.34 Nevertheless, the
Commission will continue to monitor
the secondary transmission capacity
market to ensure that participants are
not exercising market power.35 The
Commission also will monitor for abuse
by transmission providers in concert
with their affiliates. If a customer has
evidence of an exercise of market power
or other abuse, it should bring the
matter to the Commission’s attention
through a complaint or other
appropriate procedural mechanism.
Absent such evidence, the Commission
concludes that the continued rate
regulation of the primary market for
electric transmission capacity and the
transmission provider’s obligation to
expand its system to accommodate
service requests adequately mitigates
any market power that resellers may
have in the long-term secondary market.
30. The Staff Report did not raise any
concerns with removal of the price cap
that would warrant its reimposition
given the regulatory protections and
increased market oversight discussed
above. The report included a
comprehensive examination of the
assignments that took place during the
study period which included both the
period prior to the economic downturn
starting in September 2008 and the
period after the downturn. Although the
Staff Report did not conclusively
demonstrate that the price cap inhibited
the growth of the secondary market, the
data showed a marked growth in
reassignments, with both the number of
transactions and the volume increasing
during the two and one half year time
34 INGAA, 285 F.3d at 32–34 (‘‘[B]rief spikes in
moments of extreme exigency are completely
consistent with competition, reflecting scarcity
rather than monopoly.’’).
35 See Order No. 890, FERC Stats. & Regs.
¶ 31,241 at P 815.
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58297
span. The number of reassignments
grew from just over 200 in 2007 to
almost 32,000 in 2009. During this same
period, the volume reassigned grew
from 3 TWh to 36 TWh.
31. The data do not suggest the
exercise of market power. The prices
during the test period appear consistent
with pricing differentials between
locational markets, indicating that the
transactions reflect market
fundamentals, not the exercise of market
power.36 Moreover, the Staff Report
found that 99 percent of reassignments
were priced at or below the
transmission provider’s maximum firm
transmission rate, an indication that
prices reflect market conditions and
competition rather than the exercise of
market power.37 The brief spikes above
the price cap are consistent with a
competitive market, indicating scarcity
rather than market power.38
32. We disagree with comments
suggesting that the Staff Report does not
provide enough evidence to support a
finding that the market is sufficiently
competitive to lift the price cap because
it relied on data from a limited number
of transmission providers. While
capacity reassignments occurred on a
limited number of transmission systems,
the lack of data for other transmission
providers indicates a lack of
reassignments on those systems, not an
exercise of market power or lack of
potential competition for capacity
reassignment. Where reassignment is
currently non-existent or occurring at a
lower level, potential reassignment of
transmission in these areas, should it
develop, would face competition
associated with transmission that can be
acquired from other customers. Such
reassignment also would compete with
capacity available from the transmission
provider. Although the data in the Staff
Report included extensive data from
Bonneville and Central Vermont, the
greater number of such assignments may
be due to differences in market
dynamics (such as the extensive use of
hydroelectric power in the Bonneville
region) or reporting conventions (in the
case of Central Vermont).39 It also may
36 See INGAA, 285 F.3d at 31 (indicating that
differentials in prices between receipt and delivery
points are indicative of the value of the
transportation between those points).
37 Because 99 percent of the prices were below
the tariff rate, these prices are almost certainly
lower than opportunity costs which TAPS suggests
are likely higher than the tariff rate.
38 INGAA, 285 F.3d 18, 32 (‘‘A surge in the price
of candles during a power outage is no evidence of
monopoly in the candle market’’).
39 The Staff Report states that ‘‘the large number
of [Central Vermont] transactions may be due, in
part, to reporting conventions. For EQR reporting
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indicate that capacity reassignment is
more developed in those areas. The
volume of capacity reassignments on
these two systems provides an example
of what may be possible in other areas
of the country. As for arguments that the
time period under review was atypical
due to the economic downturn and,
thus, not representative, we note that
study began the second quarter of 2007,
well before the downturn began.
33. The Staff Report also did not show
evidence of affiliate abuse. Ninety-nine
percent of reassignments by affiliates of
the transmission provider were at or
below the transmission provider’s
maximum rate. The percentage of such
reassignments over the maximum firm
transmission rate by affiliates was
comparable to that by non-affiliates (0.5
percent versus 0.4 percent).
34. While it is true, as some of the
commenters point out, that the
reassignment transactions were limited
to certain areas and utilities, we see no
reason to expect different results as
capacity reassignment expands. There
have not been allegations of the exercise
of market power in reassignment
markets, and commenters do not
provide any data to suggest that market
power may be more prevalent as
capacity reassignment increases on
other transmission systems.
Development of a more robust
reassignment market in areas where
reassignments are not prevalent should
raise, rather than lower, the level of
competition in markets. Moreover, we
will continue to monitor the market and
if anomalies develop in certain areas,
they can be addressed.
35. We disagree with the comments
that a market power study or other
empirical competition analyses are
required to lift the price cap on
transmission capacity reassignments.
Contrary to commenters’ assertions,
market power analyses are not the only
method to ensure that market-based
rates remain just and reasonable.40 In
INGAA,41 the DC Circuit affirmed the
purposes, each line of data is counted as one
transaction.’’ See Staff Report at 4.
40 See Alternatives to Traditional Cost-of-Service
Ratemaking for Natural Gas Pipelines and
Regulation of Negotiated Transportation Services of
Natural Gas Pipelines, 74 FERC ¶ 61,076, at
61,227–36 (1996). The Commission ultimately
determined in that case that a market power
analysis was required in order to allow a pipeline
to use market-based pricing instead of cost-ofservice rates. The Commission has not proposed to
allow transmission providers to engage in sales of
primary capacity at market-based rates and, as
explained below, sufficient protections exist to
ensure the secondary market for transmission
capacity remains sufficiently competitive without
requiring market power analyses from each reseller.
41 Interstate Nat’l Gas Ass’n of American v. FERC,
285 F.3d at 33 (DC Cir. 2002).
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Commission’s removal of price ceilings
for short-term capacity releases by
shippers in the natural gas market
without requiring sellers to submit
market power analyses. The court
recognized that non-cost factors such as
the need to facilitate movement of
capacity into the hands of those who
value it most may also justify the
removal of price ceilings. The court
concluded that these non-cost factors,
combined with the limitation of
negotiated rates to the secondary
market, distinguished the case from
Farmers Union in which the court had
reversed a Commission determination to
implement lighthanded regulation of the
oil industry.42
36. Farmers Union itself did not
require a market power study to support
a move to a more market-based
regulatory regime. The court found that
rates should be within a ‘‘zone of
reasonableness, where [they] are neither
less than compensatory nor
excessive.’’ 43 Moreover, the court found
that the Commission could justify a
move to a more market-based focus ‘‘by
a showing that under circumstances the
goals and purposes of [the
Commission’s statutory mandate] will
be accomplished through substantially
less regulatory oversight.’’ 44 Here, the
Commission is relying on competition
in the market for transmission capacity,
together with the regulatory protections
discussed above, to ensure just and
reasonable rates. Protections, such as
continuing rate regulation of the
transmission provider’s primary
capacity, retention of the requirement
for transmission owners to build
additional capacity at cost-based rates,
competition among resellers, reforms to
the secondary market for transmission
capacity, and reporting requirements
combined with enforcement
proceedings, audits, and other
regulatory controls, will assure that
prices in the secondary market for
electric transmission capacity remain
within a zone of reasonableness.45
42 Interstate Nat’l Gas Ass’n of America v. FERC,
285 F.3d 18 at 31–34 (DC Cir. 2002), order on
remand, 101 FERC ¶ 61,127 (2002), order on reh’g,
106 FERC ¶ 61,088 (2004), aff’d sub nom. American
Gas Ass’n v. FERC, 428 F.3d 255 (DC Cir. 2005).
43 Farmers Union, 734 F.2d at 1502; see also,
INGAA, 285 F.3d at 31.
44 Farmers Union, 734 F.2d at 1510.
45 See Order No. 890, FERC Stats. & Regs.
¶ 31,241 at P 811; see also Order No. 712, 73 FR
37058 (June 30, 2008), FERC Stats. & Regs. ¶ 31,271
at P 39 (2008), order on reh’g, Order No. 712–A,
FERC Stats. & Regs. ¶ 31,284 (2008), aff’d sub nom.
Interstate Natural Gas Ass’n of America, No. 09–
1016 (DC Cir. Aug. 13, 2010).
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b. Implementation of the Requirement
37. Because the current OATTs
reinstate the price cap as of October 1,
2010, transmission providers will need
to revise section 23 of the pro forma
OATT, as indicated in Appendix B. We
direct transmission providers to file
these changes within 30 days from
publication of this Final Rule in the
Federal Register. Bonneville requests a
blanket waiver of the requirement for
non-jurisdictional entities that are
unable to satisfy reciprocity conditions
with regard to the reassignment of
transmission capacity. Whether the
particular terms and conditions of a
non-jurisdictional transmission
provider’s reciprocity tariff satisfy the
Commission’s open access principles
must be determined on a case-by-case
basis. Therefore, the Commission
denies, without prejudice, Bonneville’s
request for a blanket waiver.
38. We find Powerex’s concern that
Bonneville will reinstate the price cap
as of October 1, 2010 to be premature,
since Bonneville has not made a final
decision at this point. Moreover, when
Bonneville submitted its tariff revisions
pursuant to Order No. 890, it declined
to adopt certain pro forma provisions
related to the reassignment of
transmission capacity and several
transmission customers within
Bonneville, including Powerex, filed
stand-alone rate schedules allowing
them to sell transmission capacity above
the price cap.46 These customers may
submit any necessary revisions to their
rate schedules before October 1, 2010
and request waiver of the prior notice
requirement, if they find such action to
be necessary and appropriate.
B. Non-Rate Reforms To Promote
Secondary Market
1. NOPR Proposal
39. In the NOPR, the Commission
sought comment as to whether there are
any reforms, other than removal of the
price cap, that it should undertake to
create a more efficient and vibrant
secondary market for transmission
capacity. The Commission asked if there
are non-price limitations or regional
factors that may be continuing to limit
the utility of reassignment. By way of an
example, the Commission asked if there
46 See Portland General Electric Co., Docket No.
ER09–93–000 (Dec. 3, 2008) (unpublished letter
order); Idaho Power Co., Docket No. ER09–524–000
(Mar. 5, 2009) (unpublished letter order); Puget
Sound Energy, Inc., Docket No. ER09–528–000
(Mar. 5, 2009) (unpublished letter order); Avista
Corp., ER09–729–000 (May 12, 2009) (unpublished
letter order); PacifiCorp, Docket No. ER09–921–001
(Sept. 29, 2009) (unpublished letter order); Powerex
Corp., Docket No. ER09–926–000 (May 21, 2009)
(unpublished letter order).
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are reforms to the redirect process that
would enable all firm customers to use
their firm capacity more flexibly and
thereby facilitate capacity reassignment
by making point changes by the buyer
of reassigned capacity more efficient.
2. Comments
40. Although FIEG supports the
Commission’s proposal to allow
redirects of reassigned capacity, several
other commenters raise concerns.
Powerex admits that the ability to
modify receipt and delivery points of
reassigned capacity may make the
capacity more attractive to a potential
third-party assignee but warns that this
practice would erode the priority that
firm capacity should be accorded.
NRECA expresses similar concern that
this proposal may give higher priority to
point-to-point customers who wish to
redirect by awarding them service over
those non-firm customers who do not
redirect and over secondary network
customers. APPA contends that any
reforms to firm point-to-point service
proposed to increase the attractiveness
of re-sales of firm point-to-point
capacity would have to be carefully
assessed to ensure that they do not
result in a degradation of the quality of
network integration transmission
service. TAPS and TDU Systems urge
the Commission to not use a narrowly
focused rulemaking to implement a
sweeping change to point-to-point
transmission service.
41. Commenters offered suggestions
about various other reforms as well.
Bonneville and Seattle argue that
requiring transmission providers to act
as financial intermediaries in capacity
reassignments imposes an undue
burden and complicates settlements.
Powerex and Bonneville raise concerns
about transmission providers failing to
recalculate available transfer capability
or available flowgate capability in a
timely manner, thereby inhibiting
reassignments. Bonneville recommends
that a firm redirect request receive a
credit for any available flowgate
capability the parent reservation has on
the flowgates impacted by the firm
redirect request. TAPS suggests that the
Commission require the posting of
transmission capacity available for
reassignment on the transmission
provider’s OASIS. Cargill recommends
that the reseller not remain responsible
or liable to the transmission provider for
the reassigned capacity if it is a
complete reassignment (the full quantity
of capacity for the remainder of the
reservation) or if the reseller performs a
long-term assignment of the reservation
for any quantity up to the full amount
of the capacity of the reservation.
42. Seattle advocates a transition from
comma separated data to structured
XML data in order to enhance data
exchange and validation between ‘‘frontend’’ and ‘‘back-end systems’’ used by
transmission customers and providers.
It also advocates more meaningful forms
of transaction umbrella agreements,
such as the WSPP agreement. EPSA
advocates consistent rules about posting
the entities and market participants that
have active umbrella agreements with
the transmission provider. It says that
such postings would give competitive
suppliers transparency about which
market participants can purchase
reassigned capacity.
3. Commission Determination
43. The Commission declines to
implement the non-rate reforms
proposed in this proceeding at this time.
Although some of these proposals may
have merit, we are unable to make a
determination that they are appropriate
at this time based on the record in this
proceeding. With respect to the issues
raised by Seattle and EPSA regarding
data structures, such issues are best
addressed through the standards
development process of the North
American Energy Standards Board,
which sets voluntary wholesale electric
market standards including those
related to data exchanges and posting
requirements.
III. Information Collection Statement
44. The following collection of
information contained in this proposed
rule is subject to review by the Office of
Management and Budget (OMB) under
section 3507(d) of the Paperwork
Reduction Act of 1995.47 OMB’s
regulations require OMB to approve
certain information collection
requirements imposed by agency rule.48
Burden Estimate: The public reporting
and records retention burdens for the
reporting requirements and the records
retention requirement are as follows.49
The Commission solicited comments on
the need for this information and 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 Commission has
addressed those concerns elsewhere in
the rule.
Number of
respondents
Number of
responses
Hours per
response
Total annual
hours
Conforming tariff changes ...............................................................................
hsrobinson on DSK69SOYB1PROD with RULES
Data collection
132
1
10
1,320
Cost To Comply: $150,480
1,320 hours @ $114 an hour (average
cost of attorney ($200 per hour),
consultant ($150), technical ($80), and
administrative support ($25))
OMB’s regulations require it to
approve certain information collection
requirements imposed by an agency
rule. The Commission is submitting a
copy of this Final Rule to OMB for their
review approval of the information
collection requirements.
Title: FERC–516, Electric Rate
Schedules and Tariff Filings; FERC–717
47 44
48 5
U.S.C. 3507(d) (2006).
CFR 1320.11 (2010).
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16:03 Sep 23, 2010
Standards for Business Practices and
Communication Protocols for Public
Utilities.
Action: Collection
OMB Control Nos. 1902–0096 and
1902–0173
Respondents: Transmission Providers
Frequency of responses: One time.
Necessity of the Information:
45. The Federal Energy Regulatory
Commission is adopting amendments to
the pro forma OATT 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 by
encouraging more robust competition.
The Final Rule achieves this goal by
removing the price cap previously
imposed on reassignments of
transmission capacity.
46. 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
49 These burden estimates apply only to this Final
Rule and do not reflect upon all of FERC–516 or
FERC–717.
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Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Rules and Regulations
number of public utilities that, absent
waiver, would have to modify their
current OATTs by filing the revised pro
forma OATT is 176.53 Of these only six
public utilities, or less than two percent,
dispose of four million MWh or less per
year.54 The Commission does not
consider this a substantial number, and
in any event, these small entities may
seek waiver of these requirements.55
Moreover, the criteria for waiver that
would be applied under this rulemaking
for small entities is unchanged from that
used to evaluate requests for waiver
under Order Nos. 888 and 889. Thus,
small entities who have received waiver
of the requirements to have on file an
open access tariff or to operate an
OASIS would be unaffected by the
requirements of this proposed
rulemaking.
VII. Effective Date and Congressional
Notification
V. Regulatory Flexibility Act
49. The Regulatory Flexibility Act of
1980 (RFA) 52 generally requires a
description and analysis of Final Rules
that will have significant economic
impact on a substantial number of small
entities. This Final Rule applies to
public utilities that own, control, or
operate interstate transmission facilities,
not to electric utilities per se. The total
53. These regulations shall become
effective September 24, 2010. Section
553(d) of the Administrative Procedure
Act (APA) generally requires a rule to be
effective not less than 30 days after
publication in the Federal Register
unless, inter alia, the rule relieves a
restriction or good cause is otherwise
found to shorten the time period.56
Section 553(b)(B) of the APA authorizes
agencies to dispense with certain
procedures when the agency, for good
cause, finds that those procedures are
‘‘impracticable, unnecessary, or contrary
to public interest.’’ 57 For the following
reasons the Commission is using the
‘‘Good Cause’’ exemption. This Final
Rule must become effective by 12 a.m.
on October 1, 2010 or the price cap on
VI. Document Availability
reassignments of electric transmission
capacity will be reinstated. Reinstating
50. In addition to publishing the full
the price cap would impose a restriction
text of this document in the Federal
on the rights of transmission customers.
Register, the Commission provides all
Thus, this Final Rule relieves a
interested persons an opportunity to
restriction. Furthermore, the
view and/or print the contents of this
Commission finds that good cause exists
document via the Internet through
FERC’s Home Page (https://www.ferc.gov) to make this Final Rule effective
immediately because allowing the price
and in FERC’s Public Reference Room
during normal business hours (8:30 a.m. cap to be reinstated temporarily could
disrupt the efficient management of the
to 5 p.m. Eastern time) at 888 First
secondary market for electric
Street, NE., Room 2A, Washington DC
transmission capacity and reduce
20426.
opportunities for further reduction of
51. From FERC’s Home Page on the
Internet, this information is available on transmission congestion.
eLibrary. The full text of this document
54. The Commission has determined,
is available on eLibrary in PDF and
with the concurrence of the
Microsoft Word format for viewing,
Administrator of the Office of
printing, and/or downloading. To access Information and Regulatory Affairs of
this document in eLibrary, type the
OMB, that this rule is not a ‘‘major rule’’
docket number excluding the last three
as defined in section 351 of the Small
digits of this document in the docket
Business Regulatory Enforcement
number field.
Fairness Act of 1996.
52. User assistance is available for
List of Subjects in 18 CFR Part 35
eLibrary and the FERC’s Web site during
normal business hours from FERC
By the Commission.
Online Support at (202) 502–6652 (toll
Nathaniel J. Davis, Sr.,
free at 1–866–208–3676) or e-mail at
ferconlinesupport@ferc.gov, or the
Deputy Secretary.
Public Reference Room at (202) 502–
Note: The following Appendices will not
8371, TTY (202) 502–8659. E-mail the
appear in the Code of Federal Regulations.
Public Reference Room at
public.referenceroom@ferc.gov.
BILLING CODE 6717–01–P
50 Regulations Implementing the National
Environmental Policy Act, Order No. 486, 52 FR
47897 (December 17, 1987), FERC Stats. & Regs.,
Regulations Preambles 1986–1990 ¶ 30,783 (1987).
51 18 CFR 380.4(a)(15) (2010).
52 5 U.S.C. 601–612 (2006).
53 The sources for this figure are FERC Form No.
1 and FERC Form No. 1–F data.
54 Id.
55 The Regulatory Flexibility Act defines a ‘‘small
entity’’ as ‘‘one which is independently owned and
operated and which is not dominant in its field of
operation.’’ See 5 U.S.C. 601(3) and 601(6)(2000); 15
U.S.C. 632(a)(1) (2000). In Mid-Tex Elec. Coop. v.
FERC, 773 F.2d 327, 340–343 (DC 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.
56 5 U.S.C. 553(d) (2006).
57 5 U.S.C. 553(b)(B) (2006).
Director, Phone: (202) 502–8415, fax:
(202) 273–0873, e-mail:
michael.miller@ferc.gov.]
47. 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)
395–4638, fax: (202) 395–7285. Due to
security concerns, comments should be
sent electronically to the following email address:
oira_submission@omb.eop.gov. Please
reference the docket number of this
rulemaking in your submission.
hsrobinson on DSK69SOYB1PROD with RULES
IV. Environmental Analysis
48. 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.50 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 Federal Power Act (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.51
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BILLING CODE 6717–01–C
DEPARTMENT OF DEFENSE
Department of the Navy
32 CFR Part 706
Certifications and Exemptions Under
the International Regulations for
Preventing Collisions at Sea, 1972
Department of the Navy, DoD.
ACTION: Final rule.
AGENCY:
The Department of the Navy
(DoN) is amending its certifications and
exemptions under the International
Regulations for Preventing Collisions at
Sea, 1972 (72 COLREGS), to reflect that
the Deputy Assistant Judge Advocate
General (DAJAG) (Admiralty and
Maritime Law) has determined that
certain vessels of the PC–1 Class are
vessels of the Navy which, due to their
special construction and purpose,
cannot fully comply with certain
provisions of the 72 COLREGS without
interfering with their special functions
as naval ships. The intended effect of
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this rule is to warn mariners in waters
where 72 COLREGS apply.
DATES: This rule is effective September
24, 2010 and is applicable beginning
September 8, 2010.
FOR FURTHER INFORMATION CONTACT:
Lieutenant Commander Ted Cook,
JAGC, U.S. Navy, Admiralty Attorney,
(Admiralty and Maritime Law), Office of
the Judge Advocate General, Department
of the Navy, 1322 Patterson Ave., SE.,
Suite 3000, Washington Navy Yard, DC
20374–5066, telephone number: 202–
685–5040.
SUPPLEMENTARY INFORMATION: Pursuant
to the authority granted in 33 U.S.C.
1605, the DoN amends 32 CFR part 706.
This amendment provides notice that
the DAJAG (Admiralty and Maritime
Law), under authority delegated by the
Secretary of the Navy, has certified that
certain vessels of the PC–1 Class are
vessels of the Navy which, due to their
special construction and purpose,
cannot fully comply with the following
specific provisions of 72 COLREGS
without interfering with their special
function as naval ships: Rule 21(a)
pertaining to the arc of visibility of a
masthead light. The DAJAG (Admiralty
and Maritime Law) has also certified
that the lights involved are located in
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closest possible compliance with the
applicable 72 COLREGS requirements.
Moreover, it has been determined, in
accordance with 32 CFR parts 296 and
701, that publication of this amendment
for public comment prior to adoption is
impracticable, unnecessary, and
contrary to public interest since it is
based on technical findings that the
placement of lights on this vessel in a
manner differently from that prescribed
herein will adversely affect the vessel’s
ability to perform its military functions.
List of Subjects in 32 CFR Part 706
Marine safety, Navigation (water), and
Vessels.
■ For the reasons set forth in the
preamble, the DoN amends part 706 of
title 32 of the CFR as follows:
PART 706—CERTIFICATIONS AND
EXEMPTIONS UNDER THE
INTERNATIONAL REGULATIONS FOR
PREVENTING COLLISIONS AT SEA,
1972
1. The authority citation for part 706
continues to read as follows:
■
Authority: 33 U.S.C. 1605.
2. Section 706.2 is amended in Table
Three by removing the entry for USS
■
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[FR Doc. 2010–23836 Filed 9–23–10; 8:45 am]
58303
]]>Agencies
[Federal Register Volume 75, Number 185 (Friday, September 24, 2010)]
[Rules and Regulations]
[Pages 58293-58303]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-23836]
=======================================================================
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket No. RM10-22-000; Order No. 739]
Promoting a Competitive Market for Capacity Reassignment
September 20, 2010.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission lifts the price cap
for all electric transmission customers reassigning transmission
capacity based on the Commission's experience to date and a two-year
study, released April 15, 2010. The removal of the price cap is
intended to help facilitate the development of a market for electric
transmission capacity reassignments as a competitive alternative to
transmission capacity acquired directly from the transmission owner.
DATES: Effective Date: This rule will become effective September 24,
2010.
FOR FURTHER INFORMATION CONTACT:
Laurel Hyde (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, (202) 502-8146.
A. Cory Lankford (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-6711.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer,
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.
Paragraph
Nos.
I. Background.............................................. 2
II. Discussion............................................. 15
A. Removal of the Price Cap............................ 15
1. Comments........................................ 15
2. Commission Determination........................ 25
a. Removal of the Price Cap.................... 25
b. Implementation of the Requirement........... 37
B. Non-Rate Reforms to Promote Secondary Market........ 39
1. NOPR Proposal................................... 39
2. Comments........................................ 40
3. Commission Determination........................ 43
III. Information Collection Statement...................... 44
IV. Environmental Analysis................................. 48
V. Regulatory Flexibility Act.............................. 49
VI. Document Availability.................................. 50
VII. Effective Date and Congressional Notification......... 53
1. Based on the Commission's experience to date and a two-year
study, released April 15, 2010,\1\ the Federal Energy Regulatory
Commission in this Final Rule makes permanent the lifting of price caps
for transmission customers reassigning electric transmission capacity.
This action is intended to facilitate the development of a market for
electric transmission capacity reassignments as a competitive
alternative to primary transmission capacity.
---------------------------------------------------------------------------
\1\ FERC Staff, Staff Findings on Capacity Reassignment (2010),
available at https://www.ferc.gov (Staff Report).
---------------------------------------------------------------------------
I. Background
2. In Order No. 888, the Commission concluded that a transmission
provider's pro forma Open Access Transmission Tariff (OATT) must permit
explicitly the voluntary reassignment of all or part of a holder's firm
point-to-point capacity rights to any eligible customer.\2\ The
Commission also found that allowing holders of firm transmission
capacity rights to reassign that transmission capacity would help
parties manage the financial risks associated with their long-term
commitment, reduce the market power of transmission providers by
enabling customers to compete, and foster efficient transmission
capacity allocation.
---------------------------------------------------------------------------
\2\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities,
Order No. 888, 61 FR 21540 (May 10, 1996), FERC Stats. & Regs. ]
31,036, at 31,696 (1996), order on reh'g, Order No. 888-A, 62 FR
12274 (March 14, 1997), FERC Stats. & Regs. ] 31,048 (1997), order
on reh'g, Order No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g,
Order No. 888-C, 82 FERC ] 61,046 (1998), aff'd in relevant part sub
nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667
(DC Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
---------------------------------------------------------------------------
3. With respect to the appropriate rate for transmission capacity
reassignment, the Commission concluded it could not permit
reassignments at market-based rates because it was unable to determine
that the market for reassigned transmission capacity was sufficiently
competitive so that resellers would not be able to exert market power.
Instead, the Commission capped the rate at the highest of: (1) The
original transmission rate charged to the purchaser (assignor); (2) the
transmission provider's maximum stated firm transmission rate in effect
at the time of the reassignment; or (3) the assignor's own opportunity
costs capped at the cost of expansion (price cap). The Commission
further explained that opportunity cost pricing had been permitted at
``the higher of embedded costs or legitimate and verifiable opportunity
costs, but not the sum of the two (i.e., `or' pricing is
[[Page 58294]]
permitted; `and' pricing is not).'' \3\ In Order No. 888-A, the
Commission explained that opportunity costs for transmission capacity
reassigned by a customer should be measured in a manner analogous to
that used to measure the transmission provider's opportunity cost.\4\
---------------------------------------------------------------------------
\3\ Order No. 888, FERC Stats. & Regs. ] 31,036 at 31,740.
\4\ Order No. 888-A, FERC Stats. & Regs. ] 31,048 at 30,224.
---------------------------------------------------------------------------
4. To foster the development of a more robust secondary market for
transmission capacity, the Commission, in Order No. 890, concluded that
it was appropriate to lift the price cap for all transmission customers
reassigning transmission capacity.\5\ The Commission stated that this
would allow transmission capacity to be allocated to those entities
that value it most, thereby sending more accurate price signals to
identify the appropriate location for construction of new transmission
facilities to reduce congestion.\6\ The Commission also found that
market forces, combined with the requirements of the pro forma OATT as
modified in Order No. 890, would limit the ability of resellers,
including affiliates of the transmission provider, to exert market
power.
---------------------------------------------------------------------------
\5\ Preventing Undue Discrimination and Preference in
Transmission Service, Order No. 890, 72 FR 12266 (March 15, 2007),
FERC Stats. & Regs. ] 31,241, at P 808 (2007), order on reh'g, Order
No. 890-A, 73 FR 2984 (January 16, 2008), FERC Stats. & Regs. ]
31,261 (2007), order on reh'g, Order No. 890-B, 123 FERC ] 61,299
(2008), order on reh'g, Order No. 890-C, 126 FERC ] 61,228 (2009),
order on clarification, Order No. 890-D, 129 FERC ] 61,126 (2009).
\6\ Order No. 890, FERC Stats. & Regs. ] 31,241 at P 808.
---------------------------------------------------------------------------
5. To enhance oversight and monitoring activities, the Commission
adopted reforms to the underlying rules governing transmission capacity
reassignments.\7\ First, the Commission required that all resales or
reassignments of transmission capacity be conducted through or
otherwise posted on the transmission provider's OASIS on or before the
date the reassigned service commences.\8\ Second, the Commission
required that assignees of transmission capacity execute a service
agreement prior to the date on which the reassigned service
commences.\9\ Third, in addition to existing OASIS posting
requirements, the Commission required transmission providers to
aggregate and summarize in an electric quarterly report the data
contained in these service agreements.\10\
---------------------------------------------------------------------------
\7\ Id. P 815.
\8\ Id.
\9\ Id. P 816.
\10\ Id. P 817.
---------------------------------------------------------------------------
6. The Commission also directed staff to closely monitor the
reassignment-related data submitted by transmission providers in their
quarterly reports to identify any problems in the development of the
secondary market for transmission capacity and, in particular, the
potential exercise of market power.\11\ Thus, the Commission directed
staff to prepare, within six months of receipt of two years of
quarterly reports, a report summarizing its findings.\12\ In addition,
the Commission encouraged market participants to provide feedback
regarding the development of the secondary electric transmission
capacity market and, in particular, to contact the Commission's
Enforcement Hotline if concerns arise.
---------------------------------------------------------------------------
\11\ Id. P 820.
\12\ Id.
---------------------------------------------------------------------------
7. In Order No. 890-A, the Commission affirmed its decision to
remove the price cap on reassignments of electric transmission capacity
but granted rehearing to limit the period during which reassignments
may occur above the cap.\13\ The period was limited so that the
Commission could review the Staff Report to see if changes were needed
based on the actual operation of the reassignment program. Accordingly,
the Commission amended section 23.1 of the pro forma OATT to reinstate
the price cap as of October 1, 2010.\14\
---------------------------------------------------------------------------
\13\ Order No. 890-A, FERC Stats. & Regs. ] 31,261 at P 388,
390.
\14\ Id. P 390.
---------------------------------------------------------------------------
8. The Commission also clarified that, as of the effective date of
the reforms adopted in Order No. 890, all reassignments of electric
transmission capacity must take place under the terms and conditions of
the transmission provider's OATT. As a result, there was no longer a
need for the assigning party to have on file with the Commission a rate
schedule governing reassigned capacity. To the extent that a reseller
has a market-based rate tariff on file, the provisions of that tariff,
including a price cap or reporting obligations, will not apply to the
reassignment since such transactions no longer take place pursuant to
the authorization of that tariff.
9. In Order No. 890-B, the Commission clarified that the pro forma
OATT does not, and will not, permit the withholding of transmission
capacity by the transmission provider and that it effectively
establishes a price cap for long-term reassignments at the transmission
provider's cost of expanding its system.\15\ The Commission further
found that the fact that a transmission provider's affiliate may profit
from congestion on the system does not relieve the transmission
provider of its obligation to offer all available transmission capacity
and expand its system as necessary to accommodate requests for
service.\16\ The Commission pointed out that customers that do not wish
to participate in the secondary market may continue to take service
from the transmission provider directly, just as if the price cap had
not been lifted.\17\
---------------------------------------------------------------------------
\15\ Order No. 890-B, 123 FERC ] 61,299 at P 78.
\16\ Id.
\17\ Id. P 79.
---------------------------------------------------------------------------
10. With regard to the Staff Report, the Commission clarified that
staff should focus on the competitive effects of removing the price cap
for reassigned electric transmission capacity.\18\ The Commission
stated that staff should consider the number of reassignments occurring
over the study period, the magnitude and variability of resale prices,
the term of the reassignments, and any relationship between resale
prices and price differentials in related energy markets. In addition,
the Commission directed staff to examine the nature and scope of
reassignments undertaken by the transmission provider's affiliates and
include in its report any evidence of abuse in the secondary market for
transmission capacity, whether by those affiliates or other customers.
---------------------------------------------------------------------------
\18\ Id. P 83.
---------------------------------------------------------------------------
11. The Commission also granted rehearing and directed each
transmission provider to include in its electric quarterly report the
identity of the reseller and indicate whether the reseller is
affiliated with the transmission provider.\19\ The Commission also
directed each transmission provider to include in its electric
quarterly reports the rate that would have been charged under its OATT
had the secondary customer purchased primary service from the
transmission provider for the term of the reassignment.\20\ The
Commission directed transmission providers to submit this additional
data for all resales during the study period and to update, as
necessary, any previously-filed electric quarterly reports on or before
the date they submitted their next electric quarterly reports.
---------------------------------------------------------------------------
\19\ Id. P 84.
\20\ Id.
---------------------------------------------------------------------------
12. On April 15, 2010, Commission staff published its report on the
two-year study period.\21\ The Staff Report took a comprehensive look
at electric point-to-point transmission capacity
[[Page 58295]]
reassignment that occurred over the period from the second quarter of
2007 through the fourth quarter of 2009. Staff examined all reported
electric transmission reassignments during this period on both a
national and a regional basis. These almost 35,000 transactions
encompassed 65 TWh of total volume transferred. Staff looked at the
data in a number of ways, in order to better understand the market and
to look for evidence of abuse. In doing so, staff looked at the
magnitude and variability of resale prices, and focused on trends in
those numbers over time and by region. Staff compared resale prices to
the maximum tariff rates that would have otherwise been in effect for
those transactions. Further, staff looked at reassignments by term--
hourly, daily, monthly, and yearly and looked at differences in term by
transmission provider and by volume. Where the receipt and delivery
points of transactions had reported price indices with sufficient data,
staff compared the prices of reassignments to the energy market spread
(differential in prices between the two locations) over the same time
periods.
---------------------------------------------------------------------------
\21\ FERC Staff, Staff Finding on Capacity Reassignment (2010),
available at https://www.ferc.gov (Staff Report).
---------------------------------------------------------------------------
13. Staff also compared resale prices for transactions involving
affiliates versus non-affiliates. Staff compared the rate of
transactions above the cap for both affiliates and non-affiliates.
Staff looked for additional forms of affiliate abuse such as a
transmission provider providing preferential treatment in the
allocation of reassigned capacity to an affiliate. Staff also checked
for complaints of the abuse in affiliate transactions, as well as for
capacity reassignment in general.
14. Two weeks after the release of the Staff Report, based on the
Commission's experience in the natural gas transportation market and
the Staff Report's conclusion that the secondary market had grown
substantially and that resale prices reflected market fundamentals
rather than the exercise of market power, the Commission issued a
Notice of Proposed Rulemaking (NOPR) proposing to lift the price cap
for all electric transmission customers reassigning transmission
capacity beyond October 1, 2010. In addition, the Commission proposed
to direct transmission providers to submit corresponding revisions to
their OATTs within 30 days of publication of the Final Rule in the
Federal Register. The Commission also sought comment as to whether
there are any other reforms that it should undertake to create a more
efficient and vibrant secondary market for electric transmission
capacity. In response to these NOPR proposals, the Commission received
comments from 13 parties, which are addressed below.\22\
---------------------------------------------------------------------------
\22\ A list of commenters is provided in Appendix A.
---------------------------------------------------------------------------
II. Discussion
A. Removal of the Price Cap
1. Comments
15. Several commenters support the Commission's proposal to remove
the price cap on transmission reassignments permanently.\23\ They
contend that removal of the cap will encourage the development of a
more robust secondary market, resulting in appropriate price signals
and an efficient allocation of transmission capacity. Cargill comments
that the resale of transmission capacity at negotiated rates is
consistent with other Commission reforms in favor of market-based
pricing.
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\23\ E.g. Bonneville, Cargill, EPSA, FIEG, PG&E, PGE, Powerex,
Seattle.
---------------------------------------------------------------------------
16. Despite their general support for the Commission's proposal,
EPSA and PG&E raise concerns about the staff study and the need for
transparency. EPSA states that the Staff Report shows some gaps that
will require further analysis; such as limited numbers of transmission
providers reported and the majority of transactions being from
Bonneville. PG&E expresses a lingering concern about the potential for
transmission service providers to raise power prices in locations where
there is insufficient competition. EPSA and PG&E urge the Commission to
continue to monitor the capacity reassignment market as it matures so
that the Commission will be informed and therefore able to direct
necessary reforms to the market, as the needed reforms reveal
themselves. EPSA further urges the Commission to look at ways of
increasing transparency for transmission capacity available for
reassignments as a way of promoting the secondary market for
reassignment. Powerex comments that there are already a number of
safeguards including requirements that transmission providers report
reassignments on their systems on OASIS and in the electronic quarterly
reports (EQR) that should help limit abuses. Similarly, Seattle
comments that reconciliation of EQRs, audits, and OASIS transactions
would go a long way to ensure that resale markets are functioning
without affiliate abuse.
17. Bonneville agrees that lifting the price cap on transmission
capacity reassignments appears to support the goal of a more robust
secondary market for that capacity but asks the Commission to recognize
the position of non-jurisdictional entities, such as itself. Bonneville
contends that non-jurisdictional entities may have to place conditions
upon the removal of the cap in order to obtain reciprocity and comply
with their applicable statutory requirements. Bonneville contends that
if its administrator determines that behavior associated with
transmission capacity reassignments is occurring on its system in a
manner that frustrates or is otherwise inconsistent with the
administrator's statutory requirements to make all excess capacity
available to utilities on a fair and nondiscriminatory basis, the
administrator must be able to act promptly to stop that behavior. Thus,
Bonneville suggests that any revision to section 23 of Bonneville's
OATT permanently lifting the price cap must be conditioned upon the
administrator's express authority to carry out this mandate including
the right to reinstate the cap expeditiously if necessary.
18. Other commenters argue against removal of the price cap,
contending that staff's two-year study provides insufficient evidence
to support a finding that the secondary market is sufficiently
competitive to lift the price caps or that market forces or other
factors will be effective to adequately protect consumers.\24\ These
commenters point out that, although the Final Rule would apply to an
estimated 132 public utilities, the Staff Report included data from
only 26 with 79 percent of the reported transactions coming from
Bonneville. These commenters also point out that the study was
performed during a recession with concomitant reductions in the demand
for electricity, and that Bonneville is atypical, given that it is
dependent on large hydroelectric projects. APPA further comments that
because there were so few sales made during the study period by
affiliates above the rate cap, it would appear that reinstitution of
the cap would not significantly dampen resales of capacity by
affiliates of transmission providers.
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\24\ E.g. APPA, NRECA, SCE, TAPS, Outland, and TDU Systems.
---------------------------------------------------------------------------
19. TAPS states that the staff study did not examine both prices
offered and accepted such that the Commission could determine the level
of market interest in reassigned capacity, whether prices increased,
the cause of price changes, and whether those prices remained in the
zone of reasonableness. It notes that the staff study compared resale
prices during the study period to the tariff rate, but not to the
opportunity cost cap, which is likely higher. It argues that
accordingly, the study does not show that the price cap constrained
[[Page 58296]]
any prices, and thus it prevents a finding that the price cap is unjust
and unreasonable. SCE requests that the Commission reconcile its
proposal with findings in the Staff Report that removal of the price
cap does not appear to be primarily responsible for the observed growth
in the secondary market. It also states that the Staff Report did not
definitively conclude that there was not abuse by resellers, even in a
period with very low demand and no supply scarcity. SCE states that
this is not sufficient evidence to lift the price cap. APPA, SCE and
TAPS suggest that, if the Commission wishes to lift the price cap, it
should only do so as a continuation of the experiment.
20. NRECA, TAPS, and TDU Systems argue that the Staff Report does
not provide a sufficient factual basis for the Commission to conclude
that the OATT section 23.1, which reinstates the price cap on October
1, 2010, is unjust and unreasonable or to conclude that proposed
revision is just and reasonable. Moreover, TAPS and TDU Systems comment
that market-based reassignment of transmission capacity should not be
available to entities to the extent they lack market-based rate
authority in the area in which the transmission reservation is located.
TDU Systems states that each secondary transmission capacity market
should be looked at individually, and that there is no single, national
market for secondary transmission capacity rights. It questions why the
Staff Report considers Public Service of New Hampshire (PSNH) to be an
aberration, while the nearby Central Vermont Public Service Corporation
(Central Vermont) system is presented as representing national trends.
21. TAPS and TDU Systems further contend that, to permit market-
based rates, the Commission remains bound by the requirement that
market-based rates be supported by empirical proof that existing
competition would ensure that the actual price is just and
reasonable.\25\ TDU Systems comments that courts have held that
undocumented reliance on market forces is insufficient grounds for
authorizing market-based rates.\26\ Moreover, TAPS and TDU Systems
argue that the Commission has a requirement to make an ex ante finding
of the absence of market power and sufficient post-approval
requirements.\27\ SCE agrees that the Commission should engage in an ex
ante competitive analysis to find that the transmission reseller lacks
market power, or take sufficient steps to mitigate market power, as
well as adopt sufficient post-approval reporting requirements.
---------------------------------------------------------------------------
\25\ Citing Farmers Union Cent. Exch., Inc. v. FERC, 734 F.2d
1486, 1510 (DC Cir. 1984)(Farmers Union).
\26\ Citing Transwestern Pipeline, 43 FERC ] 61,240, at 61,250
(1988).
\27\ Citing California ex. Rel. Lockyer v. FERC, 383 F.3d 1006,
1013 (9th Cir. 2004).
---------------------------------------------------------------------------
22. Outland states that the pilot project has allowed resellers to
acquire capacity ``for pennies and then hold up the first renewable
energy generator that comes along looking to use it.'' \28\ It states
that parties acquire transmission when they do not need it for a real
generation project, to the detriment of real projects.
---------------------------------------------------------------------------
\28\ Outland at 1.
---------------------------------------------------------------------------
23. NRECA, TAPS, and TDU Systems urge the Commission, at a minimum,
to retain the price cap on transmission capacity reassignments for
transmission provider affiliates and retail/merchant functions. TAPS
states that the pattern of affiliate pricing reveals more about
corporate strategy selected by a few corporate entities and general
conditions during an atypical period, than confirming the Commission's
assumption that the rates for primary capacity or competition in the
reassignment market will restrain prices. It states that assuming that
the customer may always take service from the transmission provider
directly is cold comfort if the available capacity has been assigned to
the transmission provider's affiliate. NRECA states that a larger
portion of affiliate than non-affiliate transactions occurred over the
cap, and points to the PSNH system where all reported transactions
originated with an affiliate and occurred over the price cap.
24. In its supplemental comments, Powerex expresses concern that
Bonneville might reinstate the price cap as of October 1, 2010,
regardless of Commission action in this proceeding. Powerex asks the
Commission to address the possible adverse consequences of non-
jurisdictional transmission providers reinstating price caps on
transmission reassignments and to provide guidance to customers seeking
to reassign transmission on the systems of non-jurisdictional
transmission providers that elect not to adopt any reforms the
Commission directs. To address this issue, Powerex requests the
Commission to clarify that its seller-specific market-based rate
schedule for transmission reassignment remains operative.
Alternatively, Powerex seeks guidance on how to price capacity
reassignments based on the customer's opportunity cost capped at the
transmission provider's cost of expansion.
2. Commission Determination
a. Removal of the Price Cap
25. The Commission hereby adopts its NOPR proposal to lift the
price cap for all reassignments of electric transmission capacity to
become effective October 1, 2010. Removal of the price cap will help
foster the development of a more robust secondary market for
transmission capacity because point-to-point transmission service
customers will have increased incentives to resell their service
whenever others place a higher value on it. Existing transmission,
therefore, may be put to better, more efficient use.
26. Moreover, removal of the price cap will promote the efficient
construction of new capacity. Prices serve as signals indicating where
capacity shortages exist and where potentially profitable construction
can take place. The Commission has previously addressed the need for
new transmission and established incentives for its construction.\29\
Removing the price cap on sales of secondary electric transmission
capacity is one way to create the proper incentives for new
transmission investment in this industry. Areas with congestion tend to
have higher prices and thus signal the need for investment.\30\
However, if prices for reassigned capacity exceed the cost of
construction of new transmission, the customer could request service
from the transmission provider which would support investment in new
transmission and lower costs prospectively by relieving constrained
transmission capacity. Thus, the price of reassigned capacity will
remain effectively capped at the cost of new transmission. We therefore
reaffirm the Commission's finding in Order No. 890-A that removal of
the price cap for reassigned capacity will help establish a competitive
market for secondary transmission capacity that will send more accurate
signals and that such price signals will promote more efficient use of
the electric transmission system.\31\
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\29\ Promoting Transmission Investment through Pricing Reform,
Order No. 679, 71 FR 43294 (July 31, 2006), FERC Stats. & Regs. ]
31,222 (2006), order on reh'g, Order No. 679-A, 72 FR 1152 (January
10, 2007), FERC Stats. & Regs. ] 31,236 (2006), order on reh'g, 119
FERC ] 61,062 (2007).
\30\ See Interstate Nat'l Gas Ass'n of America v. FERC, 285 F.3d
18, 32-34 (DC Cir. 2002) (INGAA) (``[B]rief spikes in moments of
extreme exigency are completely consistent with competition,
reflecting scarcity rather than monopoly.'').
\31\ Order No. 890-A, FERC Stats. & Regs. ] 31,261 at P 388.
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27. Our continued regulatory oversight will also limit the
potential for the exercise of market power. We are
[[Page 58297]]
not deregulating or otherwise adopting market-based rates for the
provision of transmission service under the pro forma OATT.
Transmission providers will continue to be obligated to offer available
transfer capability to customers, including available transfer
capability associated with purchased but unused capacity. Transmission
providers also will continue to be obligated to construct new
facilities to satisfy requests for service if those requests cannot be
satisfied using existing capacity. Furthermore, the rates for
transmission service provided under the pro forma OATT will continue to
be determined on a cost-of-service basis unless the transmission
provider can demonstrate, on a case-specific basis, that it lacks
market power. Nothing in this Final Rule affects the obligations of
transmission providers to offer service under the pro forma OATT at
cost-based rates. The availability of firm and non-firm service from
transmission providers, therefore, will limit the ability of
reassignors to exercise market power. In INGAA, the Court of Appeals
for the District of Columbia Circuit recognized that the maintenance of
regulated rates for primary service would protect against the potential
for the exercise of market power in the capacity release market.\32\
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\32\ 285 F.3d at 32 (``[i]f holders of firm capacity do not use
or sell all of their entitlement, the pipelines are required to sell
the idle capacity as interruptible service to any taker at no more
than the maximum rate--which is still applicable to the
pipelines''); see also, Promotion of a More Efficient Capacity
Release Market, Order No. 712, 73 FR 37058 (June 30, 2008), FERC
Stats. & Regs. ] 31,271, at P48-49 (2008), order on reh'g, Order No.
712-A, FERC Stats. & Regs. ] 31,284 (2008).
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28. The Commission disagrees with suggestions that affiliates of
the transmission provider be treated differently than non-affiliated
customers with respect to reassignments of transmission capacity. The
Commission's Standards of Conduct are designed to prevent the
transmission provider and its affiliate from acting in concert to
exercise market power.\33\ Commenters did not identify any affiliate
concerns that these obligations, along with the monitoring discussed
below, would not address.
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\33\ See Standards of Conduct for Transmission Providers, Order
No. 717, 73 FR 63796 (October 27, 2008), FERC Stats. & Regs. ]
31,280 (2008), order on reh'g, Order No. 717-A, 74 FR 54463 (October
22, 2009), FERC Stats. & Regs. ] 31,297 (2009), order on reh'g,
Order No. 717-B, 129 FERC ] 61,123 (2009), order on reh'g, Order No.
717-C, 131 FERC ] 61,045 (2010). The Commission's Standards of
Conduct establish that a transmission provider must (1) treat all
customers, affiliated and non-affiliated, on a not unduly
discriminatory basis, (2) not make or grant any undue preference or
advantage to any person, and (3) not subject any person to any undue
prejudice or disadvantage with respect to transmission of electric
energy. This would include avoiding undue prejudice or disadvantage
in the initial allocation of capacity to affiliates, thereby
allowing those affiliates to gain market power and then to exercise
it when reassigning capacity.
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29. The Commission takes seriously the possibility that resellers
may attempt to exercise market power in the secondary market for
transmission. We continue to find, however, that the regulatory
protections in place and our increased oversight of this market will
limit the potential for market power abuse. Prices for secondary
transmission capacity may rise above prices for primary transmission
capacity but this alone does not indicate an abuse of market power. On
the contrary, courts have recognized that prices in a competitive
market should rise during periods when capacity is truly scarce in
order to ensure that transmission capacity is being allocated
appropriately.\34\ Nevertheless, the Commission will continue to
monitor the secondary transmission capacity market to ensure that
participants are not exercising market power.\35\ The Commission also
will monitor for abuse by transmission providers in concert with their
affiliates. If a customer has evidence of an exercise of market power
or other abuse, it should bring the matter to the Commission's
attention through a complaint or other appropriate procedural
mechanism. Absent such evidence, the Commission concludes that the
continued rate regulation of the primary market for electric
transmission capacity and the transmission provider's obligation to
expand its system to accommodate service requests adequately mitigates
any market power that resellers may have in the long-term secondary
market.
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\34\ INGAA, 285 F.3d at 32-34 (``[B]rief spikes in moments of
extreme exigency are completely consistent with competition,
reflecting scarcity rather than monopoly.'').
\35\ See Order No. 890, FERC Stats. & Regs. ] 31,241 at P 815.
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30. The Staff Report did not raise any concerns with removal of the
price cap that would warrant its reimposition given the regulatory
protections and increased market oversight discussed above. The report
included a comprehensive examination of the assignments that took place
during the study period which included both the period prior to the
economic downturn starting in September 2008 and the period after the
downturn. Although the Staff Report did not conclusively demonstrate
that the price cap inhibited the growth of the secondary market, the
data showed a marked growth in reassignments, with both the number of
transactions and the volume increasing during the two and one half year
time span. The number of reassignments grew from just over 200 in 2007
to almost 32,000 in 2009. During this same period, the volume
reassigned grew from 3 TWh to 36 TWh.
31. The data do not suggest the exercise of market power. The
prices during the test period appear consistent with pricing
differentials between locational markets, indicating that the
transactions reflect market fundamentals, not the exercise of market
power.\36\ Moreover, the Staff Report found that 99 percent of
reassignments were priced at or below the transmission provider's
maximum firm transmission rate, an indication that prices reflect
market conditions and competition rather than the exercise of market
power.\37\ The brief spikes above the price cap are consistent with a
competitive market, indicating scarcity rather than market power.\38\
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\36\ See INGAA, 285 F.3d at 31 (indicating that differentials in
prices between receipt and delivery points are indicative of the
value of the transportation between those points).
\37\ Because 99 percent of the prices were below the tariff
rate, these prices are almost certainly lower than opportunity costs
which TAPS suggests are likely higher than the tariff rate.
\38\ INGAA, 285 F.3d 18, 32 (``A surge in the price of candles
during a power outage is no evidence of monopoly in the candle
market'').
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32. We disagree with comments suggesting that the Staff Report does
not provide enough evidence to support a finding that the market is
sufficiently competitive to lift the price cap because it relied on
data from a limited number of transmission providers. While capacity
reassignments occurred on a limited number of transmission systems, the
lack of data for other transmission providers indicates a lack of
reassignments on those systems, not an exercise of market power or lack
of potential competition for capacity reassignment. Where reassignment
is currently non-existent or occurring at a lower level, potential
reassignment of transmission in these areas, should it develop, would
face competition associated with transmission that can be acquired from
other customers. Such reassignment also would compete with capacity
available from the transmission provider. Although the data in the
Staff Report included extensive data from Bonneville and Central
Vermont, the greater number of such assignments may be due to
differences in market dynamics (such as the extensive use of
hydroelectric power in the Bonneville region) or reporting conventions
(in the case of Central Vermont).\39\ It also may
[[Page 58298]]
indicate that capacity reassignment is more developed in those areas.
The volume of capacity reassignments on these two systems provides an
example of what may be possible in other areas of the country. As for
arguments that the time period under review was atypical due to the
economic downturn and, thus, not representative, we note that study
began the second quarter of 2007, well before the downturn began.
---------------------------------------------------------------------------
\39\ The Staff Report states that ``the large number of [Central
Vermont] transactions may be due, in part, to reporting conventions.
For EQR reporting purposes, each line of data is counted as one
transaction.'' See Staff Report at 4.
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33. The Staff Report also did not show evidence of affiliate abuse.
Ninety-nine percent of reassignments by affiliates of the transmission
provider were at or below the transmission provider's maximum rate. The
percentage of such reassignments over the maximum firm transmission
rate by affiliates was comparable to that by non-affiliates (0.5
percent versus 0.4 percent).
34. While it is true, as some of the commenters point out, that the
reassignment transactions were limited to certain areas and utilities,
we see no reason to expect different results as capacity reassignment
expands. There have not been allegations of the exercise of market
power in reassignment markets, and commenters do not provide any data
to suggest that market power may be more prevalent as capacity
reassignment increases on other transmission systems. Development of a
more robust reassignment market in areas where reassignments are not
prevalent should raise, rather than lower, the level of competition in
markets. Moreover, we will continue to monitor the market and if
anomalies develop in certain areas, they can be addressed.
35. We disagree with the comments that a market power study or
other empirical competition analyses are required to lift the price cap
on transmission capacity reassignments. Contrary to commenters'
assertions, market power analyses are not the only method to ensure
that market-based rates remain just and reasonable.\40\ In INGAA,\41\
the DC Circuit affirmed the Commission's removal of price ceilings for
short-term capacity releases by shippers in the natural gas market
without requiring sellers to submit market power analyses. The court
recognized that non-cost factors such as the need to facilitate
movement of capacity into the hands of those who value it most may also
justify the removal of price ceilings. The court concluded that these
non-cost factors, combined with the limitation of negotiated rates to
the secondary market, distinguished the case from Farmers Union in
which the court had reversed a Commission determination to implement
lighthanded regulation of the oil industry.\42\
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\40\ See Alternatives to Traditional Cost-of-Service Ratemaking
for Natural Gas Pipelines and Regulation of Negotiated
Transportation Services of Natural Gas Pipelines, 74 FERC ] 61,076,
at 61,227-36 (1996). The Commission ultimately determined in that
case that a market power analysis was required in order to allow a
pipeline to use market-based pricing instead of cost-of-service
rates. The Commission has not proposed to allow transmission
providers to engage in sales of primary capacity at market-based
rates and, as explained below, sufficient protections exist to
ensure the secondary market for transmission capacity remains
sufficiently competitive without requiring market power analyses
from each reseller.
\41\ Interstate Nat'l Gas Ass'n of American v. FERC, 285 F.3d at
33 (DC Cir. 2002).
\42\ Interstate Nat'l Gas Ass'n of America v. FERC, 285 F.3d 18
at 31-34 (DC Cir. 2002), order on remand, 101 FERC ] 61,127 (2002),
order on reh'g, 106 FERC ] 61,088 (2004), aff'd sub nom. American
Gas Ass'n v. FERC, 428 F.3d 255 (DC Cir. 2005).
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36. Farmers Union itself did not require a market power study to
support a move to a more market-based regulatory regime. The court
found that rates should be within a ``zone of reasonableness, where
[they] are neither less than compensatory nor excessive.'' \43\
Moreover, the court found that the Commission could justify a move to a
more market-based focus ``by a showing that under circumstances the
goals and purposes of [the Commission's statutory mandate] will be
accomplished through substantially less regulatory oversight.'' \44\
Here, the Commission is relying on competition in the market for
transmission capacity, together with the regulatory protections
discussed above, to ensure just and reasonable rates. Protections, such
as continuing rate regulation of the transmission provider's primary
capacity, retention of the requirement for transmission owners to build
additional capacity at cost-based rates, competition among resellers,
reforms to the secondary market for transmission capacity, and
reporting requirements combined with enforcement proceedings, audits,
and other regulatory controls, will assure that prices in the secondary
market for electric transmission capacity remain within a zone of
reasonableness.\45\
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\43\ Farmers Union, 734 F.2d at 1502; see also, INGAA, 285 F.3d
at 31.
\44\ Farmers Union, 734 F.2d at 1510.
\45\ See Order No. 890, FERC Stats. & Regs. ] 31,241 at P 811;
see also Order No. 712, 73 FR 37058 (June 30, 2008), FERC Stats. &
Regs. ] 31,271 at P 39 (2008), order on reh'g, Order No. 712-A, FERC
Stats. & Regs. ] 31,284 (2008), aff'd sub nom. Interstate Natural
Gas Ass'n of America, No. 09-1016 (DC Cir. Aug. 13, 2010).
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b. Implementation of the Requirement
37. Because the current OATTs reinstate the price cap as of October
1, 2010, transmission providers will need to revise section 23 of the
pro forma OATT, as indicated in Appendix B. We direct transmission
providers to file these changes within 30 days from publication of this
Final Rule in the Federal Register. Bonneville requests a blanket
waiver of the requirement for non-jurisdictional entities that are
unable to satisfy reciprocity conditions with regard to the
reassignment of transmission capacity. Whether the particular terms and
conditions of a non-jurisdictional transmission provider's reciprocity
tariff satisfy the Commission's open access principles must be
determined on a case-by-case basis. Therefore, the Commission denies,
without prejudice, Bonneville's request for a blanket waiver.
38. We find Powerex's concern that Bonneville will reinstate the
price cap as of October 1, 2010 to be premature, since Bonneville has
not made a final decision at this point. Moreover, when Bonneville
submitted its tariff revisions pursuant to Order No. 890, it declined
to adopt certain pro forma provisions related to the reassignment of
transmission capacity and several transmission customers within
Bonneville, including Powerex, filed stand-alone rate schedules
allowing them to sell transmission capacity above the price cap.\46\
These customers may submit any necessary revisions to their rate
schedules before October 1, 2010 and request waiver of the prior notice
requirement, if they find such action to be necessary and appropriate.
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\46\ See Portland General Electric Co., Docket No. ER09-93-000
(Dec. 3, 2008) (unpublished letter order); Idaho Power Co., Docket
No. ER09-524-000 (Mar. 5, 2009) (unpublished letter order); Puget
Sound Energy, Inc., Docket No. ER09-528-000 (Mar. 5, 2009)
(unpublished letter order); Avista Corp., ER09-729-000 (May 12,
2009) (unpublished letter order); PacifiCorp, Docket No. ER09-921-
001 (Sept. 29, 2009) (unpublished letter order); Powerex Corp.,
Docket No. ER09-926-000 (May 21, 2009) (unpublished letter order).
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B. Non-Rate Reforms To Promote Secondary Market
1. NOPR Proposal
39. In the NOPR, the Commission sought comment as to whether there
are any reforms, other than removal of the price cap, that it should
undertake to create a more efficient and vibrant secondary market for
transmission capacity. The Commission asked if there are non-price
limitations or regional factors that may be continuing to limit the
utility of reassignment. By way of an example, the Commission asked if
there
[[Page 58299]]
are reforms to the redirect process that would enable all firm
customers to use their firm capacity more flexibly and thereby
facilitate capacity reassignment by making point changes by the buyer
of reassigned capacity more efficient.
2. Comments
40. Although FIEG supports the Commission's proposal to allow
redirects of reassigned capacity, several other commenters raise
concerns. Powerex admits that the ability to modify receipt and
delivery points of reassigned capacity may make the capacity more
attractive to a potential third-party assignee but warns that this
practice would erode the priority that firm capacity should be
accorded. NRECA expresses similar concern that this proposal may give
higher priority to point-to-point customers who wish to redirect by
awarding them service over those non-firm customers who do not redirect
and over secondary network customers. APPA contends that any reforms to
firm point-to-point service proposed to increase the attractiveness of
re-sales of firm point-to-point capacity would have to be carefully
assessed to ensure that they do not result in a degradation of the
quality of network integration transmission service. TAPS and TDU
Systems urge the Commission to not use a narrowly focused rulemaking to
implement a sweeping change to point-to-point transmission service.
41. Commenters offered suggestions about various other reforms as
well. Bonneville and Seattle argue that requiring transmission
providers to act as financial intermediaries in capacity reassignments
imposes an undue burden and complicates settlements. Powerex and
Bonneville raise concerns about transmission providers failing to
recalculate available transfer capability or available flowgate
capability in a timely manner, thereby inhibiting reassignments.
Bonneville recommends that a firm redirect request receive a credit for
any available flowgate capability the parent reservation has on the
flowgates impacted by the firm redirect request. TAPS suggests that the
Commission require the posting of transmission capacity available for
reassignment on the transmission provider's OASIS. Cargill recommends
that the reseller not remain responsible or liable to the transmission
provider for the reassigned capacity if it is a complete reassignment
(the full quantity of capacity for the remainder of the reservation) or
if the reseller performs a long-term assignment of the reservation for
any quantity up to the full amount of the capacity of the reservation.
42. Seattle advocates a transition from comma separated data to
structured XML data in order to enhance data exchange and validation
between ``front-end'' and ``back-end systems'' used by transmission
customers and providers. It also advocates more meaningful forms of
transaction umbrella agreements, such as the WSPP agreement. EPSA
advocates consistent rules about posting the entities and market
participants that have active umbrella agreements with the transmission
provider. It says that such postings would give competitive suppliers
transparency about which market participants can purchase reassigned
capacity.
3. Commission Determination
43. The Commission declines to implement the non-rate reforms
proposed in this proceeding at this time. Although some of these
proposals may have merit, we are unable to make a determination that
they are appropriate at this time based on the record in this
proceeding. With respect to the issues raised by Seattle and EPSA
regarding data structures, such issues are best addressed through the
standards development process of the North American Energy Standards
Board, which sets voluntary wholesale electric market standards
including those related to data exchanges and posting requirements.
III. Information Collection Statement
44. The following collection of information contained in this
proposed rule is subject to review by the Office of Management and
Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of
1995.\47\ OMB's regulations require OMB to approve certain information
collection requirements imposed by agency rule.\48\
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\47\ 44 U.S.C. 3507(d) (2006).
\48\ 5 CFR 1320.11 (2010).
---------------------------------------------------------------------------
Burden Estimate: The public reporting and records retention burdens
for the reporting requirements and the records retention requirement
are as follows.\49\ The Commission solicited comments on the need for
this information and 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 Commission has addressed those concerns elsewhere in the rule.
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\49\ These burden estimates apply only to this 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
----------------------------------------------------------------------------------------------------------------
Conforming tariff changes................... 132 1 10 1,320
----------------------------------------------------------------------------------------------------------------
Cost To Comply: $150,480
1,320 hours @ $114 an hour (average cost of attorney ($200 per hour),
consultant ($150), technical ($80), and administrative support ($25))
OMB's regulations require it to approve certain information
collection requirements imposed by an agency rule. The Commission is
submitting a copy of this Final Rule to OMB for their review approval
of the information collection requirements.
Title: FERC-516, Electric Rate Schedules and Tariff Filings; FERC-
717 Standards for Business Practices and Communication Protocols for
Public Utilities.
Action: Collection
OMB Control Nos. 1902-0096 and 1902-0173
Respondents: Transmission Providers
Frequency of responses: One time.
Necessity of the Information:
45. The Federal Energy Regulatory Commission is adopting amendments
to the pro forma OATT 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 by encouraging more robust competition. The Final Rule
achieves this goal by removing the price cap previously imposed on
reassignments of transmission capacity.
46. 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
[[Page 58300]]
Director, Phone: (202) 502-8415, fax: (202) 273-0873, e-mail:
michael.miller@ferc.gov.]
47. 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) 395-4638, 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.
IV. Environmental Analysis
48. 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.\50\ 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 Federal Power Act (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.\51\
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\50\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (December 17, 1987), FERC Stats. &
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
\51\ 18 CFR 380.4(a)(15) (2010).
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V. Regulatory Flexibility Act
49. The Regulatory Flexibility Act of 1980 (RFA) \52\ generally
requires a description and analysis of Final Rules that will have
significant economic impact on a substantial number of small entities.
This Final Rule applies to public utilities that own, control, or
operate interstate transmission facilities, not to electric utilities
per se. The total number of public utilities that, absent waiver, would
have to modify their current OATTs by filing the revised pro forma OATT
is 176.\53\ Of these only six public utilities, or less than two
percent, dispose of four million MWh or less per year.\54\ The
Commission does not consider this a substantial number, and in any
event, these small entities may seek waiver of these requirements.\55\
Moreover, the criteria for waiver that would be applied under this
rulemaking for small entities is unchanged from that used to evaluate
requests for waiver under Order Nos. 888 and 889. Thus, small entities
who have received waiver of the requirements to have on file an open
access tariff or to operate an OASIS would be unaffected by the
requirements of this proposed rulemaking.
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\52\ 5 U.S.C. 601-612 (2006).
\53\ The sources for this figure are FERC Form No. 1 and FERC
Form No. 1-F data.
\54\ Id.
\55\ The Regulatory Flexibility Act defines a ``small entity''
as ``one which is independently owned and operated and which is not
dominant in its field of operation.'' See 5 U.S.C. 601(3) and
601(6)(2000); 15 U.S.C. 632(a)(1) (2000). In Mid-Tex Elec. Coop. v.
FERC, 773 F.2d 327, 340-343 (DC 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.
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VI. Document Availability
50. 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 FERC's Home Page (https://www.ferc.gov) and in FERC'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.
51. From FERC's Home Page on the Internet, this information is
available on 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 the docket
number excluding the last three digits of this document in the docket
number field.
52. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from FERC Online Support at (202)
502-6652 (toll free at 1-866-208-3676) or e-mail at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at
public.referenceroom@ferc.gov.
VII. Effective Date and Congressional Notification
53. These regulations shall become effective September 24, 2010.
Section 553(d) of the Administrative Procedure Act (APA) generally
requires a rule to be effective not less than 30 days after publication
in the Federal Register unless, inter alia, the rule relieves a
restriction or good cause is otherwise found to shorten the time
period.\56\ Section 553(b)(B) of the APA authorizes agencies to
dispense with certain procedures when the agency, for good cause, finds
that those procedures are ``impracticable, unnecessary, or contrary to
public interest.'' \57\ For the following reasons the Commission is
using the ``Good Cause'' exemption. This Final Rule must become
effective by 12 a.m. on October 1, 2010 or the price cap on
reassignments of electric transmission capacity will be reinstated.
Reinstating the price cap would impose a restriction on the rights of
transmission customers. Thus, this Final Rule relieves a restriction.
Furthermore, the Commission finds that good cause exists to make this
Final Rule effective immediately because allowing the price cap to be
reinstated temporarily could disrupt the efficient management of the
secondary market for electric transmission capacity and reduce
opportunities for further reduction of transmission congestion.
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\56\ 5 U.S.C. 553(d) (2006).
\57\ 5 U.S.C. 553(b)(B) (2006).
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54. 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.
List of Subjects in 18 CFR Part 35
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
Note: The following Appendices will not appear in the Code of
Federal Regulations.
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BILLING CODE 6717-01-C
