112 FERC ¶ 61,012

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Pat Wood, III, Chairman;

Nora Mead Brownell, Joseph T. Kelliher,

and Suedeen G. Kelly.

+--------------------------------------------+----------+-------------+
| Bonneville Power Administration            | Docket   | E           |
|                                            | No.      | L05-106-000 |
| PacifiCorp                                 |          |             |
|                                            |          |             |
| Idaho Power Company                        |          |             |
+--------------------------------------------+----------+-------------+

DECLARATORY ORDER PROVIDING GUIDANCE CONCERNING GRID WEST PROPOSAL

(Issued July 1, 2005)

**[Introduction]{.underline}**

1.  In this order, we address a petition for a declaratory order filed
    by Bonneville Power Administration (Bonneville), PacifiCorp and
    Idaho Power Company (Idaho Power) (collectively, Petitioners)
    seeking guidance with respect to certain issues they identify as
    being of critical importance to the further development of Grid
    West, a proposed independent transmission provider. Specifically,
    they ask the following questions:

    \(1\) Assuming Grid West seeks approval under section 205 of the
    Federal Power Act to offer regional transmission service pursuant to
    an open access transmission tariff (OATT), but not as a regional
    transmission organization (RTO) under Order No. 2000,[^1] will the
    Commission treat Grid West's application as one that must satisfy
    the open access requirements of Order No. 888[^2] (that is, offering
    services consistent with or superior to the pro forma OATT
    requirements) rather than the requirements for RTO status?

    \(2\) Does Grid West's governance structure as embodied in its
    Operational Bylaws allow it to satisfy the independence requirements
    of Order No. 2000?

    \(3\) What is the Commission\'s position regarding transmission
    owners' withdrawal rights? (a) Will the Commission approve a
    contract between Grid West and Bonneville that allows Bonneville to
    withdraw as a participating transmission owner without Commission
    approval? (b) Will the Commission clarify that a participating
    transmission owner that is a public utility would be able to
    terminate its contractual arrangements with Grid West under
    conditions that the Commission determines are just and reasonable?

    \(4\) If Grid West becomes a public utility that sells transmission
    service but not as an RTO, will the Commission provide assurances
    that it will not thereafter require Grid West to comply with Order
    No. 2000 requirements or Standard Market Design approaches?

    \(5\) As a matter of policy, will the Commission accept a provision
    in Grid West\'s agreements with Bonneville and other transmission
    owners providing that certain terms identified as critical to
    transmission owners\' participation will be protected from
    subsequent Commission-mandated change based on, in Bonneville's
    case, Bonneville's statutory requirements and the doctrine of
    sub-delegation, and for all transmission owners the application of
    the *Mobile-Sierra* standard to certain contract provisions?

    \(6\) If Grid West becomes a public utility that sells transmission
    service but not as an RTO, is Commission policy sufficiently
    flexible to accommodate participating transmission owners continuing
    as transmission providers for their pre-existing transmission
    agreements, including OATT service, while new service is made
    available only through Grid West?

    \(7\) Will the Commission acknowledge that Bonneville's
    participation in Grid West, as a participating transmission owner,
    does not provide the Commission with any authority to modify
    Bonneville's existing transmission agreements?

    \(8\) Will the Commission support implementation, for an indefinite
    duration, of license plate rates and the application of charges to
    through and out transactions?

2.  This order benefits customers by providing guidance to Petitioners,
    which, in turn, should help them in the development of Grid West.

    **[Background]{.underline}**

    **A.** **[Description of Petitioners]{.underline}**

3.  Bonneville is a self-financed federal power marketing administration
    within the United States Department of Energy. Pursuant to its own
    statutory framework, it owns and operates a significant portion of
    the bulk electric transmission system in the Pacific Northwest. It
    is not a public utility under section 201(e) of the Federal Power
    Act (FPA),[^3] although the Commission does have limited authority
    under other law to approve Bonneville\'s rates[^4] and certain
    limited authorities under the FPA such as ordering the agency on a
    case-by-case basis to provide transmission service.[^5] Bonneville
    has received

    the Commission\'s approval of its OATT under the "safe harbor"
    provision of Order No. 888.[^6] Bonneville has been an active
    participant in previous efforts, described below, to establish a
    regional transmission organization in the region, both as an ISO
    (IndeGO) and as an RTO (RTO West).

4.  PacifiCorp is an investor-owned utility providing retail electric
    service within the states of California, Idaho, Oregon, Utah,
    Washington, and Wyoming. PacifiCorp is a public utility under
    section 201 of the FPA, a transmission provider, and a wholesale
    marketer of electric power. PacifiCorp also operates more than
    15,000 circuit miles of transmission, making it one of the largest
    investor-owned open-access transmission systems in the United
    States. PacifiCorp is an active participant in the development of
    Grid West and also supported previous efforts to establish a
    regional transmission organization in the region.

5.  Idaho Power is an investor-owned utility providing retail electric
    service within the states of Idaho and Oregon. Idaho Power is a
    public utility under section 201 of the FPA, a transmission
    provider, and a wholesale marketer of electric power. Idaho Power is
    an active participant in the development of Grid West and also
    supported previous efforts to establish a regional transmission
    entity in the Northwest.

    **B.** **[The Northwest's Efforts to Create an ISO and
    RTO]{.underline}**

6.  Petitioners state that for more than eight years, they and other
    transmission owners[^7] in the Pacific Northwest and adjacent areas
    have been exploring proposals to form an independent regional
    transmission organization. The purpose of such an organization would
    be to manage and operate the multiple transmission systems as a
    single system in order to gain commercial and operational
    efficiency, improved planning and grid expansion, and increased
    reliability of the interconnected grid.

7.  Petitioners state that after the first proposal called IndeGO
    collapsed for lack of support in 2000, the transmission owners
    formed and funded RTO West, a nonprofit Washington corporation that
    served as a vehicle for the joint effort to develop an RTO. The
    Commission issued declaratory orders approving significant portions
    of the RTO West conceptual proposal.[^8] However, some regional
    stakeholders criticized the RTO West proposal as being too concerned
    with meeting the Commission's requirements and with problems that
    did not exist in the RTO West region to any significant degree, and
    divorced from the region\'s operational characteristics. They argued
    that some of the proposed solutions to those problems were not
    appropriate to the region\'s unique hydro-thermal power system and
    would consequently impose unnecessary costs and threaten
    pre-existing arrangements. Some stakeholders expressed strong
    reservations about a perceived lack of accountability of an
    independent RTO West board to regional interests. Based largely on
    their experience with the California energy crisis, they feared the
    imposition of problematic market mechanisms and uncontrolled costs
    by trustees who lacked any significant connection to the region.
    Consequently, the transmission owners decided in 2003 that they
    lacked the necessary public support to move forward with the RTO
    West proposal.

8.  According to Petitioners, significant customer anxieties persist
    concerning (i) mandatory, centralized energy markets and their
    potential manipulation; (ii) the use of financial transmission
    rights in the Pacific Northwest; (iii) the exposure of existing
    (often non-jurisdictional) transmission service to cost-shifting and
    other changes ordered by the Commission; (iv) the likelihood of
    implementation costs overwhelming any potential benefits; and (v)
    increased jurisdictional reach of the Commission over currently
    non-jurisdictional facilities and entities.[^9] Based on the
    experience to date, Petitioners have chosen to pursue Grid West
    rather than continuing efforts to establish an RTO because they
    expect that any filing of an Order No. 2000 compliant RTO proposal
    would be adamantly opposed by multiple utility transmission
    customers.

9.  Petitioners state that they are at a point in the development
    process where they wish to obtain guidance from the Commission
    before they decide whether to commit resources to further develop
    the Grid West proposal.[^10] A critical factor will be their
    assessment of whether the Grid West proposal is likely to be
    workable and produce net benefits to the area encompassed within the
    proposed Grid West footprint. Although other transmission owners are
    not part of the instant petition, the Grid West footprint
    (Geographic Area) is comprised of the portions of Alberta and
    British Columbia and of the states of Idaho, Montana, Nevada,
    Oregon, Utah, Washington, and Wyoming that are electrically within
    the Western Interconnection, together with any additional geographic
    territory within the State of California that is encompassed by the
    control areas of the Bonneville Power Administration, PacifiCorp,
    and Sierra Pacific Company as of the effective date of the
    Operational Bylaws.

    **C.** **[Description of Grid West]{.underline}**

    **1.** **[Governance]{.underline}**

10. Petitioners state they are providing their description of the
    governance structure for Grid West to permit the Commission to
    determine whether the governance structure set forth in the
    Operational Bylaws would satisfy the independence requirements for
    Order No. 2000. They state that the Commission's determination "is a
    condition precedent for Grid West to begin offering transmission and
    related services in the operational stage but is needed now to
    determine whether additional funds should be dedicated to
    development of Grid West."[^11] The Grid West governance structure
    is modeled on the RTO West governance structure that was previously
    approved by the Commission.[^12] The changes made to the RTO West
    bylaws were the result of a productive collaboration among the
    members of the Regional Representatives Group.[^13] The governance
    structure for Grid West is discussed in more detail in the
    discussion of Petitioners' Question No. 2, below.

    **2.** **[Operation and Services]{.underline}**

11. Petitioners state that their description of Grid West\'s operational
    characteristics and services is based on the work of the Regional
    Representatives Group to date and is therefore still in a
    preliminary stage. For purposes of this order, we include
    Petitioners' description of several of the currently contemplated
    operational characteristics and services of Grid West as background
    information.

12. Petitioners state that, as currently envisioned, the proposal for
    initial operations for Grid West includes voluntary consolidation of
    control areas by some transmission owners in the region and the
    provision of new regional transmission service over the larger Grid
    West footprint.[^14] Grid West will have three key roles: (i)
    control area operator for consolidating transmission
    owners;[^15] (ii) transmission provider with respect to the new
    regional service(s) for the larger Grid West footprint; and (iii)
    central scheduling entity for the Grid West managed transmission
    system. Petitioners state that, as the control area operator for the
    anticipated consolidated control areas, Grid West would serve as the

    Balancing Authority and Reliability Authority and would be
    responsible for maintaining reserve margins, calculating Area
    Control Error, and accepting generation offers to clear congestion
    and balance the system, among other things.[^16]

13. Petitioners state that with respect to non-control area services,
    Grid West would serve as the exclusive provider of new regional
    transmission rights over the entire Grid West managed transmission
    system, *i.e.*, both inside and outside the consolidated control
    area, and would be granted authority from participating transmission
    owners to enable it to provide such services. Grid West would: (i)
    retain a physical transmission rights approach but would implement a
    system-wide, flow-based method for determining available flow
    capacity; (ii) provide for centralized decision making for access
    requests, scheduling and determination of available flow capacity;
    and (iii) establish a centralized OASIS site. Grid West would also
    be the scheduling entity for the entire system. Users would be
    required to have physical transmission rights to schedule
    transmission services and must submit balanced schedules.[^17] Grid
    West would implement a regional planning and expansion program with
    back-up authority for reliability purposes, and would establish an
    independent market monitor function. According to Petitioners, Grid
    West would not, however, sell ancillary services or operate an
    ancillary services market outside of the consolidated control area.
    Ancillary services would continue to be provided by the existing
    control area operator.

14. Petitioners envision the creation of a "Reconfiguration Market,"
    which is intended to address two of the problems identified by
    regional stakeholders: (i) rules and practices that prevent full
    utilization of transmission infrastructure; and (ii) absence of
    organized market structures that produce efficient use of the
    system.

15. The Reconfiguration Market will provide an opportunity and incentive
    for holders of physical transmission rights, whether under
    pre-existing agreements or new service arrangements, to bid their
    unused rights into an auction, for periods no longer than one year,
    to be available to others seeking additional transmission service.
    Reconfiguring these offers into flow-based injection and withdrawal
    points and combining them with available flow capacity, Grid West
    will determine the amount and location of capacity which it can
    provide to those bidding into the Reconfiguration Market for new
    injection/withdrawal rights. Offers of unused rights that are
    accepted would receive the market clearing price. Though it would
    not prohibit bilateral trades, this centralized Reconfiguration
    Market should facilitate and encourage the trading of unused
    transmission rights in the region. In addition, capacity made
    available by failure to schedule transmission rights at pre-schedule
    will be made available in the post-Day Ahead market. Petitioners
    believe these two mechanisms will discourage hoarding of
    transmission rights.

16. Petitioners indicate that new services offered by Grid West would
    include: (i) auctioned transmission service of one year or less
    comprised of a blend of available flow capacity, if any, and
    existing transmission rights or scheduling flexibility offered by
    customers into a "Reconfiguration Market" (for service of one year
    or less); (ii) long-term rights from existing capacity (if
    sufficient) or from capacity made available through the expiration
    of contracts or added to the system through upgrades and
    construction; and (iii) a first come, first served post-Day Ahead
    service serving a function similar to non-firm or secondary service.
    The proposal would preserve existing transmission arrangements
    without requiring transmission owners to purchase new service from
    Grid West to serve such contracts.[^18] Embedded costs would be
    recovered from pre-existing agreements as they are now by the
    original service providers. Embedded costs would be recovered from
    additional long-term transmission rights provided by Grid West
    through application of non-pancaked license plate rates to the
    extent practicable.

17. The pricing proposal being evaluated anticipates that each
    participating transmission owner would have a license plate rate
    (Company Rate) for new transmission service to load on that
    particular owner\'s system.[^19] An owner\'s Company Rate would be
    based upon its system revenue requirement (as included in the
    transmission owner\'s agreement with Grid West). The proposal
    currently being developed would allow each owner to elect whether to
    have Grid West develop and propose its Company Rate or to develop
    and propose its own Company Rate.[^20] Petitioners state that,
    because each transmission owner currently expected to bring
    facilities to Grid West must obtain the Commission\'s approval of
    its transmission rates, the Commission would continue to maintain
    the same level of oversight of wholesale transmission rates as
    exists today, even if an owner elected to develop and propose its
    own Company Rate.

18. Petitioners also envision Grid West applying a Grid Management Fee
    to schedules (including transmission owners\' schedules for
    pre-existing service they provide) to recover Grid West\'s operating
    costs and a Revenue Recovery Rate Adjustment charge to new services
    if necessary to make up for participating transmission owners\'
    revenue losses resulting from termination of their own short-term
    and non-firm transmission contracts. And, the Grid West proposal
    envisions export transactions, whether under pre-existing rights or
    purchased rights, contributing to embedded cost recovery.[^21]

    **[Notice of Filing and Responsive Pleadings]{.underline}**

19. Notice of Petitioners' filing was published in the *Federal
    Register*,[^22] with motions to intervene and protests due on or
    before May 27, 2005. Timely motions to intervene, raising no
    substantive issues, were filed by: Northwest Independent Power
    Producers; Public Power Council (PPC); Public Utility District No. 1
    of Snohomish County, Washington; Washington Public Utilities
    District Association; PPL Montana, LLC and PPL EnergyPlus, LLC;
    Sacramento Municipal Utility District; Northern California Power
    Agency; Cities of Santa Clara and Redding, California and M-S-R
    Public Power Agency; Modesto Irrigation District; Transmission
    Agency of Northern California; Powerex Corporation; the Nevada
    Attorney General's Bureau of Consumer Protection; and the Utilities
    of the Western Public Agencies Group (WPAG).

20. Timely motions to intervene and comments were filed by Avista
    Corporation (Avista), Utah Municipal Power Agency (UMPA) and Pacific
    Northwest Generating Cooperative (PNGC). Timely comments were filed
    by PPC and Washington Public Utility Districts Association (WPUDA)
    (collectively, PPC/WPUDA), Northwest IPP/Marketers Coalition
    (IPP/Marketers), the Oregon Public Utility Commission (Oregon
    Commission) and the Wyoming Public Service Commission (Wyoming
    Commission). On May 31, 2005, WPAG filed a motion to intervene out
    of time and comments. On June 2, 2005, Northwest Requirements
    Utilities (NRU) filed a motion to intervene out of time and
    comments. On June 14, 2005, Petitioners filed a response, clarifying
    their petition and arguing that the Commission need not address
    issues not raised by them.

    **[Discussion]{.underline}**

    **A.** **[Procedural Matters]{.underline}**

21. Pursuant to Rule 214 of the Commission's Rules of Practice and
    Procedure,[^23] the timely motions to intervene serve to make the
    entities that filed them parties to this proceeding. Given the early
    stage of this proceeding and the absence of any undue prejudice or
    delay to any party, we will grant WPAG's and NRUs' motions to
    intervene out of time and accept their comments. Petitioners'
    response to the comments is permitted under Rule 213(a)(3) of the
    Commission's Rules of Practice and Procedure.[^24]

    **B.** **[Substantive Matters]{.underline}**

    **1.** **[Legal Framework Within Which Grid West Would
    Operate]{.underline}**

    **[Petitioners' Position]{.underline}**

22. Petitioners explain that they and others participating in the
    development of the Grid West proposal have not determined the form
    of the eventual filings they and Grid West must make and the relief
    sought before Grid West can sell transmission services. They state
    that this cannot be completed until the Developmental Board of
    Trustees establishes the Grid West design. They state that, at a
    minimum, they anticipate filing and seeking approval of the Grid
    West tariff and transmission agreements with transmission owners.
    For purposes of their petition for a declaratory order, Petitioners
    state that they have certain assumptions regarding the legal
    framework within which Grid West would operate, which they have set
    forth in the petition as an aid to understanding the eight questions
    that they pose. They also ask the Commission to correct any mistaken
    assumptions they may have. Petitioners' assumptions are as
    follows:[^25]

    1\) Grid West will be a "public utility" within the meaning of the
    FPA;

    2\) because RTO formation is voluntary, the Commission may approve a
    regional transmission provider that offers transmission service
    under an OATT and that does not have to satisfy the Commission's
    requirements under Order No. 2000;

    3\) a non-jurisdictional utility, or an entity over which the
    Commission has only limited authority, that allows its facilities to
    be used by Grid West for the provision of regional transmission
    service will not itself become subject to Commission jurisdiction,
    or any expansion of the scope of Commission jurisdiction, over its
    activities as a consequence of its participation in Grid West;

    4\) a non-jurisdictional utility, or an entity over which the
    Commission has only limited authority that acquires
    transmission-only services from Grid West, will not itself become
    subject to Commission jurisdiction;

    5\) mere membership in Grid West by non-jurisdictional entities will
    not result in any way in their becoming subject to the Commission\'s
    jurisdiction;[^26] and

    6\) if Grid West is a public utility, it must file its tariff and
    related protocols prior to commencing service, it would need to file
    a pro forma OATT or a tariff that is determined by the Commission to
    be comparable or superior to the pro forma OATT, and Grid West would
    thereafter be subject to Commission orders that apply generically to
    all public utilities with Commission-approved open access tariffs.

    **[Comments]{.underline}**

23. PPC/WPUDA dispute that the declaratory order requested by
    Petitioners can provide the certainty that Petitioners seek because
    Petitioners have not presented a proposal for approval, and the Grid
    West concept is an incomplete and uncertain proposition that is
    continuing to evolve in significant respects. Thus, PPC/WPUDA
    contend that the declaratory order can be only an advisory opinion.
    They also argue that a Commission cannot bind future Commissions and
    that the addition of new, pertinent facts would permit the
    Commission to reassess its answers to Petitioners' questions and
    change them if it sees fit. PPC/WPUDA also ask the Commission to
    state whether its declaratory order would bind non-petitioning
    filing utilities and whether entities that are not parties to this
    proceeding would be barred by principles of res judicata or
    collateral estoppel from raising issues addressed in the declaratory
    order.

24. WPAG argues that the Commission should address each of Petitioners'
    assumptions. WPAG further requests that, in responding to each of
    Petitioners' questions, the Commission state: whether its answer
    will bind subsequent Commissions to act in a consistent manner;
    whether subsequent Commissions will be bound by the answer,
    regardless of the nature of the actual filing(s) subsequently made
    by Grid West; whether the answer will be treated as res judicata or
    subject to the doctrine of estoppel for subsequent Grid West
    filings; and whether the answer will remain binding even if a
    subsequent Commission adopts a policy that is inconsistent with the
    answer.

25. Petitioners respond that PPC/WPUDA and WPAG ask questions that the
    petition does not ask and that the Commission need not address them.
    They further argue that the intervenors' questions related to the
    scope and effect of the requested declaratory order are issues about
    the effect of Commission orders in general and not the Grid West
    conceptual proposal.

    **[Commission Determination]{.underline}**

26. Although Petitioners do not believe that it is necessary to address
    their assumptions, unless we disagree with an assumption, we will
    address them at this time because intervenors express concern about
    the assumptions.

27. We agree with Petitioners' first assumption that Grid West would be
    a public utility under the FPA because it would be providing
    jurisdictional services. We also agree with Petitioners' second
    assumption that the Grid West proposal does not have to satisfy the
    requirements of Order No. 2000 (except regarding governance, as
    requested by Petitioners), as discussed in our responses to
    Petitioners' Question Nos. 1 and 2 below.

28. With respect to Petitioners' third assumption, if a
    non-jurisdictional utility, or an entity over which the Commission
    has only limited authority, allows its facilities to be used by Grid
    West for the provision of regional transmission service, that would
    not, by itself, cause such non-jurisdictional utility or limited
    jurisdiction entity to become a public utility subject to the full
    range of the Commission's jurisdiction under Part II of the FPA.

29. With respect to intervenors' concern with Petitioners' fourth
    assumption, neither Petitioners nor intervenors identify
    circumstances in which they believe that acquiring transmission
    service would make an otherwise non-jurisdictional, or limited
    jurisdictional, utility subject to the Commission's jurisdiction or
    increased jurisdiction, but as a general matter, we do not believe
    that a non-jurisdictional entity's purchase of transmission services
    would by itself make that entity jurisdictional.

30. We agree with Petitioners' fifth assumption that mere membership in
    Grid West would not result in an otherwise non-jurisdictional
    utility becoming jurisdictional, based on Petitioners'
    representation of the current Grid West Bylaws (i.e., distinguishing
    membership from signing a transmission agreement).

31. We agree with Petitioners' sixth assumption that if Grid West is a
    public utility, it must file its tariff and related protocols prior
    to commencing service, it would need to file a pro forma OATT or a
    tariff that is determined by the Commission to be comparable or
    superior to the pro forma OATT, and Grid West would thereafter be
    subject to Commission orders that apply generically to all public
    utilities with Commission-approved open access tariffs.

32. As the intervenors acknowledge, the Commission cannot bind future
    Commissions.[^27] However, we provide this guidance based on our
    precedent and our analysis of the issues raised by Petitioners and
    the intervenors. With respect to whether parties to this proceeding
    would be bound by the Commission's guidance, we hold here, as we
    held in the *RTO West Rehearing Order*, that if a party to this
    proceeding has concerns with the guidance that we provide in this
    order, it should express those concerns on rehearing. They should
    not wait until Grid West makes its filing to raise issues that they
    could have raised earlier.[^28]

33. Moreover, if, in the future, Grid West seeks and is granted RTO
    status, Grid West would have to comply with any applicable
    requirements.[^29]

    **2.** **[Petitioners' Questions]{.underline}**

34. As noted above, Petitioners seek the Commission's guidance on a
    number of questions. In general comments, UMPA, while understanding
    Petitioners' desire to obtain information and assurances from the
    Commission, notes that many of the details of the Grid West proposal
    remain undeveloped, including the terms of an agreement between Grid
    West and participating transmission owners. UMPA contends that
    because it is impossible to determine whether any of the provisions
    of the yet undeveloped agreement are just and reasonable, the
    Commission should not prejudge such agreement when considering the
    petition.

35. IPP/Marketers argue that there is a danger in creating a Grid West
    so constrained and limited that it will not be successful. They
    believe that Grid West should be established, its independent board
    seated, and the entity and stakeholders given the opportunity to
    justify further development and evolution. IPP/Marketers also
    request that the Commission minimize special exceptions or terms
    necessary for Bonneville's participation and assure that such
    exceptions or terms are not extended to other filing utilities,
    which are vertically-integrated and Commission-regulated utilities.
    PNGC supports the petition.

36. Petitioners' eight questions are addressed below.

    **(1) Assuming Grid West seeks approval under section 205 of the
    Federal Power Act to offer regional transmission service pursuant to
    an open access tariff, but not as an RTO under Order No. 2000, will
    the Commission treat Grid West's application as one that must
    satisfy the open access requirements of Order No. 888 (that is,
    offering services consistent with or superior to the pro forma OATT
    requirements) rather than the requirements for RTO status?**

    **[Petitioners' Position]{.underline}**

37. Petitioners request the Commission to commit to reviewing a Grid
    West filing under Order No. 888 rather than under the requirements
    of Order No. 2000. They ask that the Commission not condition
    implementation on satisfaction of Order No. 2000 characteristics and
    functions.

38. Grid West will sell transmission service under an OATT, but the Grid
    West proposal is not intended to create an Order No. 2000 RTO. While
    Petitioners believe the Grid West working proposal would provide
    protections against discrimination, and economic efficiencies and
    reliability improvements superior to those provided under Order No.
    888, they also acknowledge that the proposal would not meet all the
    requirements of Order No. 2000. Petitioners believe that the working
    proposal represents the most change that could be accepted by a
    significant portion of the region at this time while providing a
    platform for potential future evolution brought about by the
    region\'s needs and aspirations. They also cite the Commission's
    order in *Entergy Services, Inc.* (*Entergy*),[^30] in which the
    Commission conditionally approved a proposal for an independent
    coordinator of transmission (ICT), which would not be an RTO, and
    called the proposal a step beyond the pro forma OATT.

39. Petitioners argue that their working proposal is superior to the pro
    forma OATT, representing an innovative attempt to provide not only
    independent transmission decision-making but also the benefits of
    centralized operation and planning while respecting the concerns of
    regional constituencies concerning Order No. 2000 and the
    Commission's Standard Market Design. Petitioners state that the Grid
    West working proposal represents a significant step beyond the Order
    No. 888 standards under which transmission providers operate their
    separate systems under separate tariffs and separate rates. Under
    the working proposal, Grid West would: (i) determine system-wide
    available flow capacity; (ii) operate a single OASIS for all
    participating systems; (iii) provide services that can reconfigure
    available flow capacity and released transmission rights into
    flow-based injection/withdrawal rights to enable trading of
    non-identical transmission rights over all participating
    systems; (iv) make access determinations for all participating
    systems; and (v) coordinate transmission planning on a single-system
    basis. According to Petitioners, Grid West\'s Operational Bylaws
    provide for decision-making that is, both in perception and in
    reality, entirely independent from the transmission owners and
    market participants, while adding innovative accountability and cost
    control mechanisms to better serve the interests of the
    stakeholders.

    **[Comments]{.underline}**

40. PPC/WPUDA argue that Petitioners are, in effect, asking the
    Commission to forego issuing any future order requiring compliance
    with ISO or RTO standards unless it is invited to do so by Grid
    West. They believe that future Commissions will still be able to
    alter the decision of the current Commission based on the details of
    a proposal, the facts presented at the time and the Commission's
    then-current policies and statutory obligations. They seek
    clarification as to how the Commission would implement an
    affirmative answer to Question No. 1.

41. IPP/Marketers do not believe that the Commission must choose to
    apply either Order No. 2000 or Order No. 888. They oppose applying
    Order No. 2000, citing the lack of consensus for an Order No.
    2000-compliant RTO. But, they contend that the open access
    requirements of Order No. 888 seem improper for evaluating a
    proposal that fundamentally is a regional transmission organization,
    because Order No. 888 was primarily intended to set the requirements
    for the provision of service by a single transmission provider
    operating as a vertically-integrated utility outside the framework
    of an independent market structure. According to IPP/Marketers,
    service provided under separate and multiple tariffs can encourage
    discriminatory behavior, or at least create conditions for unequal
    service among otherwise similar market participants. They suggest
    that the Grid West proposal, when fully defined, could be tested
    against the ISO principles of Order No. 888. They contend that in
    approving a number of ISOs, the Commission has allowed special
    contractual and tariff provisions to accommodate regional
    differences and the public power authorities.

42. Petitioners respond that any Grid West proposal will be filed for
    approval under the Order No. 888 open and non-discriminatory access
    provisions applicable to all transmission providers, not as an ISO
    or RTO or as an entity measure by Order No. 888's ISO principles.
    Because changes to the pro forma OATT are expected to be necessary
    to accommodate new services over multiple transmission owners'
    facilities, Petitioners assume that Grid West's transmission tariff
    will require Commission approval as being superior to the pro forma
    OATT.

    **[Commission Determination]{.underline}**

43. Since the petition represents that the initial Grid West proposal
    will not seek RTO status for Grid West, we would not require Grid
    West to meet the requirements of Order No. 2000. Rather, we would
    evaluate the proposed independent transmission provider under Order
    No. 888, as requested by Petitioners, based on the representations
    in the Petition.

    **(2) Does Grid West's governance structure as embodied in its
    Operational Bylaws satisfy the independence requirements of Order
    No. 2000?**

    **[Petitioners' Position]{.underline}**

44. Even though it is not planned for Grid West to initially seek RTO
    status, as discussed above, Petitioners state that, at some future
    point, transmission owners could decide to request a declaratory
    order seeking RTO status and that stakeholders desire certainty that
    such a request would not require a change in the governance
    structure. Therefore, Petitioners request that the Commission
    determine that Grid West would satisfy the independence requirements
    of Order No. 2000.

45. As noted above, Petitioners state that the Grid West governance
    structure is modeled on the RTO West governance structure that was
    previously approved by the Commission.[^31] Grid West, its employees
    and non-stakeholder directors do not have financial interests in any
    market participant. No single class or any combination of two or
    three classes may force the election or removal of trustees, and no
    single class may block election or removal of a trustee. However,
    the Members Representative Committee may remove a trustee at any
    time, with or without cause, by the affirmative vote of 20 members
    at a duly held meeting of the Members Representative Committee.[^32]

46. The executive search firm selected by the Developmental Board of
    Trustees shall develop a slate of qualified candidates for the
    Operational Board of Trustees. The Developmental Board of Trustees,
    in consultation with the Members Representative Committee, may
    direct the firm to provide a specific number of candidates. The
    slate of qualified candidates identified by the executive search
    firm should include individuals possessing, collectively, knowledge
    of the operational characteristics of the Pacific Northwest power
    system and executive management experience or board experience with
    electric utilities and personal abilities and qualities, such as
    integrity, leadership, problem-solving, facilitation, and
    consensus-building. In screening potential candidates the executive
    search firm shall be instructed to exclude any candidate likely to
    have a conflict of interest with the duties of a Trustee. The
    executive search firm shall also be instructed to obtain appropriate
    disclosures by candidates (covering themselves and Related Persons
    to such candidates) regarding financial interests in or other
    potential conflicts of interest with Market Participants, Members,
    and major contractors of the Corporation. The Members Representative
    Committee will elect a total of nine persons to serve on the
    Operational Board of Trustees.[^33]

47. The five-member classes that comprise the Members Representative
    Committee in Grid West are: (a) Major Transmitting Utilities; (b)
    Transmission-Dependent Utilities; (c) Generators, Power Marketers,
    Large Generating End-Use Consumers, and Others; (d) End-Use
    Consumers; and (e) State and Provincial Energy
    Authority/Tribes/Certain Public Interest Groups. Petitioners state
    that, in general, each of the five member classes in Grid West has
    the same voting power as the other member classes.

48. Grid West members are provided significant control over corporate
    costs because they will constitute a majority on the Grid West
    Budget Committee that prepares and recommends to the Operational
    Board the proposed annual budget and forecast of out-year funding
    and commitments.[^34] Members also participate in mandatory advisory
    votes when the Grid West budget proposed by the Operational Board
    exceeds prior projections by 15 percent,[^35] other advisory votes
    called by the Operational Board and Board Advisory Committee
    activities.[^36]

49. Petitioners state that the Grid West bylaws provide members with
    another board accountability mechanism. Grid West members may
    determine that an Operational Board decision, or proposed decision,
    constitutes a major change in the scope of Grid West\'s activities
    or policies that must be authorized by at least seven out of the
    nine trustees, *i.e*., a supermajority, in order to be
    implemented.[^37] The members may impose this requirement on the
    Operational Board through an affirmative vote at a members\' meeting
    of at least 18 of the class votes cast by the member classes and
    subclasses. The duration of this process would be approximately 70
    days.

50. Finally, Grid West members are provided a right to dissolve the
    corporation if the Commission "orders a change to or issues an order
    or rule that preempts or otherwise renders inoperative a provision
    of the Articles of Incorporation or these Operational Bylaws" and
    the members do not approve the change or do not approve a decision
    by the

    Operational Board to accept the effect of the Commission\'s
    order.[^38] The members must approve such changes by the same
    supermajority vote as is required for amending the Operational
    Bylaws, *i.e*., a margin of at least two-thirds of the class vote in
    at least four out of the five member classes.

51. In addition, the Members Representative Committee is responsible for
    reviewing, consulting with the Operational Board about, and voting
    on "Special Issues", e.g., backstop measures to relieve chronic
    congestion, that have been identified as being so significant to the
    region that the Operational Board can only implement them through a
    special consultation and interaction process with the Members
    Representative Committee, unless the proposed action is within the
    scope of a previous authorization. [^39] The duration of this
    consultation process, including a remand by the Members
    Representative Committee, would be approximately 145 days.

52. Petitioners further indicate that they intend to negotiate an
    allocation of section 205 filing rights between public utility
    transmission owners and Grid West and file it for approval by the
    Commission, consistent with Bonneville's statutory authorities.
    Finally, Petitioners state that the Grid West governing structure
    does not provide for representation of market participants on the
    Board of Trustees and assert that it does not provide any other
    mechanism through which market participants may prohibit a board
    vote or limit the board's discretion. Thus, Petitioners argue that
    it is unnecessary to provide a compliance audit of the independence
    of the organization's decision-making process.

    **[Comments]{.underline}**

53. IPP/Marketers assert that the element with the greatest potential to
    compromise the Board's independence will be the transmission
    agreements between Grid West and the transmission owners. They
    express concern that the transmission owners may seek to place
    tariff provisions or excessive restrictions on the operational
    responsibilities of Grid West in the transmission agreements. Such
    restrictions, if they are negotiated and signed in a bilateral
    contract between transmission owners and Grid West, may not later be
    modified by other stakeholders. Thus, IPP/Marketers assert that Grid
    West transmission customers may be significantly affected by the
    transmission agreement and should have the right to seek
    modifications of them when they are filed with the Commission. They
    contend that, in addition to the transmission agreements, Grid
    West's independence will also be determined by the enabling
    agreements, tariffs and other organizational documents, as well as
    the bylaws.

    **[Commission Determination]{.underline}**

54. Order No. 2000 requires that an RTO's governing board's
    decision-making process be independent of any market participant or
    class of participants.[^40] The RTO must include, as part of its
    demonstration of independence, a demonstration that its employees,
    and any non-stakeholder directors must not have financial interests
    in any market participant. The Commission has said that the RTO must
    be independent in both perception and reality.

55. Below, we evaluate per Petitioners' request, the proposed governance
    against the requirements of Order No. 2000.

56. The proposed Bylaws in brief state that except as set forth in
    section 7.10.2,[^41] no individual may be nominated for election to
    or become a member of the Board of Trustees, or at any time serve on
    the Board of Trustees, if such individual (or the spouse, the
    domestic partner, or any legal dependent of such individual) (i) has
    a direct or indirect financial interest in (including the ownership
    of securities of) a Market Participant or Member (or any Affiliate
    of any of such Persons); (ii) is connected as an owner, director,
    officer, employee, partner, principal, or member of a governing
    board or council, or in

    any similar capacity, to a Market Participant or Member, (iii) has a
    Related Person that is an officer, chief executive or general
    manager, director or trustee or member of a governing board or
    council, or that occupies a position of similar capacity of a Market
    Participant or Member.[^42] Thus, with regard to the financial
    independence of trustees and employees, we find that the Bylaws
    provide satisfactorily restrictions.

57. We now turn to the RTO's decision-making process. As stated above,
    the Commission's regulations require a demonstration that the
    decision-making process is independent of control by any market
    participant or class of participant. There is no express article of
    the Bylaws that, on its own, conveys control to any market
    participant or class of market participant that would directly
    undermine the independence of Grid West.[^43] In fact, the proposed
    Bylaws are written to include additional stakeholder processes so
    that no market participant or class of participants has control of
    the decision-making process. We conclude that decision-making by
    Grid West will be independent of any market participant or class of
    market participant since the Board has the ability to override the
    Members Representative Committee with a supermajority vote on
    matters on the Special Issues list and has final say on these
    matters.

58. We agree with Petitioners' claim that a compliance audit of the
    independence of the organization's decision making process is
    unnecessary. The independent compliance audit established in Order
    No. 2000 was established to provide assurance to all market
    participants that passive ownership interests by market participants
    in an RTO remained passive over time and provide assurances of
    continued RTO independence. Because the Operational Bylaws do not
    anticipate passive ownership in Grid West, the compliance audit
    required by Order No. 2000 would be unnecessary.

59. With respect to IPP/Marketers' concern about the potential effects
    of provisions of the various enabling documents for Grid West,
    interested parties will have an opportunity to comment on the
    justness and reasonableness of documents such as the proposed
    transmission agreements between the transmission owners and Grid
    West and Grid West's tariff when those documents are filed.

    **(3) What is the Commission\'s position regarding transmission
    owners' withdrawal rights? (a) Will the Commission approve a
    contract between Grid West and Bonneville that allows Bonneville to
    withdraw as a participating transmission owner without Commission
    approval? (b) Will the Commission clarify that a participating
    transmission owner that is a public utility would be able to
    terminate its contractual arrangements with Grid West under
    conditions that the Commission determines are just and reasonable?**

    **[Petitioners' Position]{.underline}**

60. Petitioners argue that Bonneville, like any other public utility
    district or municipal transmission owners who elects to execute
    participation agreements with Grid West, is not a public utility
    subject to the Commission's section 205 rate authority. Thus, they
    assert that Bonneville is not obligated to make a section 205 filing
    to withdraw. Even assuming that Grid West would have to file
    Bonneville's notice of termination of its transmission agreement
    with Grid West, this filing would not create Commission jurisdiction
    over Bonneville's decision to withdraw, according to Petitioners.
    Bonneville will not participate if it cannot withdraw without prior
    Commission approval. However, Petitioners further state that they
    anticipate that Grid West will want contractual provisions governing
    a withdrawal by Bonneville, including a requirement to support any
    pre-withdrawal contracts executed by Grid West. Thus, Petitioners
    ask the Commission to assume that Bonneville's transmission
    agreement will contain negotiated termination provisions.

    **[Comments]{.underline}**

61. No party disputes Petitioners' argument regarding Bonneville's right
    to withdraw from Grid West. However, IPP/Marketers argue that no
    party should be allowed to withdraw from Grid West without
    observance of some procedures and adequate notice, and acceptance of
    consequences directly attributable to withdrawal. Avista believes
    that implicit in Petitioners' request is that Bonneville's
    withdrawal would be pursuant to contractual termination provisions.
    According to Avista, the Commission would have authority to
    interpret termination provisions contained in a contract for service
    from a jurisdictional utility and such interpretation would be
    binding on Bonneville as it would be on any other non-jurisdictional
    party voluntarily taking service from a jurisdictional utility under
    contracts filed with the Commission. Petitioners respond that they
    only ask whether the Commission would accept a contract that allowed
    Bonneville to implement a withdrawal right with prior Commission
    approval. They argue that it is not necessary for the Commission to
    address the potentially controversial issue of how contractual
    disputes between the parties would be resolved. Further, they argue
    that the Commission's assertion of such authority with respect to an
    operational agreement between Bonneville and Grid West would
    prematurely define such an agreement to be a contract for service
    from a jurisdictional utility.

62. PPC/WPUDA argue that the Commission has authority over the contracts
    of governmental utilities to the extent that they subject themselves
    to ISO tariffs, as members or participants.[^44] NRU cites a more
    recent *City of Vernon* case for the proposition that the Commission
    concluded it had authority to review the rates of a
    non-jurisdictional entity contributing facilities to the operational
    control of an ISO using a strict section 205 review if it felt such
    a review was necessary in order to review the justness and
    reasonableness of the ISO's rates.[^45] Petitioners respond that
    City of Vernon would not be applicable to Bonneville's Company Rate
    for Grid West service. They state that the Company Rate approach
    would use each Petitioner's Commission-approved rate as a license
    plate rate for recovery of the wholesale revenue requirement of that
    petitioner's portion of the Grid West managed transmission system.
    Each owner's Company Rate would be separately reviewed under the
    standards applicable to that owner, according to Petitioners. They
    assert that the Commission would be required to review Bonneville's
    rates under statutory standards applicable to Bonneville.
    Petitioners also argue that whether there might be other rates that
    are jurisdictional and would incorporate all or a portion of
    Bonneville's revenue requirement is not yet known. With respect to
    withdrawal rights of investor-owned public utilities, Petitioners
    clarify that they seek a declaratory order that the terms and
    conditions of withdrawal would be established under the just and
    reasonable standard of section 205 of the FPA at the time the
    contract is filed and approved.

    **[Commission Determination]{.underline}**

63. In *Avista*, the Commission held that "Bonneville is subject to
    limited Commission jurisdiction as a federal power marketing agency.
    Consequently, Bonneville's decision to join RTO West is not subject
    to review by this Commission."[^46] The Commission reaffirmed this
    point with respect to Bonneville in the *RTO West Order*, adding
    that "concerns as to whether Bonneville is adequately protected are
    more appropriately addressed in proceedings that Bonneville will
    initiate pursuant to the Pacific Northwest Power Planning and
    Conservation Act \[(Northwest Power Act)\]."[^47] The same rationale
    would apply regarding the Commission's authority to review
    Bonneville's decision to withdraw from Grid West. Therefore,
    Bonneville does not need prior Commission approval to withdraw from
    Grid West.[^48] Notwithstanding that, Petitioners, including
    Bonneville, indicate that they expect to negotiate withdrawal terms
    with Grid West, and

    the Commission and interested parties will have the opportunity to
    review the withdrawal terms when Grid West makes its filing.
    Further, we clarify, as requested by Petitioners, that a
    participating transmission owner that is a public utility would be
    able to terminate its contractual arrangements with Grid West under
    conditions that the Commission determines are just and reasonable.

    **(4) If Grid West becomes a public utility selling transmission
    services but not as an RTO, will the Commission assure that it will
    not thereafter require Grid West to comply with Order No. 2000 or
    Standard Market Design approaches?**

    **[Petitioners' Position]{.underline}**

64. According to Petitioners, the most significant obstacle to broader
    regional support for the Grid West proposal is the fear of many
    stakeholders that either the Grid West Operational Board or the
    Commission will in the future impose inappropriate, costly, damaging
    or inequitable changes on the region regardless of regional
    views.[^49] They state that Regional Representatives Group has
    addressed the first fear by incorporating effective accountability
    mechanisms into the Grid West bylaws discussed concerning Question
    No. 2 above. Petitioners are aware of limitations that restrict the
    ability of members of a regulatory body to make commitments for
    future members. Nevertheless, it is unlikely that the Grid West
    proposal could move forward at Decision Point 2 if the Commission is
    unable to ease the stakeholders\' fears that this Commission or a
    future Commission may order Grid West to implement significant
    changes seen as adverse to stakeholder interests. The Commission
    should declare that it has no authority to require a public utility
    whose tariff has been approved under one rule (Order No. 888) to
    subsequently comply with the requirements of another rule (Order
    No. 2000) that applies only to organizations that have voluntarily
    applied for RTO status. They also request that the Commission
    reaffirm that transmission solutions for the Grid West footprint
    must be "appropriate to the unique needs of the Pacific
    Northwest"[^50] and that the Commission will defer to Grid West and
    its stakeholders to determine the best solutions to any problems the
    Commission may discover.

    **[Comments]{.underline}**

65. IPP/Marketers interpret the request as seeking assurances that the
    Commission does not intend to rigidly apply Order No. 2000 or
    Standard Market Design approaches to Grid West. They support the
    view that the Grid West proposal should be considered on its own
    merits, granting the region substantial deference to settle
    differences. However, they suggest that the initial design of Grid
    West may require later modification for any number of reasons,
    including the application of lessons learned from RTOs and ISOs,
    which may improve Grid West's markets and operations. IPP/Marketers
    express concern that there also may be a generally recognized
    problem or defect in Grid West's design for which Grid West is
    unable to find the consensus necessary to propose a solution. In
    such a case there would be no avenue for parties to seek relief,
    according to IPP/Marketers. They argue that the Commission must be
    able to remedy any shortcomings that are not addressed by Grid West
    directly in order to ensure that all users of the transmission
    system and market participants in the region are protected. They
    oppose the broad exclusion from further Commission review or action
    that Petitioners seek.

    **[Commission Determination]{.underline}**

66. As contemplated in this Petition, Grid West will not be an RTO. As
    such, application of Order No. 2000 would not be appropriate. While
    this Commission cannot bind future Commissions,[^51] we can provide
    as much direction as possible to Petitioners (and the region) to
    help them make the decision as to whether to move forward with Grid
    West. As with many other regions of the country, Grid West is
    contemplating a stakeholder process through which problems and
    solutions will be vetted. We have also, in the context of an
    RTO[^52] and an experimental program,[^53] not been prescriptive in
    the approach to managing regional markets.

    **(5) As a matter of policy, will the Commission accept a provision
    in Grid West\'s agreements with Bonneville and other transmission
    owners providing that certain terms identified as critical to
    transmission owners\' participation will be protected from
    subsequent Commission-mandated change based on, in Bonneville's
    case, Bonneville's statutory requirements and the doctrine of
    sub-delegation, and for all transmission owners the application of
    the *Mobile-Sierra* standard to certain contract provisions?**

    **[Petitioners' Position]{.underline}**

67. Petitioners state that certain protection provisions will be
    required in the agreements between the transmission owners and Grid
    West in order to obtain their participation in Grid West.
    Petitioners submit that these provisions could include restrictions
    on the facilities in order to protect transmission owners' capital
    investment in those facilities; the physical integrity, reliability
    and safety of those systems; pre-existing contracts and obligations
    of market participants; the method of collection and allocation of
    Grid West's revenues to the owners of the transmission systems; and
    Grid West's compliance with laws, treaties, standards, licenses and
    non-power requirements applicable to these facilities. Petitioners
    add that there may be provisions that various owners believe are
    necessary to win support for the proposal from shareholders and
    state or provincial authorities. Petitioners conclude that the
    transmission agreement between Grid West and the transmission owners
    may be replete with provisions that reflect fundamental compromises
    necessary to permit one or more of the owners to participate in Grid
    West.

68. Petitioners therefore request that the Commission issue a clear
    statement that it will allow the protection of provisions essential
    to the participation of transmission owners from being modified by
    changes to the Grid West tariff. Citing *Midwest Independent
    Transmission System Operator, Inc.*,[^54] Petitioners further
    request the Commission state that: (i) Grid West and a transmission
    owner may agree that they may not amend their contract unless the
    amendment is signed by both parties; (ii) neither party alone may
    petition the Commission under sections 205 or 206 of the FPA to
    modify specified provisions; and (iii) absent the parties\'
    agreement, the standard of review for amendments to those specified
    provisions proposed under section 206 by a non-party, or by the
    Commission acting *sua sponte*, is the *Mobile-Sierra* \"public
    interest\" standard.[^55] Finally, Petitioners request that,
    regardless of *Mobile-Sierra* protection, the Commission recognize
    that a required contractual change to Grid West's authority to use
    non-jurisdictional facilities, such as Bonneville's, would either be
    ineffective or would terminate Grid West's permission to use the
    facilities if the change does not have the owner's agreement.

    **[Comments]{.underline}**

69. PNGC states that the Commission should approve and clarify that any
    future Commission or third-party actions seeking to change the terms
    will be based on the statutory requirements and the *Mobile-Sierra*
    public interest standard, particularly the issue of sub-delegation
    for Bonneville. PNGC reiterates that many of the provisions
    identified for special protection reflect a carefully crafted
    compromise amongst the stakeholders.

70. IPP/Marketers Coalition state that the Commission has previously
    ruled on requests to ensure *Mobile-Sierra* protections for
    contracts and various provisions in transmission agreements related
    to RTOs/ISOs. They add that the Commission also ordered that certain
    provisions in the agreements be removed from the transmission
    agreements and placed in the tariff, rendering the need for
    *Mobile-Sierra* protection moot as to those transferred
    provisions.[^56] They conclude that guidance for the protection of
    contract terms from later modifications, subject to a
    *Mobile-Sierra* test can not be given until the actual transmission
    agreements are filed for acceptance. UMPA argues that if the
    Commission is inclined to protect certain provisions, it should only
    do so in such a way that does not prejudge the justness and
    reasonableness of the agreement and without foreclosing discussion
    of issues.

71. PPC and WPUDA do not oppose the Petitioners' attempt to obtain the
    Commission's agreement that certain core provisions be protected,
    but they do not believe that the Commission's assurances can or
    should be extensive since the Commission does not currently have
    before it a list of provisions to be protected. PPC and WPUDA add
    that it would assist stakeholders if the Commission could describe
    specifically what types of provisions would be considered protected
    and on what facts the Commission's determination might turn.

    **[Commission Determination]{.underline}**

72. Petitioners request that the Commission allow the protection of
    certain provisions in the agreements between transmission owners and
    Grid West from being modified. Several interveners maintain,
    however, that because Petitioners have not filed and specified the
    provisions for which they request protection, the Commission should
    not provide any extensive assurances. Since the instant order is in
    response to a request for guidance only, we believe that our
    response must remain broad in scope. That said, we agree in concept
    that parties to agreements between transmission owners and Grid West
    could, through the use of a *Mobile-Sierra* clause, guard against
    future changes to those agreements by the Commission as well as
    prevent unilateral changes from being proposed by any of the
    parties, as discussed in more detail below.[^57]

73. Petitioners first request that the Commission allow the protection
    of certain provisions from being modified by changes to the Grid
    West tariff. Consistent with our determination in the *RTO West
    Rehearing Order*,[^58] we will allow Petitioners to submit a list of
    specific provisions that they believe are essential to meeting their
    legal obligations or affect their ability to participate in Grid
    West. Once we have this list and the Grid West tariff, we will allow
    all interested parties to comment before we make a determination. In
    this regard, we are not looking to trump legal obligations, but are
    looking for a greater understanding of these obligations and how
    they can be accounted for within the framework that Petitioners
    seek.

74. Petitioners further request that the standard of review for
    amendments to specified provisions proposed by a non-party or by the
    Commission acting *sua* *sponte* be the *Mobile-Sierra* \"public
    interest\" standard. We note that our order in *ISO New England*
    accepted specific *Mobile-Sierra* provisions, and held that the
    Commission is required to "balance the needs of the Transmission
    Owners for contractual certainty with the interests properly
    represented by an RTO."[^59] We emphasize that the Commission will
    consider

    proposed *Mobile-Sierra* provisions in the context of the effect the
    provision for which *Mobile-Sierra* protection is sought has on
    non-parties to the agreement or the operation of the area's
    facilities as a whole. Thus, Grid West may seek the same
    considerations.

75. Petitioners cite *Midwest ISO* in also requesting that the
    Commission permit (1) Grid West and a transmission owner to agree
    that they may not amend their contract unless the amendment is
    signed by both parties; and (2) neither party alone to petition the
    Commission under sections 205 or 206 of the FPA to modify specified
    provisions. We note that in *Midwest ISO*, the Commission accepted a
    filed agreement. We believe it is premature at this point to offer
    such assurances, given that Petitioners have not filed any
    transmission agreements or a Grid West tariff; and we would not want
    to, in a vacuum, change the terms of any contracts by our actions
    here.

76. Finally, Petitioners request we recognize that a required
    contractual change to Grid West's authority to use
    non-jurisdictional facilities would be ineffective or would
    terminate Grid West's permission to use the facilities, if the
    change does not have the owner's agreement. Petitioners have
    referred to only one entity owning non-jurisdictional facilities in
    the proposed Grid West service area, Bonneville. We will therefore
    address this request in the context of Bonneville. As we have
    previously stated, we recognize that Bonneville's obligations and
    operational responsibilities with respect to such matters as
    irrigation, flood control, treaties, and environmental rules are not
    jurisdictional to the Commission. Accordingly, we find that our
    jurisdiction does not extend to any changes in the contract between
    Bonneville and Grid West which would affect Bonneville's statutory
    requirements.[^60] We encourage, however, Grid West and Bonneville
    to inform the Commission in any subsequent filings, of the
    particular concerns it has in this regard. In this manner, the
    Commission will be better informed and possibly prevent any actions
    that would undermine our decision here.

    6.  **If Grid West becomes a public utility that sells transmission
        service but not as an RTO, is Commission policy sufficiently
        flexible to accommodate participating transmission owners
        continuing as transmission providers for their pre-existing
        transmission agreements, including OATT service, while new
        service is made available only through Grid West?**

        **[Petitioners' Position]{.underline}**

77. The Grid West working proposal envisions a new, region-wide
    transmission service offered by Grid West while participating
    transmission owners continue to provide service to their
    pre-existing transmission arrangements under their own contract
    terms and tariffs. Petitioners state that the proposal would
    establish Grid West as a region-wide, independent transmission
    provider that will take increasing transmission provider
    responsibility from existing transmission providers through
    transmission grid expansions or the expiration of pre-existing
    transmission agreements.

78. Petitioners envision that Grid West's transmission owners will
    determine the amount of transmission capacity required to serve
    pre-existing contracts, after which Grid West would determine the
    amount of flow capacity on the entire Grid West system available for
    additional transactions under its new flow-based, multi-system
    service. Participating transmission owners would be limited to
    serving pre-existing contracts and obligations. Grid West would
    establish a tariff for the new services envisioned in the working
    proposal and would have responsibility for all decisions about new
    access requests to the Grid West system. Grid West would also be
    responsible for determining the amount of rights associated with new
    transmission construction.

79. Petitioners state that continuing responsibility of transmission
    owners to carry out their contractual responsibilities to existing
    customers is a critical component of the working proposal\'s
    acceptability to many customers and simplifies the proposal\'s
    implementation. Petitioners claim that the Commission has often
    indicated its support for preserving existing transmission
    arrangements, even in the RTO context.[^61] Continuation of the
    transmission owner\'s role as transmission provider to existing
    arrangements while a different entity is responsible for new service
    should be allowed in the context of Order No. 888.

    **[Comments]{.underline}**

80. IPP/Marketers state that it is premature for the Commission to
    comment on this aspect of Grid West's conceptual proposal, but state
    that the Commission should respond affirmatively once sufficient
    information is provided and the Commission has an opportunity to
    review Grid West's prospective documents, tariff, and agreements.
    IPP/Marketers strongly support the provision of transmission
    services under a single regional tariff and desire that the
    Commission encourage such movement with exceptions, as necessary, to
    accommodate services provided by Bonneville.

81. PNGC states market participants in the Pacific Northwest have been
    working on a regional transmission organization for almost a decade
    and that protection of existing transmission rights was instrumental
    in achieving a regional compromise which has allowed Grid West to
    continue evolving. PNGC states that the Commission should grant the
    Petitioners request limiting Grid West's operations to new
    transmission services provided that existing contracts will continue
    to be served by the transmission owners and that Bonneville's
    existing contracts will not be modified.

82. PPC/WPUDA state that the Commission should provide explicit guidance
    that the transmission owners participating in Grid West may
    establish and implement a tariff for transmission service that
    supports all of the rights provided by the current contracts and
    tariffs, including roll-over rights. PPC/WPUDA's are concerned that
    their transmission providers will no longer offer a tariff service
    that supports their roll-over rights.

    **[Commission Determination]{.underline}**

83. We find that Order No. 888 provides sufficient flexibility to
    accommodate Petitioners request that transmission owners may
    continue serving as transmission providers for their pre-existing
    transmission agreements, including OATT service, while new service
    is made available only through Grid West. In Order No. 888 we noted
    that because we were not abrogating existing requirements and
    transmission contracts generically, and because the functional
    unbundling requirement in Order No. 888 applies only to new
    wholesale services, the terms and conditions of the pro forma tariff
    do not apply to service under existing requirements contracts.
    However, if a customer\'s existing bundled service (transmission and
    generation) contract or transmission-only contract expires, and the
    customer takes any new transmission service from its former
    supplier, the terms and conditions of the OATT would then apply to
    the transmission service that the customer receives.[^62] Here,
    according to Petitioners, Grid West will offer a new, region-wide
    transmission service for all new transmission service which we
    assume may include participating transmission owners' pre-existing
    contracts that have expired.

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(7) **Whether to acknowledge that the Commission has no authority to
    require Bonneville to modify its transmission agreements?**

    **[Petitioners' Position]{.underline}**

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84. Petitioners request that the Commission confirm its lack of
    authority to order changes to Bonneville\'s OATT or to any of its
    transmission agreements even if Bonneville is a full participant in
    Grid West. Petitioners state that there is significant concern among
    public power stakeholders that an election by Bonneville to become a
    participating transmission owner in the Grid West system will grant
    the Commission authority over Bonneville that it lacks in the
    absence of such participation. In this context, Petitioners note
    that many of the stakeholders are particularly concerned with
    maintaining the benefits of existing Bonneville transmission
    agreements.

85. Petitioners argue that the Commission has clarified its lack of
    authority over pre-existing transmission agreements of
    non-jurisdictional transmission owners, even when the transmission
    owners elect to participate in a Commission-jurisdictional RTO.
    Petitioners note the Commission has specifically stated that
    "\[w\]hile the Commission has limited jurisdiction over
    Bonneville\'s rates under the Northwest Power Act, the contracts
    between Bonneville and its customers do not require Commission
    review or approval."[^63] Petitioners cite further precedent in
    *Grandfathered Agreements,* where the Commission required the
    Midwest ISO to carve out of the energy markets existing transmission
    agreements for which the transmission provider was not a public
    utility as defined in section 201 of the FPA. Petitioners submit
    that the Commission concluded in *Grandfathered Agreements* that it
    has no authority to make any modifications to these contracts.[^64]

**[Comments]{.underline}**

86. IPP/Marketers, PNGC and PPC/WPUDA all agree with the Petitioners in
    regard to this issue. PNGC adds that many public power systems have
    made major economic decisions based on their long-term contracts
    with Bonneville, and that in order to adequately continue serving
    their loads, it is essential that these contracts not be modified,
    undermined, limited or lessened in any way in the process of forming
    and operating Grid West.

87. PPC/WPUDA argue that it is uncontroversial that the Commission lacks
    jurisdiction over Bonneville's existing transmission agreements.
    However, PPC/WPUDA indicate that they are concerned with the
    Commission's use of its "conditioning authority" to force
    non-jurisdictional transmission providers to renegotiate contracts
    or make substantive changes to the exercise of rights provided by
    those contracts. PPC/WPUDA explain that although the Commission
    disclaimed jurisdiction of non-jurisdictional transmission providers
    in *Grandfathered Agreements*, the Commission went on to state that
    it does have jurisdiction over the service that the transmission
    owners must take under the Midwest ISO Tariff to meet their
    obligations in existing transmission agreements. PPC/WPUDA therefore
    request clarification that, to the extent the transmission providers
    in Grid West serve their existing transmission contracts with
    capacity withheld from Grid West, the Commission will not have an
    opportunity to place conditions on this service.

**[Commission Determination]{.underline}**

88. We agree with Petitioners that the Commission lacks the authority to
    order changes to Bonneville\'s OATT or to any of its transmission
    agreements that are serviced under Bonneville's OATT. Under the
    Northwest Power Act, the Commission has authority to accept or deny
    Bonneville's rates, but not to modify them. PPC/WPUDA are concerned
    about our conditioning authority where non-jurisdictional
    transmission providers take service under the Grid West tariff to
    meet their obligations in existing transmission agreements. We find
    their concerns are unwarranted. In their filing, Petitioners
    explicitly state that, "\[t\]he transmission provider will continue
    to directly serve its pre-existing obligations under their terms,
    including the provider's own OATT."[^65] Given this proposed
    structure, we find that we do not have the authority to modify
    Bonneville's or a non-jurisdictional transmission provider's
    existing transmission agreements.

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(8) **Will the Commission support implementation, for an indefinite
    period, of license plate rates and the application of charges to
    through-and-out transactions?**

    **[Petitioners' Position]{.underline}**

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89. Petitioners anticipate that the license plate rate (Company Rate)
    concept would be applied for the first eight years and would
    continue unless and until the Operational Board elected to adopt
    another pricing approach. Making the Company Rate approach the
    default gave significant comfort to certain load-serving entities
    with substantial concerns about disadvantageous cost shifts.

90. Petitioners claim that the Commission has adopted a flexible policy
    regarding the period of application of license plate rates in the
    RTO context. Petitioners state in Order No. 2000 the Commission
    concluded that it was appropriate to allow RTOs to propose the use
    of license plate rates and that the Commission\'s policy does not
    require abandonment of license plate rates at the end of the initial
    fixed term, but does require the RTO and its transmission owners to
    justify their choice to continue or discontinue using license plate
    rates, or otherwise change the method for fixed cost recovery.[^66]
    In the *RTO West Order*, the Commission approved in concept a
    Company Rate for a minimum period of eight years, allowing the RTO
    West board to decide whether to continue the Company Rate or propose
    an alternative pricing mechanism.[^67] In non-RTO circumstances like
    those of Grid West, the Commission accepted the Southwest Power
    Pool\'s proposal for zonal rates because it was voluntarily
    eliminating rate pancaking and charging a single rate.[^68] Since
    the Grid West proposal will not be filed under Order No. 2000,
    Petitioners desire confirmation from the Commission that license
    plate pricing, or a pricing methodology consistent with the Company
    Rate principle is acceptable and that a maximum duration will not be
    imposed.

91. Next, Petitioners state that they anticipate Grid West using a
    physical rights system, not a financial rights system. Consequently,
    customers with pre-existing rights to schedule exports or throughput
    would continue to pay their share of embedded costs through the
    rates applicable to those contracts, and customers desiring to
    schedule new export and throughput transactions would need to
    purchase the necessary physical transmission rights. Those rights
    could be obtained either through the Reconfiguration Market (for
    service of one year or less) or through purchase of long-term rights
    from available flow capacity (if any) or from expansion projects.
    Rights holders who offer transmission rights in the Reconfiguration
    Market would continue to pay the applicable rates, including
    embedded costs, even after the rights have been traded to others.
    Rates for new long-term export and throughput service would also
    collect their share of embedded costs, though it is not yet known
    whether those rates would be the Company Rate of the particular
    owner whose facilities are used at the boundary or a blended average
    of all the Company Rates applicable to border facilities.
    Petitioners state that the Grid West Pricing Work Group is currently
    developing proposals regarding the pricing of Grid West services and
    evaluating the appropriateness of export fees. Petitioners request
    the Commission clarify that Grid West rates for exports or
    throughput would not be limited to a transition period.

    **[Comments]{.underline}**

92. IPP/Marketers state that there are several reasons why this request
    is inappropriate at this time. They state that tariff and design
    issues for Grid West are in the initial stages and consideration of
    pricing mechanisms has just begun. Furthermore, IPP/Marketers claim
    that the Commission has repeatedly stated that the elimination of
    rate pancaking has been a central goal of its RTO policy.

93. PNGC and PPC/WPUDA both support petitioners' request for guidance
    regarding the envisioned rate design for Grid West. The creation of
    significant cost shifts by the adoption of a new, regional
    transmission rate design is one of the most troublesome issues
    facing Grid West. For both short-term and long-term transmission
    use, it is important that through-and-out transactions and exports
    pay their share of the embedded cost of the transmission system.
    Doing so will support the equitable allocation of costs to all users
    of the transmission system and mitigate the potential for
    under-recovery of transmission revenue requirements.

94. Petitioners respond that the Bylaws establish the Company Rate as a
    continuing rate mechanism. Further, a departure from the Bylaws is
    one of the five Special Issues that would required the Board to
    implement the special interactive process with membership. Thus,
    they contend that making the Company Rate approach effective for an
    indefinite duration is consistent with the Bylaws. Moreover,
    Petitioners argue that they have not asked the Commission to rule on
    whether their requests in the Petition are consistent with the
    Bylaws.

    **[Commission Determination]{.underline}**

95. Applicants state that they seek approval only of the pricing
    methodology to be employed prospectively or until such time that the
    Operational Board elects to adopt an alternate rate methodology.
    They further state that actual rate filings will be submitted before
    Grid West begins commercial operations. For purposes of this order,
    we will view this as a request for this Commission to make a
    determination on the reasonableness of the design of the license
    plate rate design and export fee.

96. The Commission has previously approved requests for license plate
    rates in approving RTOs. Petitioners' preference for license plate
    rates is consistent with other proposals. Consequently, we will
    accept Applicants\' proposal on a generic basis. Regarding the
    length of the Company Rate Period, we will not impose a maximum
    duration period but encourage Grid West to set forth principles that
    should guide the region in developing a pricing proposal that is
    pragmatic and encourages investment in infrastructure.

    [The Commission orders:]{.underline}

The Commission hereby provides preliminary guidance concerning the Grid
West proposal, as discussed in the body of this order.

By the Commission. Commissioner Brownell concurring with a separate
statement

attached.

( S E A L )

Magalie R. Salas,

Secretary.

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Bonneville Power Administration Docket No. EL05-106-000

PacifiCorp

Idaho Power Company

(Issued July 1, 2005)

Nora Mead BROWNELL, Commissioner *concurring*:

Today's order provides guidance on the Commission's authority to mandate
changes to the proposed framework for Grid West. While I agree with the
conclusions of this order, I am writing separately to express my grave
concern about the future efficacy of this entity.

Grid West's Operational Bylaws contain several provisions that have the
potential to limit the effectiveness of the Board of Trustees in
addressing the issues confronting the region. For example, before the
Board of Trustees can move forward with solutions to address chronic,
significant, commercial congestion that no other has stepped forward to
address, it must submit a proposal to a vote of the Members
Representative Committee[^69] in accordance with specific timeline,
procedural requirements, and mandatory consultation,[^70] at the end of
which the Board of Trustees shall vote to adopt a proposal to invoke an
authorization or take an action. This vote is then subject to a
supermajority vote of the Members Representative Committee. If 16 of the
30 Members Representative Committee members vote to support the
proposal, the Board may implement the proposal. Otherwise, it is sent
back to the Board of Trustees for another vote. Approval requires an
affirmative vote of not fewer than seven of the nine Trustees.[^71] This

process, or one similar, is used for all of the listed Special
Issues.[^72] This, in conjunction with the Members Representative
Committee's right to remove Trustees without cause puts up a high hurdle
to the Board of Trustees moving forward on issues of critical concern to
the region.

The West has already experienced first hand the dangers of ineffective
governance of a regional transmission operator. In the summer and fall
of 2000, a cumbersome, stakeholder-driven governance structure paralyzed
the California Independent System Operator's ability to respond to the
growing crisis. As the Petitioners themselves acknowledge, the West
faces serious challenges.[^73] The region can ill afford to ignore the
lessons of the past and create a regional transmission provider whose
board is hamstrung from implementing timely solutions.

Nora Mead Brownell

[^1]: *Regional Transmission Organizations*, Order No. 2000, 65 Fed.
    Reg. 809 (Jan. 6, 2000), FERC Statutes & Regulations, Regulations
    Preambles July 1996-December 2000 ¶ 31,089 (1999), *order on
    reh\'g*, Order No. 2000-A, 65 Fed. Reg. 12,088 (Mar. 8, 2000), FERC
    Statutes & Regulations, Regulations Preambles July 1996-December
    2000 ¶ 31,092 (2000), *aff\'d sub nom*. *Public Utility District.
    No. 1 of Snohomish County, Washington v. FERC*, 272 F.3d 607 (D.C.
    Cir. 2001).

[^2]: *Promoting Wholesale Competition Through Open Access
    Non-discriminatory Transmission Services by Public Utilities and
    Recovery of Stranded Costs by Public* *Utilities and Transmitting
    Utilities*, Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996),
    order on reh\'g, Order No. 888-A, 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 part and rev\'d in part sub nom. Transmission Access Policy Study
    Group v. FERC*, 225 F.3d 667 (D.C. Cir. 2000), *aff\'d sub nom. New
    York v. FERC*, 535 U.S. 1 (2002).

[^3]: While Bonneville meets the definition of "public utility"
    contained in FPA section 201(e), section 201(f) of the FPA provides
    that governmental entities such as Bonneville are not subject to
    part II of the FPA except as specifically provided.

[^4]: *See* 16 USC § 839e (2000).

[^5]: *See* 16 USC § 824k(i) (2000).

[^6]: *See* *United States Dept. of Energy - Bonneville Power
    Administration*, 80 FERC ¶ 61,119, *order on reh'g*, 81 FERC ¶
    61,165 (1997); *United States Dept. of Energy - Bonneville Power
    Administration*, 86 FERC ¶ 61,278 (1999) (accepting reciprocity
    compliance filing); *United States Dept. of Energy - Bonneville
    Power Administration*, 106 FERC ¶ 61,125 at P 1, P 9 (2004)
    (clarifying that Bonneville's OATT continues to maintain its
    reciprocity status).

[^7]: Avista Corporation (Avista), British Columbia Transmission
    Corporation, NorthWestern Energy, Portland General Electric Company,
    Puget Sound Energy, Inc., and Sierra Pacific/Nevada Power Company.

[^8]: *Avista Corp.*, 100 FERC ¶ 61,274 (*RTO West Order*), *order on
    reh'g*, 101 FERC ¶ 61,346 (2002) (*RTO West Rehearing Order*).

[^9]: Petitioners have different perspectives about the concerns raised
    by regional parties. However, Petitioners agree that their ability
    to move forward with an independent transmission entity has been
    substantially affected by these concerns.

[^10]: Petitioners state that the development of Grid West is subject to
    four decision points. At Decision Point 1, in December 2004, the RTO
    West Board of Directors adopted the Grid West Articles of
    Incorporation and Developmental Bylaws and restructured RTO West
    into Grid West. Decision Point 2 relates to seating an independent
    Grid West Developmental Board and funding its work. That decision is
    expected to occur in September 2005. Decisions Points 3 and 4
    involve the Developmental Board negotiating transmission agreements
    for use of the transmission owners' systems (Bonneville and at least
    two contiguous investor-owned transmission owners must accept the
    offer) and adopting Operational Bylaws.

[^11]: Petition at 18.

[^12]: *RTO West Order* at P 36; *Avista Corp*., 95 FERC ¶ 61,114 at P
    15-21 (2001).

[^13]: **^?^** The Regional Representatives Group is an advisory group
    that has met on a monthly basis to develop the Grid West proposal
    and assess progress of various work groups. It consists of
    transmission owners, transmission-dependent utilities, generators,
    power marketers, end-use customers, state and provincial regulators,
    and environmental and energy conservation groups.

[^14]: The regional transmission service will include transmission over
    those transmission facilities in the consolidated control area as
    well as the facilities of transmission owners that choose to
    participate in Grid West but retain their own control area
    operations.

[^15]: At least three transmission owners -- the Petitioners --
    anticipate that they may consolidate their control areas, which
    would place the vast majority of the area's transmission facilities
    into a common control area operated by Grid West.

[^16]: Balancing Authority is the responsible entity that integrates
    resource plans ahead of time, maintains load-resource balance,
    interchanges and generation balance within a Balancing Authority
    Area, and supports Interconnection frequency in real time.
    Reliability Coordinator is the entity that is the highest level of
    authority who is responsible for the reliable operation of the Bulk
    Electric System, has the Wide Area view of the Bulk Electric System,
    and has the operating tools, processes and procedures, including the
    authority to prevent or mitigate emergency operating situations in
    both next-day analysis and real-time operations. Area Control Error
    is the instantaneous difference between a Balancing Authority's net
    actual and scheduled interchange, taking into account the effects of
    Frequency Bias and correction for meter error.

[^17]: The working proposal requires balanced schedules in order to
    avoid reliance on real-time energy markets.

[^18]: Grid West is expected to schedule all service over the
    participating owners' combined systems, but unlike the RTO West
    proposal, transmission owners will not purchase a service from Grid
    West to serve pre-existing obligations. The transmission owners will
    continue to serve as the transmission providers for service to their
    existing customers under existing contracts. According to
    Petitioners, this design is one attribute of Grid West that is
    distinctly different from the design of Commission-approved RTOs.

[^19]: The issue of implementation, for an indefinite period, of license
    plate rates is addressed below concerning Petitioners' Question No.
    8.

[^20]: While Grid West will establish a Grid Management Fee, Bonneville
    plans to continue to establish its own transmission revenue
    requirement and transmission rates, including the Company Rate,
    subject to Commission review under the applicable standards
    contained in Bonneville's statutes.

[^21]: Those wishing to obtain new rights to facilitate exports could
    purchase them either on a short-term basis through the
    Reconfiguration Market or on a long-term basis by requesting new
    long-term transmission rights through the general Grid West process
    for obtaining new long-term service.

[^22]: 70 Fed. Reg. 29,299 (2005).

[^23]: 18 C.F.R. § 385.214 (2004).

[^24]: 18 C.F.R. § 385.213(a)(3) (2004).

[^25]: Petition at 33-34.

[^26]: Petitioners state that, under the Grid West Bylaws, membership is
    separate from signing a transmission agreement and does not commit a
    utility to provide its facilities for Grid West's use.

[^27]: *E.g.*, *Wyoming-California Pipeline Co.*, 45 FERC ¶ 61,234,
    61,678 (1988) (*Wyoming-California*); *Union Pacific Fuels, Inc. v.
    FERC*, 129 F.3d 157 (D.C. Cir. 1997) (*citing*
    *Wyoming-California*).

[^28]: *RTO West Rehearing Order*, 101 FERC ¶ 61,346 at P 67 ("To allow
    such untimely challenges would undermine the value of a declaratory
    order as an advisory opinion.").

[^29]: *See, e.g., Southwest Power Pool*, 89 FERC ¶ 61,284 at 61,889
    (1999), *order on reh'g*, 98 FERC ¶ 61,038 (2002), *aff'd in part
    and remanded in part on other grounds sub nom. East Texas Electric
    Cooperative, Inc. v. FERC*, 331 F.3d 131 (D.C. Cir. 2003), *order on
    remand*, 108 FERC ¶ 61,078 (2004) (*Southwest Power Pool*). The
    Commission's determination that Southwest Power Pool would have to
    comply with applicable requirements if it sought RTO status was not
    the subject of the court appeal.

[^30]: 110 FERC ¶ 61,295 (2005), *order on clarification*, 111 FERC ¶
    61,222 (2005), *reh'g pending*.

[^31]: *See* *Avista Corp.*, 96 FERC ¶ 61,058 at 61,175 (2001).

[^32]: The Members Representative Committee is a committee of either 30
    or 31 representatives of the member classes where each member class
    may generally elect six representatives to the Members
    Representative Committee. Operational Bylaws section 7.3.

[^33]: Operational Bylaws, section 7.2

[^34]: Operational Bylaws, section 8.4.1.

[^35]: Operational Bylaws, section 5.15.2.

[^36]: Operational Bylaws, section 8.2.

[^37]: Operational Bylaws, section 7.17. Certain types of Operational
    Board decisions are excluded from this member authority, including
    proposed budgets and bylaw amendments. Operational Bylaws, section
    7.17.5.

[^38]: Operational Bylaws, section 12.4.3

[^39]: Operational Bylaws, section 7.16. Special Issues are: (1)
    authorization for Grid West to exercise backstop measures (authority
    to arrange for transmission construction) with respect to chronic,
    significant, commercial congestion; (2) departure from using the
    "Company Rate approach"; (3) authorization to issue financial
    transmission rights; (4) authorization for Grid West's market
    monitor to impose penalties or actively intervene in markets; and
    (5) authorization to change a transmission owner's loss methodology.

[^40]: 18 C.F.R. § 35.34(j)(1) (2004).

[^41]: Provides that an individual shall not be deemed to be in
    violation of the restrictions set forth in section 7.10, and shall
    not be prohibited from serving merely because such individual is (i)
    a residential retail consumer of electric energy or (ii) receives
    post employment benefits from a Market Participant or Member,
    providing that those benefits are not tied to the economic
    performance of the Market participant or Member.

[^42]: Operational Bylaws Article VII, section 7.10.

[^43]: While the Grid West Board would have to consult with the Members
    Representative Committee (which may, in turn, require a
    supermajority vote by the board) prior to taking action regarding
    Special Issues (Operational Bylaws, section 7.16.7), e.g., a
    departure from using the Company Rate approach, it is not unusual
    for RTOs to have limitations on the ability of their boards to
    require filings, such as FPA section 205 filings. For example, the
    Commission approved a settlement agreement between Midwest ISO and
    the Midwest ISO Transmission Owners concerning the allocation of
    section filing rights among and between those entities. Their
    settlement agreement allocated some filing rights exclusively to the
    Transmission Owners, allocated other filing rights to Midwest ISO,
    and for other matters provided for shared filing rights among the
    Transmission Owners collectively or between the Transmission Owners
    and Midwest ISO. Where filing rights are shared, the settlement
    agreement requires coordination between Midwest ISO and the
    Transmission Owners, including a requirement for notification of
    filings and procedures for pre-filing meetings, if requested by the
    other party. *Midwest Independent Transmission System Operator,
    Inc.*, 110 FERC ¶ 61,380 at P 7, P 11 (2005).

[^44]: PPC/WPUDA cite *City of Vernon*, 93 FERC ¶ 61,103 at 61,285
    (2000), *reh'g denied*, 94 FERC ¶ 61,148 (2004), *rev'd on other
    grounds sub nom. Pacific Gas and Electric Co. v. FERC*, 306 F.3d
    1112 (D.C. Cir. 2002).

[^45]: NRU cites *City of Vernon, California*, 111 FERC ¶ 61,092 (2005),
    *reh'g pending*.

[^46]: *Avista Corp.*, 95 FERC ¶ 61,114 at 61,345 (2001). *See also,
    e.g.*, *TRANSLink Transmission Co., L.L.C.*, 99 FERC ¶ 61,106 at
    61,457-58, *order on reh'g*, 101 FERC ¶ 61,140 at 61,587-88 (2002)
    (public power entities such as the Nebraska Public Power District
    and Corn Belt Electric Cooperative are not Commission-jurisdictional
    public utilities); *Midwest Independent Transmission System
    Operator, Inc.*, 108 FERC ¶ 61,236 at P 150 (2004), *order on
    reh'g*, 111 FERC ¶ 61,042 (2005) (*Grandfatherd Agreements*)
    (carving out the grandfathered agreements that involved utilities
    that were not "public utilities" as defined in section 201 of the
    FPA).

[^47]: *RTO West Order*, 100 FERC ¶ 61,274 at P 59.

[^48]: *See also*, *e.g.*, *California Independent System Operator
    Corp.*, 109 FERC ¶ 61,391 at P 58 & n.29 (2004), *reh'g denied*, 111
    FERC ¶ 61,363 (2005), *citing Pacific Gas and Electric Co.*, 109
    FERC ¶ 61,255 at P 120 (2004).

[^49]: The Petitioners state that they are concerned about the
    Commission taking action to force a unique evolution of Grid West
    simply because Grid West is a public utility subject to the
    Commission's jurisdiction.

[^50]: Petitioners cite *Remedying Undue Discrimination through Open
    Access Transmission Service and Standard Electricity Market Design*,
    Docket No. RM01-12-000, White Paper (April 28, 2003) at 4 (Standard
    Market Design White Paper) available at
    [http://www.ferc.gov/industries/electric/indus-act/smd/white-paper.pdf]{.underline}.

[^51]: *See, e.g.*, *Wyoming-California Pipeline Co.*, 45 FERC ¶ 61,234
    at 61,278 (1988) (*Wyoming-California*); *see also, e.g.*, *Union
    Pacific Fuels, Inc. v. FERC*, 129 F.3d 157 (D.C. Cir. 1997) (citing
    *Wyoming-California*).

[^52]: *See Southwest Power Pool*, 111 FERC ¶ 61,118 (2005).

[^53]: *See Entergy, supra* note 29.

[^54]: 110 FERC ¶ 61,177 (2005) (*Midwest ISO*).

[^55]: *See* *United Gas Co. v. Mobile Gas Corp.*, 350 U.S. 332 (1956);
    *FPC v. Sierra Pacific Power Co.*, 350 U.S. 348 (1956).

[^56]: IPP/Marketers cite *ISO New England Inc.,* 106 FERC ¶61,280,
    *order on partial settlement, on compliance filing, and on reh'g*,
    109 FERC ¶ 61,147 (2004) (*ISO New England*).

[^57]: The *Mobile-Sierra* "public interest" standard is more difficult
    to meet than the "just and reasonable" standard under the FPA. *See,
    e.g.*, *Northeast Utilities Service Co. v. FERC*, 993 F.2d 937 (1st
    Cir. 1993). *See also*, *e.g.*, *Northeast Utilities Service Co. v.
    FERC*, 55 F3d 686 (1st Cir. 1995) (the *Mobile-Sierra* "public
    interest" standard is not practically insurmountable in all cases).

[^58]: *RTO West Rehearing Order*, 101 FERC ¶ 61,346 at P 15.

[^59]: *ISO New England*, 106 FERC ¶ 61,280 at P 128.

[^60]: We address Bonneville's right to withdraw its facilities from
    Grid West above in our discussion of Petitioners' Question No. 3.

[^61]: Petitioners cite the *Grandfathered Agreements* order.

[^62]: Order No. 888 at 31,665.

[^63]: Standard Market Design White Paper at 4.

[^64]: *Grandfathered Agreements*, 108 FERC ¶ 61,236 at P 150 (2004).

[^65]: Petition at 7.

[^66]: Order No. 2000 at 31,117.

[^67]: *RTO West Order*, 100 FERC ¶ 61,274 at P 136.

[^68]: *Southwest Power Pool*, 89 FERC at 61,889 (1999).

[^69]: The Members Representative Committee is a committee of either 30
    or 31 representatives of the member classes where each member class
    may generally elect six representatives to the Members
    Representative Committee. Operational Bylaws, section 7.3.

[^70]: The mandatory consultation process has a minimum window of 45
    days but no upper limit.

[^71]: The Bylaws provide that except where a greater vote is required,
    an affirmative vote requires a majority of Trustees. The Special
    Issues require a supermajority vote.

[^72]: Special Issues are: (1) authorization for Grid West to exercise
    backstop measures (authority to arrange for transmission
    construction) with respect to chronic, significant, commercial
    congestion; (2) departure from using the "Company Rate approach";
    (3) authorization to issue financial transmission rights; (4)
    authorization for Grid West's market monitor to impose penalties or
    actively intervene in markets; and (5) authorization to change a
    transmission owner's loss methodology. Operational Bylaws, section
    7.16.

[^73]: *See* Bonneville's publication *Keeping Current* at 4 (March
    2005) (citing problems such as power plant developers' inability to
    access transmission and increased congestion).