From: linda.lawrence@enron.com
To: vibeke.laroi@reuters.com
Date: 2000-08-01 13:25:00+00:00

Per Mr. Steven Kean, of Enron Corp. please see below ( Appendix C - Order 888 
"Allegations of Public Utilities Exercising Transmission
Dominance). 

                                                                 APPENDIX C


          Allegations of Public Utilities Exercising Transmission Dominance

          I.  Examples From Proceedings Before Administrative Law Judges

               These are examples of allegations that various public

          utilities have refused to provide comparable service, either

          through refusals to wheel, dilatory tactics that so protracted

          negotiations as to effectively deny wheeling, refusals to provide

          service priority equal to native load, or refusals to provide

          service flexibility equivalent to the utility's own use.

               A.  American Electric Power Service Corp. (AEP)

               In 1993, AEP filed, on behalf of its public utility

          associate companies, an open access tariff that offered only firm

          point-to-point service with very limited flexibility.  It did not

          offer network service, flexible point-to-point service, or non-

          firm service.  Thus, it did not provide customers with the same

          flexibility that AEP itself has.  Nor did it provide a service

          priority equivalent to that enjoyed by native load.  The

          Commission set AEP's tariff for hearing and, on rehearing, held

          that in order not to be unduly discriminatory, the tariff had to

          offer comparable service.  American Electric Power Service Corp.,

          64 FERC 4 61,279 (1993), reh'g, 67 FERC 4 61,168 (1994).  

               At hearing, Raj Rao of Indiana Michigan Power Agency (IMPA)

          (Ex. IMPA-1, Feb 23, 1994) and Kenneth Hegemann of American

          Municipal Power-Ohio, Inc. (AMP-Ohio) (Ex. AMPO-1, Feb 23, 1994),

          both senior management officials, testified concerning AEP's
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                                        - 2 -


          alleged discriminatory practices. 1/  AMP-Ohio is an

          association of municipalities in Ohio, some of whose members

          depend on AEP for transmission and partial requirements service. 

          IMPA is an association of municipalities in Indiana, and many of

          IMPA's loads are captive to the AEP transmission system.  The

          witnesses alleged as follows: 

                    1.  In anticipation of high peak demands, AEP would

               contract for large blocks of available short-term power,

               withhold sale of short-term power, refuse to transmit third

               party short-term power, and require purchases from AEP at

               the emergency rate (100 mill/kwh) when an emergency might

               not exist.  Ex. AMPO-1 at 6.

                    2.  In December 1989, AMP-Ohio negotiated a 20 MW

               purchase of short-term power from Louisville Gas & Electric

               Company (LG&E).  AEP refused to wheel because LG&E had

               earlier that day told AEP it had no power to sell to AEP. 

               AEP then bought the power from LG&E and offered to resell it

               to AMP-Ohio.  Ex. AMPO-1 at 6-7.

                    3.  In January 1990, AMP-Ohio solicited bids for

               February power purchases from a number of utilities

               including AEP.  AEP was not the winning bid.  AMP-Ohio made

               arrangements to purchase the power from four winning bidders

               and sought transmission through AEP.  When AMP-Ohio gave AEP
                              

          1/   After the Rehearing Order expanding the scope of the
               proceeding, AMP-Ohio and IMPA withdrew this testimony as no
               longer necessary.  This withdrawal does not change the fact
               that the testimony was sworn to under oath.
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                                        - 3 -


               the schedule for delivery, AEP refused to transmit the

               power, matched the average price of the winning bids, and

               made the sale itself.  Ex. AMPO-1 at 7.

                    4.  In August 1993, an AMP-Ohio member (Columbus, Ohio)

               was purchasing 10 MW of hourly non-displacement power from

               AEP and, after AEP raised its price to 60 mills/kwh, sought

               another source for the next hour.  Consumers Power Company

               and Detroit Edison Company both offered non-displacement

               power at 40 mills.  AEP refused to transmit, saying it had a

               600 MW unit out and could not resell power from another

               source. 2/  Columbus cancelled the transaction and had to

               buy 10 MW of power from AEP at 100 mills/kwh.  Ex. AMPO-1 at

               7-8.

                    5.  In July 1993, two AMP-Ohio members (Columbus and

               St. Mary's) had been buying hourly non-displacement power

               from AEP when the price rose to 35 mills.  Dayton Power &

               Light Company (DP&L) offered to sell at 23 mills and AEP

               agreed to transmit for one hour.  But for the next hour, AEP

               said it had problems with its system, refused to transmit

               the power, kept the power from DP&L for itself and offered

               to sell power to AMP-Ohio for Columbus and St. Mary's at 100
                              

          2/   AEP generally limited its offer of short-term transmission
               to buy/sell transactions; that is, AEP would buy the power
               from the seller and resell it to the purchaser. 
               Supplemental testimony of AEP Witness Baker (Ex. A-73) at
               27-29.  Often, the terms of the buy/sell transaction
               required transmission dependent utilities (TDUs) to maintain
               reserves and meet contractual commitments for at least a
               year.  Id.    
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                                        - 4 -


               mills.  Columbus increased its local generation, but St.

               Mary's purchased 8 MW at 100 mills.  For the next hour, AMP-

               Ohio arranged with DP&L for another 8 MW, hoping AEP would

               transmit under the 24 hour buy-sell agreement.  AEP did

               transmit this power.  Seven hours later in the day, St.

               Mary's Greenup Hydro project power was available and the 8

               MW from DP&L was no longer needed.  If St. Mary's had been

               receiving the hourly power that AEP had refused to transmit,

               St. Mary's could have switched to Greenup power.  But

               because AMP-Ohio had changed to daily service, St. Mary's

               had to pay a demand charge for the entire day, even though

               it used the power only 7 hours and would have paid less

               under the hourly rate.  Ex. AMPO-1 at 8-9. 

                    6.  In January 1994, AMP-Ohio sought to transfer power

               from one member with generation to other members, which

               required transmission over AEP and Toledo Edison lines. 

               Toledo Edison said yes, AEP said no.  AMP-Ohio's northern

               members purchased emergency power from Toledo Edison.  AMP-

               Ohio then reminded AEP that it had agreed not to deny

               transmission and AEP agreed to transmit.  Ex. AMPO-1 at 9.  

                    7.  IMPA arranged to buy 80 MW of short-term power from

               LG&E and have it wheeled, using buy-sell arrangements,

               through Public Service Company of Indiana (PSI) and AEP to

               serve IMPA's load at Richmond (an IMPA member).  The

               delivered price was $.292 per kW-day plus a 1 mill adder. 

               At the same time AEP arranged to buy 300 MW from PSI at $.30
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                                        - 5 -


               per kW day plus out-of-pocket energy costs.  Hence, PSI was

               shipping a total of 380 MW to AEP with 80 MW of that amount

               to be delivered to IMPA's load at Richmond.  Then, on a day

               when IMPA should have received the 80 MW, AEP told IMPA that

               PSI had sold everything to AEP and that IMPA would have to

               buy from AEP at $.63 per kW day plus the cost of energy from

               AEP.  IMPA purchased from AEP under protest.  AEP used its

               control over transmission to intercept the 80 MW at a lower

               price and resell it as short-term power to IMPA.  AEP

               claimed that PSI had terminated its sales to AEP on that

               day.  But the 80 MW was independent of PSI's other sales to

               AEP and would not have been interrupted if AEP had not

               interrupted it.  IMPA-1 at 7.

                    8.  IMPA has combustion turbines owned by and located

               at one member, which IMPA would like to connect to the Joint

               Transmission System owned by IMPA, CINergy and Wabash Valley

               Power Association.  To do so, IMPA needed a metering

               agreement with AEP, to which AEP would not agree.  IMPA-1 at

               6.

                    9.  In January 1994, IMPA had power to sell from its

               turbines when AEP and others needed power.  IMPA offered

               power to AEP but AEP it said could not purchase the power

               without an existing contract.  Moreover, since there was no

               short-term tariff, IMPA could not sell the power to another

               utility.  IMPA-1 at 6.  

                    10.  Another example of the utility engaging in
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                                        - 6 -


               dilatory tactics that raised the customer's transaction

               costs and effectively denied transmission is the "sham

               transaction" provision proposed by AEP.  As filed, AEP's

               tariffs permitted it to deny service merely because a

               portion of the transmitted power might be used to serve a

               former retail customer of AEP.  See, e.g., Ex. BR&WVP-1 (J.

               Bertram Solomon testimony, February 23, 1994).  (As part of

               a settlement AEP filed the pro forma tariff and withdrew

               this provision.) 

                    11.  Finally, AEP's originally filed tariff contained a

               "prodigal customer" provision.  Under this provision,

               transmission customers who sought to convert back to

               requirements service had to give AEP five years' notice, in

               which case AEP and the customer would enter into

               negotiations to determine whether AEP will provide service

               at all and if so under what rate, terms, and conditions. 

               Ex. S-39 at 1 (Staff testimony).  AEP did not require notice

               from all new customers, only from prodigal customers.  Id.

               at 2.  That a potential customer was previously served by

               AEP is not a reason to treat the customer differently.  (AEP

               withdrew this provision when it filed the pro forma tariff.)

                    B.  Entergy Services, Inc. (Entergy) 

               Entergy filed a partial settlement largely adopting the NOPR

          pro forma tariffs except for two provisions (headroom and

          ancillary services).  Because the settlement predated the filing

          date for customer testimony before the ALJ, the customers did not
,






                                        - 7 -


          address the need for Entergy to file a tariff.  However,

          customers did make allegations of discriminatory practices, as

          follows.     

                    1.  Customers alleged that Entergy flat-out refused to

               wheel.  Louisiana Energy and Power Authority (LEPA) witness

               Sylvan J. Richard testified that LEPA's predecessor systems

               could not obtain interconnections from Entergy.  Ex. SJR-1

               at 50.

                    2.  Customers also alleged that Entergy refused to

               provide service priority equal to native load and refused to

               provide service flexibility equivalent to the utility's own

               use.  For example, LEPA witness Richard testified that even

               after state commissions ordered interconnections and other

               coordination services, LEPA's predecessors were still not

               able to obtain coordination services because Entergy was not

               willing to coordinate and because the transmission service

               it did offer was inflexible, unidirectional point-to-point

               service, which prevented economic coordination with others. 

               Id. at 50-51.  

                    3.  South Mississippi Electric Power Association

               (SMEPA) witness J. Bertram Solomon testified that Entergy's

               original "open access" tariff was restricted to point-to-

               point service, proposed separate charges for each operating

               company, and required the cancellation of existing

               agreements in order to take service under the proposed

               tariff.  Ex. SMEPA-10 at 28.  Entergy eventually filed a
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                                        - 8 -


               network tariff, but proposed different local facilities

               charges for the various Entergy public utility operating

               subsidiaries.  Id. at 29.  Since these local facilities

               charges were higher than the transmission component of the

               subsidiaries' bundled rates, Entergy obtained a competitive

               advantage.  Id.

                    4.  The Arkansas Cities and Cooperatives (ACC) is a

               group of cities and cooperatives that own or operate

               electric generation or distribution systems in Arkansas. 

               ACC Witness Steven Merchant testified that Entergy has

               segregated the wholesale market between two of its

               subsidiaries, Arkansas Power & Light Copmpany (APL) and

               Entergy Power, Inc. (EPI).  Ex. SMM-1 at 16.  In marketing

               power and energy in Arkansas, EPI is subject to an Arkansas

               Commission order that bars EPI from competing with APL for

               wholesale loads without first obtaining a waiver.  Id. 

               Recently, EPI requested this waiver for all wholesale

               transactions in Arkansas except for wholesale customers

               currently served by an Entergy subsidiary; in other words,

               EPI requested the Arkansas Commission to expand competition

               for all wholesale customers except where EPI might compete

               with APL.  Id.  ACC witness Merchant concluded that, since

               EPI does not compete with APL, Entergy insulates APL's

               wholesale business from competition and denies those

               wholesale customers access to EPI as a source of power,

               thereby limiting alternative generation sources available to
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                                        - 9 -


               ACC.  Id. at 17-19.  (Entergy's witness Kenney stated that

               Entergy has recently filed a joint motion with ACC to the

               Arkansas Commission seeking to extend the waiver and permit

               EPI to sell to APL's wholesale customers.  Ex. JFK-11 at 14-

               15.)

               C.  Pacific Gas & Electric Company (PG&E)

               Northern California Power Agency (NCPA) attached several

          documents to its 1988 complaint in Docket No. EL89-4.  These

          documents were provided to support NCPA's claim that PG&E's

          unreasonable practices under the PG&E/NCPA Interconnection

          Agreement (IA) effectively denied NCPA access to transmission

          properly requested under the IA.  Although the parties eventually

          settled and the Commission terminated the docket with a letter

          order dated May 18, 1988, these documents provide allegations of

          PG&E using dilatory tactics that so protracted negotiations as to

          effectively equal a refusal to wheel. 3/       

                    1.  PG&E stated that since transmission was not

               currently available, it was entitled to wait 72 months

               before providing transmission; that is, transmission access

               could not be granted before the passing of the 72-month

               notice period.  NCPA 1988 Complaint, Ex. 3.  However, the IA
                              

          3/   All of these incidents are related to and examples of PG&E's
               conduct described in the NOPR (FERC Stats. & Regs. 4 32,514
               at 33,073 n.151), that is, the history of PG&E's attempt to
               avoid its commitments made to the California owners of the
               California Oregon Transmission Project (COTP).  However,
               these incidents are not exactly the same as the incidents
               described in the NOPR, because NCPA is not one of the owners
               of the COTP.
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                                        - 10 -


               provided that transmission be provided when it becomes

               actually available.  PG&E also requested substantial

               additional information, which NCPA considered beyond that

               reasonably necessary for a study, but still provided.  PG&E

               then determined that transmission was not available,

               reasoning that transmission was unavailable unless all the

               transmission requested could be provided 8760 hours per year

               without restrictions or limitations, extending through the

               expiration of the agreement in 2013.  NCPA 1988 Complaint at

               9.  

                    2.  On November 27, 1987, NCPA made a new transmission

               request to PG&E, seeking 50 MW of bi-directional

               transmission at Midway.  NCPA 1988 Complaint, Ex. 5.  On

               January 28, 1988, PG&E filed an interconnection agreement

               with Turlock Irrigation District (TID) that provided TID

               with 50 MW of bi-directional transmission at Midway. 

               Pacific Gas & Electric Company, 42 FERC 4 61,406, order on

               reh'g, 43 FERC 4 61,403 (1988).  On February 22, 1988, PG&E

               advised NCPA that all firm transmission service available at

               Midway had been fully subscribed.  NCPA 1988 Complaint, Ex.

               6.  Then, on March 29, 1988, PG&E filed with the Commission

               an interconnection agreement with Modesto Irrigation

               District (MID), that provided MID with 50 MW of bi-

               directional transmission at Midway.  Pacific Gas & Electric

               Company, 44 FERC 4 61,010 (1988).  At about the same time

               (in the last week in March 1988), PG&E advised NCPA that the
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                                        - 11 -


               allocations of transmission to TID, MID, and others,

               including a not yet finalized allocation to Sacramento

               Municipality Utility District, had used all the transmission

               available at Midway.  NCPA 1988 Complaint, Exs. 7 and 8.     

               D.  Northeast Utilities Service Company (NU)

               This is the case where Northeast Utilities acquired Public

          Service of New Hampshire (PSNH) (Docket No. EC90-10).  New

          England Power Company (NEP) witness Robert Bigelow's direct

          testimony expressed concern over the "relatively restrictive

          transmission policies of both" NU, on behalf of Northeast

          Utilities' public utility subsidiaries, and PSNH.  Bigelow Direct

          Testimony at 21 (filed May 25, 1990).  In his cross rebuttal

          testimony, Mr. Bigelow testified that "NU has a poor track record

          as a provider of transmission service" and "PSNH also has an

          abhorrent track record as a provider of transmission services." 

          Bigelow Cross Rebuttal Testimony, at 3 (filed June 20, 1990). 

          Mr. Bigelow described both NU's and NEP's (his own company)

          failure to provide service flexibility equivalent to their own

          use.  Except for NEP's TDUs, both NEP and NU historically

          provided only point-to-point transmission, which required

          separate scheduling for each transaction.  Bigelow Cross Rebuttal

          at 4.

               E.  Southern California Edison Company and San Diego Gas and
                   Electric Company

               The evidence in this merger proceeding (Docket No. EC89-5)

          included testimony from a number of witnesses describing
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                                        - 12 -


          instances of Edison's conduct.  Richard Greenwalt was the power

          supply supervisor for the City of Riverside, California.  He was

          responsible for scheduling all purchases of energy for Riverside

          and for the cities of Azusa, Banning and Colton, California. 

          Greenwalt testimony at 1 (November 1989).  (These four cities and

          Anaheim, California, are collectively referred to as the Southern

          Cities or Cities.)  Joseph Hsu was the Director of Utilities for

          Azusa.  Hsu testimony at 1 (November 1989).  Gale Drews was the

          electric utility director of Colton.  Drews testimony at 1-2

          (November 1989).  Bill Carnahan was the director for Riverside. 

          Carnahan testimony at 1 (November 1989).  Gordon Hoyt was the

          general manager of the Anaheim power department.  Hoyt testimony

          at 1 (November 1989).  Dan McCann was the power coordination

          supervisor for Anaheim.  He supervised Anaheim's load scheduling

          and is a former Edison employee, having worked for Edison for 20

          years.  McCann Testimony at 1-2 (November 1989).  These witnesses

          testified that Edison refused to wheel as follows.

                    1.  Edison's policy was to curtail the Cities any time

               it could be justified using any of a list of acceptable

               reasons to deny interruptible transmission service.  Id. at

               22-23. 

                    2.  Edison would not generally provide transmission

               service when Edison could save money by itself purchasing

               the economy energy that would be wheeled.  McCann testimony

               at 19.  The Cities called Edison every hour to request

               interruptible transmission service.  Id..  Edison often
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                                        - 13 -


               refused to sell energy available in the Western Systems

               Power Pool to the Cities and then made available higher cost

               contract energy or partial requirements service.  Id. at 19-

               20.  

                    3.  When Anaheim requested Edison provide firm

               transmission of power from neighboring states, Edison would

               often agree to provide non-firm service but would not

               integrate the capacity for many years in the future, saying

               that its control area did not need capacity at that time. 

               Hoyt testimony at 9.  Since the selling utility was

               interested in a sale of capacity, not just energy, the

               transaction would not occur.  Id.  Edison repeatedly used

               its control over transmission to deny Anaheim access to low-

               cost firm power.  Id. at 9-10.  

                    4.  While Edison provided short-term firm transmission

               service to the Cities, it would only provide long-term firm

               service for three specific resources:  the SONGS nuclear

               plant, a specific IPP, and Hoover Dam power.  Hoyt testimony

               at 20.  One of Edison's reasons for denying long-term

               transmission was that Edison desired to reserve the

               transmission for its own future (unspecified) needs.  Id.  

                    5.  In the 1970s, Edison refused to allow the Cities

               access to the Pacific Intertie.  Hoyt testimony at 21; Drews

               testimony at 7-8.  

                    6.  In 1988, Edison refused to provide transmission

               service for a Cities power purchase from Public Service
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                                        - 14 -


               Company of New Mexico (PSNM) from Palo Verde Nuclear

               station.  Hoyt testimony at 21.    

                    7.  Edison has refused to provide requested firm

               transmission from  

                    - California-Oregon border to Midway Station

                    - Nevada-Oregon Border to Sylmar Substation

                    - Palo Verde Switchyard to Vista 

                    - SONGS Switchyard to Vista.

               Carnahan testimony at 15.  

                    8.  Riverside requested transmission from Palo Verde

               and was told that such service was not available.  Carnahan

               testimony at 16.  Edison offered Riverside only 12 MW of

               curtailable transmission entitlement to provide Riverside's

               share of Palo Verde.  Id.  This service was neither large

                    enough or long enough, and Edison insisted on

                    unreasonable terms and conditions.  Id.

                    9.  Azusa, Banning and Colton had a contract with

               Edison that entitled them to use their Palo Verde firm

               transmission path to schedule energy to meet their contract

               energy obligation.  Edison refused to permit the three

               cities to use that path.  Edison did not contest that the

               contracts allowed this use, but said that the scheduling of

               such small amounts of energy for the three cities would be

               too burdensome.  Greenwalt testimony at 14. 

                    10.  Edison would not respond in a timely manner to the

               Cities' requests, routinely taking months to respond.  Drews
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                                        - 15 -


               testimony at 15.

                    11.  During the 1980s, Edison provided Colton with some

               transmission service to allow the Cities to reach certain

               suppliers, but limited the choices available to the Cities

               and imposed terms and conditions that increased the Cities'

               costs and placed Colton at a disadvantage against Edison. 

               Drews testimony at 9.  Arranging alternative generation

               sources was difficult because the Cities always had to first

               get Edison to state whether it would provide transmission. 

                    12.  During 1988 and 1989, a dispute arose between

               Edison and the Cities concerning the Hoover Uprating

               Project.  Drews testimony at 16.  Edison argued that for the

               months when units were out of service for uprating, and

               Southern Cities capacity was reduced to zero, Southern

               Cities would not receive an energy credit, even though

               energy was still available and used by Edison.  But the

               contracts allowed a participant who did not have capacity to

               still schedule its energy as non-firm energy on the capacity

               of another participant.  Id. at 16-17.

                    13.  In 1986, Azusa negotiated a power purchase

               contract with the California Department of Water Resources

               in increments of first 5 MW and then 2 MW (for a total of 7

               MW).  Hsu testimony at 14.  First Edison assured Azusa that

               the transmission for the additional 2 MW would not be a

               problem.  Id.  Then Edison would not agree to amend the

               transmission service agreement for the additional 2 MW.  Id.
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                                        - 16 -


                    14.  In 1986, Azusa notified Edison of Special

               Condition 12 4/ purchases from PG&E and requested firm

               transmission service.  Id.  Two months before service was to

               begin, Edison notified the Cities of a problem with the

               transmission lines.  Id.  Transmission was eventually

               granted, but only after a four-month delay and substantial

               losses to the Cities.  Id.  Then Edison decided there was no

               problem with its transmission facilities.  Id. at 14-15.

                    15.  In 1986-87, the Cities purchased 20 MW from PG&E

               and 80 MW from Deseret G&T Cooperative.  Hoyt testimony at

               7-8.  Edison stated that without reinforcement of its

               transmission system, Edison would not provide the

               transmission.  Id.  There was a five-month delay during

               which the Cities were forced to purchase from Edison at a

               higher cost.  Id. at 8-9.  Then Edison decided that the

               transmission system did not need reinforcement.  Id. at 8.

                    16.  Edison also refused to provide a service priority

               equal to that of native load.  It would curtail the Cities

               in order to purchase more economy energy for itself.  McCann

               testimony at 28.  If Edison could make the purchase, it

               would curtail the City and use the energy for itself.  Id. 

               When Edison curtailed the Cities, they were not able to

                              

          4/   Special Condition 12 of the Integrated Operations Agreement
               between Edison and the Southern Cities defined certain
               Special Condition 12 resources and allowed the Cities to
               make certain uses of those resources, subject to certain
               restrictions. 
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                                        - 17 -


               purchase economy energy and instead purchased energy from

               Edison.  Id. at 24.

                    17.  According to Edison, the interruptible

               transmission it provided the Cities was interruptible for

               any reason.  Id. at 20.  A purchase could be terminated the

               hour after it is begun or even during the hour.  Id.  As a

               result, the Cities lost opportunities to make advantageous

               economy purchases.  Id. at 20-21.  

                    18.  Edison also refused to provide customers

               flexibility similar to the flexibility Edison provided

               itself.  Edison's refusal to provide bi-directional

               transmission service restricted the Cities' abilities to

               purchase hydroelectric energy from the Pacific Northwest. 

               Hoyt testimony at 22.  Because most contracts with Northwest

               utilities require a return of power, the Northwest utilities

               would not deal with the Cities without transmission to

               return energy.  Id. at 22-23.  Edison did provide bi-

               directional transmission to the Los Angeles Department of

               Water & Power (LADWP) to accommodate flows to and from

               Arizona.  Id.

                    19.  Riverside was unable to obtain non-firm service

               more than two hours in advance of need.  Carnahan testimony

               at 18.

                    20.  Riverside and Colton were both served out of

               Edison's Vista substation.  Although the two cities were on

               the same 69 kV bus, Edison would not allow them to sell
,






                                        - 18 -


               energy to each other.  Greenwalt testimony at 17. 

                    21.  Riverside's agreement with Edison allowed

               Riverside to purchase a block of energy through the WSPP and

               divide it up among the four Cities (Azusa, Banning, Colton

               and Riverside).  Greenwalt testimony at 17.  When Riverside

               had excess energy from other sources, Edison would not

               permit it to sell that energy to the other three cities. 

               Id.  For example, Riverside attempted to sell Deseret energy

               transmitted by LADWP to the Edison system.  Id. at 17-18. 

               LADWP would not break out the Cities' shares of that energy,

               and Edison would not accept the energy as a delivery for all

               four cities.  Id. at 18.  Edison argued that because this

               energy was excess energy that Riverside could not use,

               Riverside did not have transmission rights to bring it into

               the control area.  Id.  As a result, Riverside paid for the

               energy delivered by LADWP to the Edison control area, but

               could not sell it to the other three cities, and gave it to

               Edison itself, which consumed the energy without making any

               payment for it.  Id.  Riverside tried a number of

               alternative paths, including using WSPP transmission where

               Riverside paid Edison 5 mills to connect to Azusa, 5 mills

               to connect to Banning, and 5 mills to connect to Colton for

               each megawatthour.  While this approach was successful for a

               while, eventually Edison refused to permit these sales.  

                    22.  Edison claimed that the Cities only have

               transmission rights to bring in enough Special Condition 12
,






                                        - 19 -


               energy to satisfy the Cities' load.  Greenwalt testimony at

               18.  

                    23.  Edison contended that the Cities' load

               requirements were satisfied first by integrated resources

               and then by Special Condition 12 and economy energy

               purchases.  Id. at 19.  When the Cities' integrated

               resources exceeded their load, any Special Condition 12

               resources became excess.  Under Riverside's Deseret

               contract, the Cities were required to take a minimum of 35

               MW each hour.  Id.  Edison acknowledged that it was

               obligated to buy, or allow the Cities to sell, any excess

               energy from Riverside's integrated resources.  Id.  However,

               Edison refused to give the Cities credit for excess Special

               Condition 12 energy brought into the area, claiming that the

               Cities could not have brought it in because they did not

               have transmission rights.  Id.  

          II.  Other Examples of Transmission Disputes

               Disputes over transmission are not uncommon, contrary to

          EEI's suggestion.  Some recent examples taken from pleadings and

          other documents and from Commission orders reveal that it has

          been very difficult for various entities in the electric power

          industry to agree on transmission rights.  These examples also

          reveal that even after issuance of AEP and the Open Access NOPR

          with its proposed pro forma tariffs, there has been considerable

          controversy over whether various utilities' "open access" tariffs

          deviate from those tariffs.  (The Commission has allowed
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                                        - 20 -


          utilities that adopt tariffs that match or exceed the non-rate

          terms and conditions in the NOPR pro forma tariffs to obtain

          certain benefits.)

                    A.  In a letter of February 3, 1995 to Mr. Gerald

               Richman of the Commission's Enforcement section in the

               Office of the General Counsel, Steven J. Kean, Vice

               President, Regulatory Affairs, Enron Power Marketing, Inc.

               (Enron) alleged that Niagara Mohawk Power Corporation (NiMo)

               refused to wheel power from Rochester Gas & Electric (RG&E)

               to Enron under RG&E's transmission contract with NiMo;

               however, when Enron revealed the buyer, NiMo did wheel power

               for RG&E to the buyer.  Mr. Kean alleged that this was not

               an isolated incident.  NiMo argued that the contract did not

               require it to provide RG&E with transmission to Enron.  It

               also said that the principle of comparability does not

               require the service.  Letter of November 21, 1994 from NiMo

               representative A. Karen Hill to Gerald Richman.

                    B.  The Commission's Task Force Hot Line (Hot

               Line) received a complaint that a member of the New

               York Power Pool (NYPP) refused to transmit power that

               another member bought from a power marketer.  In a

               letter of November 17, 1994, from Chair Moler to Mr.

               William J. Balet, Executive Director of NYPP, Chair

               Moler explained that the Commission's enforcement staff

               had investigated and found the allegation to be true.
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                                        - 21 -


                    C.  In Southern Minnesota Municipal Power Agency

               v. Northern States Power Company (Minnesota), 73 FERC 4

               61,350 (1995), NSP and SMMPA had a contract under which

               NSP agreed to provide transmission service.  However,

               the parties had numerous disputes over the service. 

               The Commission found that NSP had misinterpreted the

               contract in several ways.  For, example, SMMPA argued

               that it should be able to directly schedule its

               deliveries of energy out of the NSP control area and

               that it should not be limited to particular points of

               delivery.  NSP argued that only it was entitled to

               control the physical operation of scheduling.  The

               Commission found that the clear language of the

               contracts gave SMMPA the authority to schedule its own

               power.  

                    D.  Mid-Continent Area Power Pool, 72 FERC 4 61,223

               (1995), involved MAPP's membership criteria, which made it

               impossible for a power marketer to join MAPP and obtain the

               benefits of certain transmission services available only to

               MAPP members.  The Commission found that the membership

               criteria may be unreasonable, particularly since there may

               be less burdensome ways of setting up membership criteria

               for non-traditional entities.



            
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