Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 10353 

1Puget, Petition for Declaratory Order, Docket No. 

EL10–71–000, at p. 1 (filed June 4, 2010) (Puget’s 

Petition). 

2 134 FERC ¶61,122 (2011). 

3Promoting Wholesale Competition Through 

Open Access Non-Discriminatory Transmission 

Services by Public Utilities; Recovery of Stranded 

Costs by Public Utilities and Transmitting Utilities, 

Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996), 

order on reh’g, Order No. 888–A, FERC Stats. & 

Regs. ¶ 31,048, order on reh’g, Order No. 888–B, 81 

FERC ¶ 61,248 (1997), order on reh’g, Order No. 

888–C, 82 FERC ¶ 61,046 (1998), aff’d in relevant 

part sub nom. Transmission Access Policy Study 

Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d 

sub nom. New York v. FERC, 535 U.S. 1 (2002). 

4 16 U.S.C. 824d. 

intervention or motion to intervene, as 

appropriate. Such notices, motions, or 

protests must be filed on or before the 

comment date. On or before the 

comment date, it is not necessary to 

serve motions to intervene or protests 

on persons other than the Applicant. 

The Commission encourages 

electronic submission of protests and 

interventions in lieu of paper using the 

‘‘eFiling’’ link at http://www.ferc.gov. 

Persons unable to file electronically 

should submit an original and 14 copies 

of the protest or intervention to the 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426. 

This filing is accessible on-line at 

http://www.ferc.gov, using the 

‘‘eLibrary’’ link and is available for 

review in the Commission’s Public 

Reference Room in Washington, DC. 

There is an ‘‘eSubscription’’ link on the 

Web site that enables subscribers to 

receive e-mail notification when a 

document is added to a subscribed 

docket(s). For assistance with any FERC 

Online service, please e-mail 

FERCOnlineSupport@ferc.gov, or call 

(866) 208–3676 (toll free). For TTY, call 

(202) 502–8659. 

Comment Date: 5 p.m. Eastern Time 

on March 8, 2011. 

Dated: February 16, 2011. 

Kimberly D. Bose, 

Secretary. 

[FR Doc. 2011–4086 Filed 2–23–11; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket No. RM11–9–000] 

Locational Exchanges of Wholesale 

Electric Power 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Notice of Inquiry. 

SUMMARY: In this Notice of Inquiry 

(NOI), the Commission seeks comment 

that would assist the Commission in 

providing guidance as to the 

circumstances under which locational 

exchanges of electric power should be 

permitted generically and circumstances 

under which the Commission should 

consider locational exchanges on a caseby-case basis. 

DATES: Comments are due April 25, 

2011. 

ADDRESSES: Commenters may submit 

comments, identified by docket number 

by any of the following methods: 

• Agency Web Site: http:// 

www.ferc.gov. Documents created 

electronically using word processing 

software should be filed in native 

applications or print-to-PDF format and 

not in a scanned format. 

• Mail/Hand Delivery: Commenters 

unable to file comments electronically 

must mail or hand deliver an original 

copy of their comments to: Federal 

Energy Regulatory Commission, 

Secretary of the Commission, 888 First 

Street, NE., Washington, DC 20426. 

Additional requirements can be found 

on the Commission’s Web site, see, e.g., 

the ‘‘Quick Reference Guide for Paper 

Submissions,’’ available at http:// 

www.ferc.gov/docs-filing/efiling.asp, or 

via phone from FERC Online Support at 

202–502–6652 or toll-free at 1–866– 

208–3676. 

FOR FURTHER INFORMATION CONTACT: 

Andrew Knudsen (Legal Information), 

Federal Energy Regulatory 

Commission, Office of the General 

Counsel, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6527, andrew.knudsen@ferc.gov. 

Andrew Weinstein (Legal Information), 

Federal Energy Regulatory 

Commission, Office of the General 

Counsel, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6230, andrew.weinstein@ferc.gov. 

Melissa Lozano (Technical Information), 

Federal Energy Regulatory 

Commission, Office of Energy Market 

Regulation, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6267, melissa.lozano@ferc.gov. 

Thomas Dautel (Technical Information), 

Federal Energy Regulatory 

Commission, Office of Energy Policy 

& Innovation, 888 First Street, NE., 

Washington, DC 20426, (202) 502– 

6196, thomas.dautel@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Jon Wellinghoff, 

Chairman; Marc Spitzer, Philip D. Moeller, 

John R. Norris, and Cheryl A. LaFleur. 

Issued February 17, 2011. 

1. The Commission seeks comment 

regarding circumstances in which 

locational exchanges of electric power 

should be permitted generically or 

considered by the Commission on a 

case-by-case basis. Because locational 

exchanges, in different circumstances, 

might look either like wholesale power 

transactions that make efficient use of 

the transmission system or like the 

functional equivalent of transmission 

service, we also seek comments as to 

whether and how different types of 

locational exchanges are consistent with 

our core principles that transmission 

service must be available on a 

transparent and not unduly 

discriminatory basis. While the 

Commission has spoken to locational 

exchanges in the past and that guidance 

continues to apply today, any policy 

determinations made in this proceeding 

will only be applied prospectively. 

I. Background 

A. Docket No. EL10–71–000 

2. On June 4, 2010, Puget Sound 

Energy Inc. (Puget) filed a petition for 

declaratory order seeking a finding that 

a locational exchange is a wholesale 

power transaction and not transmission 

service subject to an open access 

transmission tariff (OATT). Puget 

defines a locational exchange as 

* * * a pair of simultaneously arranged 

wholesale power transactions between the 

same counterparties in which party A sells 

electricity to party B at one location, and 

party B sells the same volume of electricity 

to party A at a different location with the 

same delivery period, but not necessarily at 

the same price.1

3. In an order issuing 

contemporaneously with this NOI, the 

Commission finds that Puget’s Petition 

raises significant policy issues for 

market participants in the electric 

industry and that the record in Docket 

No. EL10–71–000 provides insufficient 

basis to make the determination 

requested by Puget.2 The Commission 

has initiated this proceeding to develop 

the record necessary to address the 

proper regulatory treatment of locational 

exchanges. 

B. Prior Commission Policy 

4. Prior to Puget’s Petition, the 

Commission discussed transactions 

similar to locational exchanges in Order 

No. 888 3 and subsequent Commission 

orders. As part of its statutory obligation 

under sections 205 and 206 of the 

Federal Power Act 4 to remedy undue 

discrimination, the Commission 

adopted Order No. 888, which prohibits 

public utilities from using their 

monopoly power over transmission to 

engage in undue discrimination against 

others. In Order No. 888, the 


emcdonald on DSK2BSOYB1PROD with NOTICES
10354 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 

5Order No. 888, FERC Stats. & Regs. at 31,785. 

The Commission discussed a specific type of 

transaction in which ‘‘an end user arranges for the 

purchase of generation from a third-party supplier 

and a public utility transmits that energy in 

interstate commerce and re-sells it as part of a 

‘bundled’ retail sale to the end user.’’ Notice of 

Proposed Rulemaking, FERC Stats. & Regs. 

¶ 32,514, at 33,082–83 (1995). 

6Order No. 888–A, FERC Stats. & Regs. at 30,344. 

7 Id. The Commission has subsequently enforced 

this prohibition against ‘‘buy-sell’’ arrangements. 

See New York State Electric and Gas Corporation, 

77 FERC ¶ 61,044 (1996), reh’g denied, 83 FERC 

¶61,203 (1998). 

8Utah Associated Municipal Power Systems v. 

PacifiCorp, 83 FERC ¶ 61,337, at 62,367 (1998) 

(UAMPS I), reh’g denied and clarification granted, 

87 FERC ¶ 61,044, at 61,187–88 (1999) (UAMPS II) 

(collectively, UAMPS). 

9UAMPS I, 83 FERC at 62,367. 

10UAMPS II, 87 FERC at 61,188. 

11El Paso Electric Co., 115 FERC ¶ 61,312 (2006) 

(El Paso). 

12El Paso, 115 FERC ¶ 61,312 at p. 18–22. 

13Puget’s Petition, at p. 1. 

Commission discussed certain ‘‘buy-sell 

arrangements’’ that could be used ‘‘to 

obfuscate the true transactions taking 

place and thereby allow parties to 

circumvent Commission regulation of 

transmission in interstate commerce.’’ 5

The Commission further noted in Order 

No. 888–A that ‘‘[we] reserve our 

authorities to ensure that public utilities 

and their customers are not able to 

circumvent non-discriminatory 

transmission in interstate commerce.’’ 6

Moreover, the Commission recognized 

that a wide range of existing programs 

and transactions might fall within a 

category of arrangements that look 

similar to buy-sells and indicated that it 

would address these on a case-by-case 

basis.7

5. Subsequent to Order No. 888, the 

Commission has considered exchanges 

of power resembling those proposed by 

Puget on at least two occasions. In 

UAMPS, the Commission prohibited an 

arrangement in which a transmission 

customer sold electricity to a 

transmission provider’s merchant 

affiliate at one location, and the 

transmission provider’s merchant 

affiliate sold the same volume of 

electricity to the transmission customer 

at a different location.8 Prior to entering 

into the exchange, the transmission 

customer had sought to interconnect 

additional generation to the 

transmission provider’s system. 

However, because this customer was 

operating under a grandfathered 

bilateral agreement and not the OATT 

adopted under Order No. 888, the 

transmission customer did not have a 

right to demand the redispatch 

necessary to place the generation on the 

transmission provider’s network. As an 

alternative to obtaining redispatch, the 

customer entered into an exchange with 

the transmission provider’s merchant 

affiliate. Subsequently, the customer 

filed a complaint with the Commission 

alleging that the transmission provider 

had failed to maintain functional 

separation between its transmission and 

merchant functions. The Commission 

prohibited this transaction, finding that 

it effectuated transmission service and 

violated the separation of functions 

between the merchant affiliate and the 

transmission provider. The Commission 

explained, 

The redispatch transaction offered by 

PacifiCorp’s Merchant Function is, 

unquestionably, a transmission service; the 

sole result of the transaction is to deliver a 

Utah Municipal Systems resource from a 

receipt point on PacifiCorp’s system to a 

delivery point on PacifiCorp’s system.9

The Commission further explained that 

all transmission service must be 

provided under an OATT or under 

grandfathered bilateral arrangements. 

The Commission reiterated that the only 

permissible way for a customer to 

arrange transmission service on a 

transmission provider’s system through 

the merchant affiliate is via reassignment of point-to-point 

transmission service. On rehearing, the 

Commission affirmed the prohibition on 

the transaction in which a transmission 

provider’s merchant function purchased 

power from a transmission customer at 

receipt points on the transmission 

provider’s system and simultaneously 

sold the same amount of power to the 

transmission customer at delivery 

points again on the transmission 

provider’s transmission system.10

Characterizing the exchange as 

redispatch of generation resources that 

effectuated transmission service, the 

Commission emphasized that 

transmission service can only be 

provided under the OATT. 

6. In El Paso, however, the 

Commission reached a different 

decision based on a different set of facts 

and found that the specific locational 

exchange proposed by El Paso and a 

counterparty (Phelps Dodge) was 

permissible.11 In El Paso, the parties 

submitted their agreement to the 

Commission for approval and provided 

additional information in response to 

data requests from Commission staff. In 

permitting the exchange in El Paso, the 

Commission expressly distinguished the 

factual circumstances related to the 

exchange in El Paso from the exchange 

in UAMPS. The Commission observed 

that, unlike the facts presented in 

UAMPS, in El Paso (1) The generation 

substations at which the sales occurred 

and the lines interconnecting the 

substations were owned jointly by 

multiple parties, not just El Paso, and 

thus El Paso’s counterparty could have 

obtained service from another source; 

(2) the counterparty had not requested 

redispatch, nor was redispatch needed 

to complete the transaction; (3) the 

counterparty was not an existing 

transmission customer of El Paso, so it 

was not paying twice for the same 

service and had not requested nor had 

it been denied transmission service; and 

(4) the swap could have been entered 

into with another power marketer 

instead of El Paso’s merchant affiliate.12

II. Subject of the Notice of Inquiry 

7. The Commission seeks comments 

regarding circumstances in which 

locational exchanges of electric power 

should be permitted generically or 

considered by the Commission on a 

case-by-case basis. The Commission 

specifically requests comments 

addressing the topics identified below, 

as well as any other relevant issues 

identified by interested parties. 

A. General Information 

8. The Commission seeks comment 

regarding the characteristics of 

locational exchanges and whether the 

definition set forth by Puget’s Petition 

sufficiently accounts for those 

characteristics. Puget defined a 

locational exchange as ‘‘[a] pair of 

simultaneously arranged wholesale 

power transactions between the same 

counterparties in which party A sells 

electricity to party B at one location, 

and party B sells the same volume of 

electricity to party A at a different 

location with the same delivery period, 

but not necessarily at the same price.’’ 13

Puget also describes the locational 

exchanges it is proposing as different 

from the buy-sell transactions discussed 

in Order No. 888. Puget explains that, in 

Order No. 888, the Commission was 

concerned about exchanges in which 

one party wanted to transmit power 

from one location to another location, 

and a second party with transmission 

capacity on that path simply purchased 

the power from the first party at the 

point of delivery, moved the power to 

the point of receipt using its 

transmission capacity, and sold the 

same power back to the first party at the 

point of receipt. In contrast to such buysell transactions, Puget explains, the 

parties to a locational exchange both 

have power at the respective sides of the 

transaction, which is exchanged 

bilaterally resulting in exchanges that 

‘‘are simply symmetrical swaps of power 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 10355 

14Puget Petition at p. 15. Puget elaborates that 

‘‘Party A has power at Point X and wants to market 

or use it at Point Y and Party B has power at Point 

Y and wants to market or use it at Point X.’’ Id. at 

14–15. 

15E.g., Puget’s Petition; Xcel Energy Services Inc., 

Comments, Docket No. EL10–71–000, (filed July 6, 

2010); Portland General Electric Co., Docket No. 

EL10–71–000 (filed July 6, 2010); Financial 

Institutions Energy Group, Comments, Docket No. 

EL10–71–000 (filed July 6, 2010). 

16Puget’s Petition, Figure 1, 3, and 4. For 

instance, in Figure 3, both generators output is the 

same with and without a locational exchange. The 

benefit cited by Puget appears to be that Puget 

avoids the need to use a constrained transmission 

path. 17UAMPS II, 87 FERC at 61,188. 

at two points.’’ 14 We encourage 

commenters to identify other 

transactions that may be different in 

form from the types of transactions 

encompassed by Puget’s proposal but 

should be considered by the 

Commission as part of this proceeding. 

9. Moreover, the Commission 

understands that various parties, at least 

in the Northwest, believe that locational 

exchanges provide certain benefits, 

including the ability to streamline 

operations.15 For example, as discussed 

more fully below, some parties assert 

that locational exchanges may reduce 

transmission congestion and improve 

system reliability by offering an 

alternative mechanism to serve load 

while avoiding the transmission of 

electricity over congested transmission 

paths. Parties also assert that locational 

exchanges (1) Facilitate access to distant 

energy resources, including wind power 

and other variable resources located far 

from native load; (2) allow market 

participants to take advantage of price 

spreads at different locations; (3) enable 

market participants to more efficiently 

utilize their existing transmission 

capacity rights; (4) ease scheduling 

burdens by eliminating the need for 

hourly and daily scheduling of 

transmission between the exchange 

points; and (5) allow entities such as 

power marketers the ability to avoid 

having to return small amounts of inkind power to the transmission provider 

in order to manage transmission servicerelated imbalances. 

10. Moreover, it is the Commission’s 

understanding that locational exchanges 

typically occur outside of organized 

markets. To the extent that the exchange 

involves power located inside an 

organized market, the other side of the 

exchange typically involves power 

located outside of an organized market. 

The Commission also understands that 

locational exchanges may vary in 

duration, as many of them are for only 

a few hours or days whereas others may 

be for longer periods. The Commission 

understands that these exchanges may 

be arranged several months to several 

days in advance or shortly before the 

exchange is initiated. 

11. The Commission seeks 

information regarding the characteristics 

of locational exchanges to help the 

Commission understand how market 

participants use and benefit from these 

arrangements, as well as how these 

arrangements affect the electric power 

system. In particular, the Commission 

encourages commenters to address the 

following questions: 

(1) How common are locational 

exchanges? 

(2) What types of parties use 

locational exchanges (affiliate, marketer, 

generator)? How common is it for an 

affiliate of the transmission provider to 

be one of the parties to a locational 

exchange? 

(3) In what regions of the country and 

in what types of organized and nonorganized markets are locational 

exchanges used? 

(4) In a typical locational exchange 

how much power (in megawatts) is 

being exchanged? To the extent the 

amount of power varies significantly, 

please give a range. 

(5) Do locational exchanges typically 

involve short-term or long-term 

contracts? How many days in advance is 

a locational exchange typically 

arranged? 

(6) Under what circumstances, and for 

what purposes are locational exchanges 

used? How are locational exchanges 

arranged (bilateral negotiation via email, phone call, or instant message; 

broker; electronic exchange)? 

(7) What are the benefits of locational 

exchanges? In identifying the benefits of 

these arrangements, please describe the 

type of circumstances in which the 

locational exchange provides this 

benefit and why the locational exchange 

serves as a means to achieve the 

specified benefit. The Commission also 

urges commenters to provide specific 

examples demonstrating particular 

benefits. 

B. Effects of Locational Exchanges on 

System Congestion 

12. The Commission understands that 

some parties believe that certain types 

of locational exchanges may relieve 

physical congestion. In cases such as 

those contemplated in Puget’s 

Petition,16 it would seem that the 

locations and magnitudes of the 

generation sources and load sinks on the 

system remain unchanged. Thus, 

although the parties to the locational 

exchange may eliminate their own risks 

of curtailment due to congestion over 

that path, the distribution of power 

flows on the transmission system before 

and after the locational exchange 

transactions appears to remain 

unchanged. The Commission seeks 

comment on this and on whether other 

types of locational exchanges (for 

example, as described in the example 

below and depicted in Figure 1, where 

one party replaces a source of power 

with a new source, rather than simply 

swapping pre-existing generator output) 

may actually increase congestion. Thus, 

the Commission encourages parties to 

comment on the effect of locational 

exchanges on system congestion and to 

provide examples of how these 

arrangements do or do not reduce 

system congestion. 

C. Merchant Affiliate Issues 

13. In both UAMPS and El Paso, the 

Commission focused specifically on 

locational exchanges involving a 

merchant affiliate as one of the parties 

to the exchange. In UAMPS, the 

Commission rejected the proposed 

locational exchange, finding that ‘‘[a] 

public utility’s merchant function may 

not provide transmission service.’’ 17 In 

El Paso, however, the Commission 

accepted the locational exchange 

involving a merchant affiliate as a 

permissible marketbased rate wholesale 

power sale due to the factual 

distinctions described previously. 

14. The Commission seeks comment 

as to whether locational exchanges may 

offer opportunities for transmission 

providers and their merchant affiliates 

to discriminate unduly against or 

between non-affiliate transmission 

customers. We seek comment on 

whether a merchant affiliate of a 

transmission provider is uniquely 

positioned, due to its access to network 

transmission service, to provide 

locational exchanges on its affiliated 

transmission provider’s system, and 

whether, in some cases, may be the only 

counterparty available for a customer 

seeking to enter into a locational 

exchange. We seek comment on 

whether, under these circumstances, the 

merchant affiliate of a transmission 

provider (or its parent company) could 

benefit from revenues that flow from the 

locational exchange, while the 

transmission provider continues to 

recover its transmission cost-of-service, 

effectively shifting costs to network and 

native load customers due to decreased 

use of point-to-point transmission 

service pursuant to the OATT. Thus, the 

Commission seeks comment regarding 

potential concerns involving locational 

exchanges executed by a merchant 

affiliate on its affiliated transmission 

provider’s system. 


emcdonald on DSK2BSOYB1PROD with NOTICES
10356 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 

18 In this example, Party B undesignates as a 

network resource the capacity it sells to Party A, 

and instead uses the generation at Location Y it has 

purchased from Party A. 

15. Recognizing that there may be 

safeguards to address concerns 

regarding affiliate transactions, the 

Commission seeks comment on how 

industry participants now assure that 

such activities do not violate 

Commission policies. For example, do 

tagging obligations, Electric Quarterly 

Report (EQR) filings, standards of 

conduct rules and market-based rates 

rules provide sufficient protections and 

transparency to mitigate against the 

possible risks related to locational 

exchanges involving a merchant affiliate 

transacting on its affiliated transmission 

provider’s system? The Commission 

would also welcome comment on 

whether any additional regulatory 

safeguards are necessary. 

D. Flexible Use of Network 

Transmission Service to Effectuate 

Locational Exchanges 

16. The Commission seeks comment 

on whether locational exchanges could 

interact with network service rights in a 

manner that is inconsistent with the 

Commission’s open access principles. 

One potential such transaction, shown 

in Figure 1 below, could involve an 

arrangement in which Party A operates 

expensive generation at Location X to 

serve its load at Location X. Party A 

wishes to replace its expensive 

generation with inexpensive generation 

it owns at Location Y, but the Y-to-X 

path is congested. Party A’s solution is 

to enter into a locational exchange with 

Party B, which has network 

transmission service, network resources, 

and load straddling Locations X and Y. 

Parties A and B enter an agreement in 

which Party A sells its inexpensive 

generation at Location Y to Party B, and 

Party B sells to Party A some of its 

generation that is closer to Location X 

and unaffected by the constraint on the 

Y-to-X path.18 In this example, Party A’s 

reduction in resources at Location X and 

Party B’s new purchase of generation at 

Location Y may effectively transfer to 

Party A the inherent flexibility afforded 

to Party B as a network customer. The 

Commission further notes that this 

transaction has the effect of physically 

sending more power over the already 

congested Y-to-X path and onto Party 

A’s load. More generally, the 

Commission is inquiring whether the 

interaction between network service 

rights and locational exchanges could 

create a risk that parties will be able to 

engage in the effective provision of 

transmission service in a nontransparent manner outside of an OATT. 

17. Thus, the Commission seeks 

comment whether a party with network 

transmission rights could use locational 

exchanges to circumvent the 

Commission’s open access principles. 

BILLING CODE 6717–01–P 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 10357 

BILLING CODE 5001–01–C 


emcdonald on DSK2BSOYB1PROD with NOTICESEN24FE11.002</GPH>
10358 Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 

19Network service is priced based on the load 

ratio allocation method. ‘‘Because network service 

is load based, it is reasonable to allocate costs on 

the basis of load for purposes of pricing network 

service.’’ Order No. 888, FERC Stats. & Regs. at 

31,736. Pro forma OATT, section 34. For firm and 

non-firm point-to-point service, the transmission 

customer will be billed for its reserved capacity 

under terms of schedule 7 and 8, respectively. Pro 

forma OATT, section 25; schedules 7 and 8. The 

transmission customer’s reserved capacity is the 

maximum amount of capacity and energy that the 

transmission provider agrees to transmit for the 

transmission customer between the point of receipt 

and the point of delivery. Pro forma OATT, section 

1.42. 

20Revised Public Utility Filing Requirements for 

Electric Quarterly Reports, Order No. 2001–I, 125 

FERC 61,103, at Appendix A. The Commission has 

stated that the definition of ‘‘exchange’’ includes 

simultaneous trades at different locations. Revised 

Public Utility Filing Requirements for Electric 

Quarterly Reports, Order No. 2001–G, 120 FERC 

¶ 61,270, at P 53, order on reh’g and clarification, 

Order No. 2001–H, 121 FERC ¶ 61,289 (2007). 

21We note that the Commission’s rules provide 

that data for exchange transactions are not to be 

reported to developers of price indices. As such, 

there appears to be no concern related to locational 

exchanges affecting the accuracy of price indices. 

See 18 CFR 35.41(c) and Commission’s Policy 

Statement on Natural Gas and Electric Price 

Indices, 104 FERC ¶ 61,121, at P 34 (2003). 

22For example, in El Paso, the Commission 

accepted a particular locational exchange after the 

parties filed the agreement and provided additional 

data to the Commission. El Paso, 115 FERC 

¶ 61,312. 

E. Potential Discriminatory Effects 

18. The Commission seeks comment 

as to whether locational exchanges 

allow some parties to obtain the 

functional equivalent of transmission 

service on more favorable terms or rates 

than those available to other parties. 

The Commission also seeks comment 

regarding the potential distortive effects 

of locational exchanges on billing 

determinants and how such distortions 

may affect transmission rates. 

Transmission rates are determined by 

distributing transmission costs among 

different transmission services (such as 

point-to-point and network service) and 

dividing those costs by billing 

determinants calculated based upon the 

power amounts served by each 

transmission service.19 If locational 

exchanges are not considered 

transmission service and are therefore 

not included in the billing determinants 

used to set transmission rates, locational 

exchanges that serve as an alternative to 

transmission service may increase 

transmission rates for remaining 

customers. Thus, the Commission seeks 

comment as to whether locational 

exchanges could increase charges for 

remaining transmission customers while 

allowing those entering into locational 

exchanges to avoid transmission 

charges. 

19. The Commission seeks comments 

as to whether and, if so, how locational 

exchanges affect billing determinants or 

create other such potential market 

distortions. Moreover, if locational 

exchanges have an effect on billing 

determinants and the distribution of 

costs, the Commission seeks comment 

on whether certain types of customers 

are less likely to be able to enter into 

locational exchanges and thus may be 

forced to pay potentially increased 

transmission costs that result from the 

distorted billing determinants. 

F. Price Reporting 

20. The Commission seeks comment 

as to whether the current EQR 

procedures and requirements are 

sufficient to ensure appropriate 

locational exchange data reporting. 

Under § 35.10b of the Commission’s 

regulations, sellers of power are 

required to report data to the 

Commission’s EQR system covering all 

services provided under part 35 of the 

Commission’s regulations. The EQR 

data dictionary provides for a category 

of services called ‘‘exchanges’’ within 

which ‘‘the receiver accepts delivery of 

energy for a supplier’s account and 

returns energy at times, rates, and 

amounts as mutually agreed if the 

receiver is not an RTO/ISO.’’ 20

However, there is no rule describing 

whether an exchange transaction must 

be reported in EQR as an exchange, or 

whether an exchange transaction may 

alternatively be reported in EQR as two 

separate power sale transactions (one 

report by each seller). 

21. Because of the structure of a 

locational exchange, the price per 

megawatt hour at each side of the 

transaction does not appear to be of any 

immediate financial interest to the 

parties, except as those prices determine 

the price of the entire locational 

exchange position (or the spread). Thus, 

if an exchange were reported in EQR as 

two separate power sale transactions, 

parties may not have any financial 

incentive to establish and report 

realistic prices for the power at each 

location. For instance, parties would be 

indifferent between reporting prices of 

$5 and $10 versus $400 and $405, since 

in both cases the spread is $5. As a 

result, such reports could have the effect 

of distorting price data in the 

Commission’s EQR system. With respect 

to this issue, we encourage parties to 

respond to the following questions: 

(1) How are locational exchanges 

typically reported to the EQR today? 

(2) Are additional rules needed to 

ensure that locational exchanges are 

reported in EQR as exchanges, and not 

reported as two separate power sales? 21

G. System Reliability 

22. The Commission inquires as to 

whether locational exchanges affect the 

ability of system operators and any 

other relevant entities to obtain 

information or perform other functions 

necessary to maintain adequate system 

reliability. The Commission also seeks 

comment on the effects and 

implications of locational exchanges on 

the transmission system(s) and the 

operator’s ability to comply with 

Commission approved North American 

Electric Reliability Corp. (NERC) 

reliability standards. 

23. Parties should describe (1) The 

potential effect of locational exchanges 

on system performance including 

inadvertent power flows and the 

availability of information regarding 

power flows to the transmission 

provider and other reliability entities; 

(2) how locational exchanges interact 

with scheduling and tagging 

requirements; and (3) how locational 

exchanges affect short-term and longterm system planning. The Commission 

also seeks information associated with 

the relationship between locational 

exchanges and curtailment issues and 

procedures. 

24. As parties provide this 

information, the Commission urges 

them to consider scenarios where a 

locational exchange is effectuated, 

including but not limited to, (a) within 

one balancing authority area; (b) within 

more than one balancing authority area; 

(c) over short distances as compared to 

long distances; (d) involving small 

amounts of MWs as opposed to large 

amounts of MWs; and (e) involving 

more than two points of exchanges in 

the context of the different scenarios 

listed in (a) through (d). 

H. Pricing of Locational Exchanges 

25. If the Commission determines that 

a locational exchange is transmission 

service subject to an OATT, the 

Commission seeks comment as to 

whether there is an appropriate existing 

transmission pricing policy that should 

apply specifically to these types of 

arrangements. In the alternative, the 

Commission urges parties to propose a 

pricing mechanism that would 

efficiently price those exchanges that 

make use of the transmission system. 

I. Commission Review of Locational 

Exchanges 

26. In addition, the Commission seeks 

comment regarding the potential effect 

of requiring parties to seek prior 

Commission approval for locational 

exchanges on a case-by-case basis.22 In 

particular, the Commission urges parties 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 37 / Thursday, February 24, 2011 / Notices 10359 

to comment as to whether such a 

requirement would impose undue 

delays and other administrative burdens 

affecting the ability of market 

participants to use locational exchanges. 

27. The Commission seeks comment 

regarding circumstances in which 

locational exchanges of electric power 

should be permitted generically. In this 

regard, the Commission seeks comment 

regarding criteria that might define a 

safe harbor within which a locational 

exchange would be deemed a 

permissible wholesale power 

transaction without prior Commission 

review of that transaction. Under this 

approach, those parties seeking to enter 

into exchanges that do not satisfy the 

safe harbor criteria could seek 

Commission approval on a case-by-case 

basis. To the extent that there are 

circumstances in which locational 

exchanges are permitted on a generic 

basis, the Commission seeks comment 

regarding any additional rules that may 

be necessary to regulate the exchanges. 

J. Comment Procedures 

28. The Commission invites interested 

persons to submit comments, and other 

information on the matters, issues, and 

specific questions identified in this 

notice. Comments are due April 25, 

2011. Comments must refer to Docket 

No. RM11–9–000, and must include the 

commenter’s name, the organization 

they represent, if applicable, and their 

address in their comments. 

29. The Commission encourages 

comments to be filed electronically via 

the eFiling link on the Commission’s 

Web site at http://www.ferc.gov. The 

Commission accepts most standard 

word processing formats. Documents 

created electronically using word 

processing software should be filed in 

native applications or print-to-PDF 

format and not in a scanned format. 

Commenters filing electronically do not 

need to make a paper filing. 

30. Commenters that are not able to 

file comments electronically must send 

an original copy of their comments to: 

Federal Energy Regulatory Commission, 

Secretary of the Commission, 888 First 

Street NE., Washington, DC 20426. The 

current copy requirements are specified 

on the Commission’s Web site, see, e.g., 

the ‘‘Quick Reference Guide for Paper 

Submissions,’’ available at http:// 

ww.ferc.gov.docs-filing/efiling.asp, or 

via phone from FERC Online Support at 

202–502–6652 or toll-free at1–866–208– 

3676. 

31. All comments will be placed in 

the Commission’s public files and may 

be viewed, printed, or downloaded 

remotely as described in the Document 

Availability section below. Commenters 

on this proposal are not required to 

serve copies of their comments on other 

commenters. 

K. Document Availability 

32. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and/or print the contents of this 

document via the Internet through 

FERC’s Home Page (http://www.ferc.gov) 

and in FERC’s Public Reference Room 

during normal business hours (8:30 a.m. 

to 5 p.m. Eastern time) at 888 First 

Street, NE., Room 2A, Washington DC 

20426. 

33. From FERC’s Home Page on the 

Internet, this information is available on 

eLibrary. The full text of this document 

is available on eLibrary in PDF and 

Microsoft Word format for viewing, 

printing, and/or downloading. To access 

this document in eLibrary, type the 

docket number excluding the last three 

digits of this document in the docket 

number field. 

34. User assistance is available for 

eLibrary and the FERC’s Web site during 

normal business hours from FERC 

Online Support at (202) 502–6652 (toll 

free at 1–866–208–3676) or e-mail at 

ferconlinesupport@ferc.gov, or the 

Public Reference Room at (202) 502– 

8371, TTY (202) 502–8659. E-mail the 

Public Reference Room at 

public.referenceroom@ferc.gov. 

By direction of the Commission. 

Kimberly D. Bose, 

Secretary. 

[FR Doc. 2011–4079 Filed 2–23–11; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

[Docket Nos. EL11–22–000, QF11–115–001, 

QF11–116–001, et al.] 

OREG 1, Inc., OREG 2, Inc., OREG 3, 

Inc., OREG 4, Inc.; Notice of Petition 

for Declaratory Order 

Docket Nos. 

OREG 1, Inc. .................... EL11–22–000 

OREG 2, Inc. .................... QF11–115–001 

OREG 3, Inc. .................... QF11–116–001 

OREG 4, Inc. .................... QF11–117–001 

QF11–118–001 

QF11–119–001 

QF11–120–001 

QF11–121–001 

QF11–122–001 

QF11–123–001 

QF11–124–001 

Take notice that on February 14, 2011, 

pursuant to Rule 207(a)(2) of the Federal 

Energy Regulatory Commission’s 

(Commission) Rules of Practice and 

Procedure, 18 CFR 385.207(a)(2) (2010), 

OREG 1, Inc., OREG 2, Inc., OREG 3, 

Inc., and OREG 4, Inc., filed a Petition 

for Declaratory Order (Petition) 

requesting that the Commission grant 

their request for limited waivers from 

the filing requirements applicable to 

small power production facilities set 

forth in section 292.203(a)(3) of the 

Commission’s Regulation’s, 18 CFR 

292.203(a)(3) (2010). 

Any person desiring to intervene or to 

protest this filing must file in 

accordance with Rules 211 and 214 of 

the Commission’s Rules of Practice and 

Procedure (18 CFR 385.211, 385.214). 

Protests will be considered by the 

Commission in determining the 

appropriate action to be taken, but will 

not serve to make protestants parties to 

the proceeding. Any person wishing to 

become a party must file a notice of 

intervention or motion to intervene, as 

appropriate. Such notices, motions, or 

protests must be filed on or before the 

comment date. On or before the 

comment date, it is not necessary to 

serve motions to intervene or protests 

on persons other than the Applicant. 

The Commission encourages 

electronic submission of protests and 

interventions in lieu of paper using the 

‘‘eFiling’’ link at http://www.ferc.gov. 

Persons unable to file electronically 

should submit an original and 14 copies 

of the protest or intervention to the 

Federal Energy Regulatory Commission, 

888 First Street, NE., Washington, DC 

20426. 

This filing is accessible on-line at 

http://www.ferc.gov, using the 

‘‘eLibrary’’ link and is available for 

review in the Commission’s Public 

Reference Room in Washington, DC. 

There is an ‘‘eSubscription’’ link on the 

Web site that enables subscribers to 

receive e-mail notification when a 

document is added to a subscribed 

docket(s). For assistance with any FERC 

Online service, please e-mail 

FERCOnlineSupport@ferc.gov, or call 

(866) 208–3676 (toll free). For TTY, call 

(202) 502–8659. 

Comment Date: 5 p.m. Eastern Time 

on March 16, 2011. 

Dated: February 16, 2011. 

Kimberly D. Bose, 

Secretary. 

[FR Doc. 2011–4085 Filed 2–23–11; 8:45 am] 

BILLING CODE 6717–01–P 


emcdonald on DSK2BSOYB1PROD with NOTICES