[Federal Register Volume 69, Number 189 (Thursday, September 30, 2004)]
[Notices]
[Pages 58421-58423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22016]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL04-135-000]


Order Instituting Section 206 Proceeding

Issued September 27, 2004.
    Before Commissioners: Pat Wood, III, Chairman; Nora Mead 
Brownell, Joseph T. Kelliher, and Suedeen G. Kelly.
    Midwest Independent Transmission System Operator, Inc., PJM 
Interconnection, L.L.C., and all transmission owners providing 
access to their transmission facilities under Midwest Independent 
Transmission System Operator, Inc. or PJM Interconnection, L.L.C. 
Tariffs and all other public utility transmission owners in these 
regions (including the entities identified below):

Alliant Energy Corporate Services, Inc. on behalf of:
    Interstate Power and Light Company
Ameren Services Company on behalf of:
    Union Electric Company and
    Central Illinois Public Service Company
    Central Illinois Light Company
Aquila, Inc. (formerly UtiliCorp United, Inc.)
Cinergy Services, Inc.
    Cincinnati Gas & Electric Company
    PSI Energy, Inc.
    Union Light Heat & Power Company
City Water, Light & Power (Springfield, IL)
Dairyland Power Cooperative
FirstEnergy Corporation on behalf of:
    American Transmission Systems, Inc.
Great River Energy
GridAmerica LLC
Illinois Power Company
Indiana Municipal Power Agency
Indianapolis Power & Light Company
International Transmission Company
Hoosier Energy Rural Electric Cooperative
Lincoln Electric (Neb.) System
LG&E Energy Corporation on behalf of:
    Kentucky Utilities Company
    Louisville Gas & Electric Company
Michigan Electric Transmission Company, LLC
Michigan Public Power Agency
Minnesota Power, Inc.
Montana-Dakota Utilities Company
Northern Indiana Public Service Company
Northwestern Wisconsin Electric Company
Otter Tail Power Company
Southern Illinois Power Cooperative
Southern Indiana Gas & Electric Cooperative
Southern Minnesota Municipal Power Agency
Superior Water, Light & Power Company
Sunflower Electric Power Corporation
Wabash Valley Power Association, Inc.
Wolverine Power Supply Cooperative
Xcel Energy Services, Inc. on behalf of:
    Northern States Power Company (Minnesota)
    Northern States Power Company (Wisconsin)
Allegheny Electric Cooperative, Inc.
Allegheny Power
American Electric Power Service Corporation on behalf of:
    Appalachian Power Company
    Columbus Southern Power Company
    Indiana Michigan Power Company
    Kentucky Power Company
    Kingsport Power Company
    Ohio Power Company
    Wheeling Power Company
Atlantic City Electric Company
Baltimore Gas & Electric Company
Dayton Power and Light Company
Delmarva Power & Light Company
Dominion Virginia Power Company
Exelon Corporation on behalf of:
    Commonwealth Edison Company
    Commonwealth Edison Company of Indiana, Inc.
Jersey Central Power & Light Company
Metropolitan Edison Company
Old Dominion Electric Cooperative
PECO Energy Company
Pennsylvania Electric Company
Public Service Electric & Gas Company
PPL Electric Utilities Corporation
Potomac Electric Power Company
Rockland Electric Company
UGI Utilities, Inc.
    1. In this order, we are instituting a Federal Power Act section 
206\1\ proceeding to implement a new long-term transmission pricing 
structure intended to eliminate seams in the PJM Interconnection, 
L.L.C. (PJM) and Midwest Independent Transmission System Operator 
System, Inc. (Midwest ISO) regions, and establish a refund effective 
date of December 1, 2004. This order will provide the mechanism by 
which the Commission will implement a new pricing structure to replace 
existing through and out rates. This order benefits customers by 
ensuring a smooth transition in eliminating seams.
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    \1\ 16 U.S.C. 824e (2000).
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I. Background

    2. In earlier orders in this proceeding, the Commission ordered the 
elimination of regional through and out rates between PJM and Midwest 
ISO regions effective April 1, 2004,\2\ and also found unjust and 
unreasonable the through and out rates of individual public utilities 
that had not yet become members of PJM or the Midwest ISO effective 
April 1, 2004.\3\ The Commission directed compliance filings to 
eliminate the through and out rates for new transactions, and allowed 
two-

[[Page 58422]]

year transitional lost revenue recovery mechanisms, so-called Seams 
Elimination Charge/Cost Adjustments/Assignments (SECAs), to be put in 
place effective April 1, 2004.\4\ On December 17, 2003, the Commission 
clarified that the through and out rates were eliminated for 
reservations pursuant to requests made on or after November 17, 2003, 
for service commencing on or after April 1, 2004.\5\
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    \2\ Midwest Independent Transmission System Operator, Inc., et 
al., 104 FERC ] 61,105, order on reh'g, 105 FERC ] 61,212 (2003).
    \3\ Ameren Services Company, et al., 105 FERC ] 61,216 (2003).
    \4\ See supra notes 1-2.
    \5\ Midwest Independent Transmission System Operator, Inc., et 
al., 105 FERC ] 61,288 (2003).
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    3. Subsequently, the Commission provided time for the parties to 
participate in a stakeholder process to develop these transitional lost 
revenue recovery mechanisms. On February 6, 2004, noting that it had 
already allowed the parties some additional time for a stakeholder 
process, the Commission also established settlement judge procedures to 
further aid the parties in developing these transitional lost revenue 
recovery mechanisms.\6\
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    \6\ Midwest Independent Transmission System Operator, Inc., et 
al., 106 FERC ] 61,105 (2004).
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    4. On February 4, 2004, the Chief Judge filed a report with the 
Commission on the parties' progress in the ongoing discussions, along 
with their agreement that the date for elimination of the through and 
out rates should be extended from April 1, 2004 to May 1, 2004, (but 
with the transition period continuing to run from April 1, 2004, i.e., 
effectively shortening the transition period).\7\ On February 6, 2004, 
the Commission accepted this agreement to extend the date for 
elimination of through and out rates to May 1, 2004, and so allowed the 
parties additional time to resolve matters consensually.\8\
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    \7\ Midwest Independent Transmission System Operator, Inc., et 
al., 106 FERC ] 63,010 (2004).
    \8\ Midwest Independent Transmission System Operator, Inc., et 
al., 106 FERC ] 61,106 (2004).
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    5. On March 5, 2004, the Chief Judge filed a report and an 
agreement among the parties, noting that the parties had participated 
in fourteen full days of formal settlement negotiations (often 
involving over 100 participants), and that there had been numerous 
meetings involving individual participants or groups of participants. 
This resulted in an agreement, supported or joined in by 84 parties 
(some representing more than one utility) that was accepted by the 
Commission.\9\
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    \9\ Midwest Independent Transmission System Operator, Inc., et 
al., 106 FERC ] 61,262 (2004) (March 19 Order).
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    6. This agreement established the going-forward principles and 
procedures that, would shorten the transition to the elimination of the 
through and out rates by seventeen months. This agreement retained the 
through and out rates until December 1, 2004, at which time they would 
be eliminated entirely. The agreement also provided for negotiations to 
continue to develop a long-term transmission pricing structure that 
eliminates seams in the PJM and Midwest ISO regions. The agreement 
provided that either one proposal or, if the parties were unable to 
agree to a single proposal, multiple proposals would be filed with the 
Commission on October 1, 2004, with a December 1, 2004 effective date.
    7. On September 3, 2004, the Chief Judge issued a report \10\ 
indicating that after further settlement and stakeholder conferences 
there was an impasse between two major groups of parties. The Chief 
Judge stated that it appeared there will be two competing proposals 
filed with the Commission on October 1, 2004. The Chief Judge added 
that additional meetings and conferences are planned in an attempt to 
come to further agreement. On September 16, 2004, the Chief Judge 
issued a further report \11\ indicating that a further settlement 
conference had been held. He explained that, while the parties' 
discussions have successfully narrowed the issues and successfully 
narrowed the range of proposals to two, further discussions would not 
be productive. Accordingly, he terminated the settlement judge 
procedures.
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    \10\ Midwest Independent Transmission System Operator, Inc., et 
al., 108 FERC ] 63,034 (2004).
    \11\ Midwest Independent Transmission System Operator, Inc., et 
al., 108 FERC ] 63,039 (2004).
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II. Discussion

    8. In its March 19 Order, which accepted the parties' agreement on 
going-forward principles and procedures, the Commission stated that 
``in no event will through and out rates remain in place beyond 
December 1, 2004 irrespective of whether there is an agreed-upon long-
term transmission pricing structure.'' In addition, the Commission 
``obligate[d] itself to choose a replacement and to put that 
replacement in place on December 1, 2004 (subject to refund, if 
appropriate).''\12\
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    \12\ March 19 Order, 106 FERC ] 61,262 at P 19. The Commission 
also stated that it was ``not obligated to adopt any particular 
long-term transmission pricing structure over another.'' Id. at P 19 
n.19; accord id. at P 13 n.17.
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    9. As noted above, the Chief Judge has reported that two 
alternative proposals for a long-term transmission pricing structure 
will likely be filed. However, the Commission anticipates that 
ultimately it will adopt a single long-term transmission pricing 
structure across the entire PJM and Midwest ISO regions. Consequently, 
in order to allow the Commission to adopt a single long-term 
transmission pricing structure, the Commission is instituting this 
section 206 proceeding to establish a just and reasonable long-term 
transmission pricing structure and is establishing a refund effective 
date of December 1, 2004. Doing so will ensure that the Commission has 
adequate authority to implement a long-term transmission pricing 
structure for all parties across the PJM and Midwest ISO regions. 
Following the filing of the two alternative proposals and comments on 
the proposals, the Commission will take further action in this 
proceeding.
    10. In cases where, as here, the Commission institutes a section 
206 investigation on its own motion, section 206(b) requires that the 
Commission establish a refund effective date that is no earlier than 60 
days after publication of notice of the Commission's investigation in 
the Federal Register, and no later than five months subsequent to the 
expiration of the 60 day period. In order to give maximum protection to 
customers, and consistent with our previous commitments on this matter, 
we will establish a refund effective date in Docket No. EL04-135-000 of 
December 1, 2004, the previously established effective date of the 
long-term transmission pricing structure.
    11. Section 206 also requires that, if no final decision is 
rendered by the refund effective date or by the conclusion of the 180-
day period commencing upon the initiation of a proceeding pursuant to 
section 206, whichever is earlier, the Commission shall state the 
reasons why it failed to do so and shall state its best estimate of 
when it reasonably expects to make such a decision. In the 
circumstances of this proceeding, given that the parties' alternative 
proposals have not yet been filed, we cannot resolve this matter at 
this time. However, we estimate that we will be able to issue our 
initial order on these filings and in this proceeding prior to December 
1, 2004, and, if we are not able to resolve this matter in that initial 
order, we estimate that we will be able to resolve this matter by July 
31, 2005.

The Commission Orders

    (A) Pursuant to the authority contained in and subject to the 
jurisdiction conferred upon the Federal Energy Regulatory Commission by 
section 402 of the Department of Energy Organization Act and by the 
Federal Power Act, particularly section 206 thereof, and pursuant to 
the Commission's Rules of Practice and

[[Page 58423]]

Procedure and the regulations under the Federal Power Act (18 CFR 
chapter I), an investigation is hereby instituted in Docket No. EL04-
135-000 concerning the justness and reasonableness of a long-term 
transmission pricing structure for the PJM and Midwest ISO regions that 
will be the successor to through and out rates, as discussed in the 
body of this order.
    (B) The Secretary shall promptly publish a copy of the Commission's 
order in Docket No. EL04-135-000 in the Federal Register.
    (C) The refund effective date in Docket No. EL04-135-000, 
established pursuant to section 206(b) of the Federal Power Act, will 
be December 1, 2004.
    (D) Notices of intervention and motions to intervene in Docket No. 
EL04-135-000 are due on or before October 15, 2004.

    By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. 04-22016 Filed 9-29-04; 8:45 am]
BILLING CODE 6717-01-P