118 FERC ¶ 61,031 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 358 

(Docket No. RM07-1-000) 

(January 18, 2007) 

AGENCY: Federal Energy Regulatory Commission; DOE 

ACTION: Notice of Proposed Rulemaking 

SUMMARY: The purpose of this Notice of Proposed Rulemaking is to propose 

permanent regulations regarding the standards of conduct consistent with the decision of 

the United States Court of Appeals of the District of Columbia in National Fuel Gas 

Supply Corporation v. FERC, 468 F.3d 831 (2006), regarding natural gas pipelines. On 

January 9, 2007, the Commission issued an interim rule regarding the standards of 

conduct in response to the court’s decision. The Commission is soliciting comments 

regarding whether or not the interim rule should be made permanent for natural gas 

transmission providers. The Commission is also soliciting comments regarding 

comparable changes for electric utility transmission providers: specifically, whether or 

not the standards of conduct should govern the relationship between electric utility 

transmission providers and their energy affiliates. Also, the Commission is proposing to: 

revise the definition of marketing, sales or brokering; make permanent the changes 

adopted in the interim rule for risk management employees and discretionary waivers; 

remove the regulations that permit the transmission provider to share information 

necessary to maintain the operations of its transmission system with its energy affiliates; 
Docket No. RM07-1-000 2

add and revise various regulations to facilitate integrated resource planning and 

competitive solicitations; revise the regulations to require each transmission provider to 

post the name of its chief compliance officer, to delete outdated references, and to require 

that transmission provider employees certify that they have completed standards of 

conduct training; and, revise the definition of affiliate regarding exempt wholesale 

generators. 

DATES: Comments must be filed on or before [insert date that is 45 days after date of 

publication in the FEDERAL REGISTER]. Reply comments must be filed on or before 

[insert date that is 65 days after date of publication in the FEDERAL REGISTER]. 

ADDRESSES: You may submit comments identified by Docket No. RM07-1-000, by 

one of the following methods: 

• Agency Web Site: http://ferc.gov. Follow the instructions for submitting 

comments via the eFiling link found in the Comment Procedures Section of the 

preamble. 

• Mail: Commenters unable to file comments electronically must mail or hand 

deliver an original and 14 copies of their comments to the Federal Energy 

Regulatory Commission, Office of the Secretary, 888 First Street, N.E., 

Washington, D.C. 20426. Please refer to the Comment Procedures Section of 

the preamble for additional information on how to file paper comments. 
Docket No. RM07-1-000 

3

FOR FURTHER INFORMATION CONTACT: 

Eric Ciccoretti 

Office of Enforcement 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Telephone: (202) 502-8493 

E-mail: eric.ciccoretti@ferc.gov 

Deme Anas 

Office of Enforcement 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Telephone: (202) 502-8178 

E-mail: demetra.anas@ferc.gov 

Stuart Fischer 

Office of Enforcement 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Telephone: (202) 502-8517 

E-mail: stuart.fischer@ferc.gov 

SUPPLEMENTARY INFORMATION

:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

NOTICE OF PROPOSED RULEMAKING

(January 18, 2007) 

I. Introduction

1. The Federal Energy Regulatory Commission (Commission) is proposing to adopt 

standards of conduct regulations that govern the relationship between natural gas 

transmission providers and their marketing affiliates in light of the decision of the United 

States Court of Appeals for the District of Columbia Circuit concerning the standards of 

conduct for transmission providers under Order No. 2004.1

 In National Fuel Gas Supply 

Corporation v. FERC (National Fuel),2 the court determined that the Commission did not 

support the standards of conduct’s definition of energy affiliate and vacated Order Nos. 

2004, 2004-A, 2004-B, 2004-C and 2004-D (collectively referred to as Order No. 2004) 

 1

 On November 25, 2003, the Commission added Part 358 to the its regulations 

adopting standards of conduct that apply uniformly to natural gas and electric utility 

transmission providers. Standards of Conduct for Transmission Providers, Order No. 

2004, FERC Stats. & Regs., Regulations Preambles 2001-2005 ¶ 31,155 (2003), order on 

reh’g, Order No. 2004-A, FERC Stats. & Regs., Regulations Preambles 2001-2005 

¶ 31,161 (2004), order on reh’g, Order No. 2004-B, FERC Stats. & Regs., Regulations 

Preambles 2001-2005 ¶ 31,166 (2004), order on reh’g, Order No. 2004-C, FERC Stats. 

& Regs., Regulations Preambles 2001-2005 ¶ 31,172, order on reh’g, Order No. 2004-D, 

110 FERC ¶ 61,320 (2005), remanded as it applies to natural gas pipelines, National Fuel 

Gas Supply Corporation v. FERC, 468 F.3d 831, (D.C. Cir. Nov. 17, 2006). 

2

 National Fuel, slip op. at 4. 
Docket No. RM07-1-000 2

as applied to natural gas pipelines and remanded the orders to the Commission.3

 

Specifically, the court rejected the Commission’s attempt to extend the standards of 

conduct beyond pipelines’ relationships with their marketing affiliates to also govern 

pipelines’ relationships with numerous non-marketing affiliates, such as producers, 

gatherers, and local distribution companies (energy affiliates). In light of this, the court 

found moot the other issues raised on appeal.4

 

2. On January 9, 2007, the Commission issued an interim rule that promulgated 

temporary regulations consistent with the court’s decision, but designed to prevent a 

regulatory gap with respect to standards of conduct for natural gas transmission providers 

and their marketing affiliates.5

 The purpose of this Notice of Proposed Rulemaking 

(NOPR) is to propose permanent regulations consistent with the court's decision 

regarding natural gas pipelines. The Commission is also soliciting comments regarding 

whether or not to make comparable changes for electric utility transmission providers. 

With respect to both industries, the Commission seeks evidence regarding the scope of 

the rules, including application of the rules to energy affiliates. This issuance will 

provide a forum to develop the appropriate record for any future action. Moreover, 

because we are initiating a rulemaking proceeding, the Commission also takes this 

 3

 Id. 

4

 Id. 

5

 Standards of Conduct for Transmission Providers, Order No. 690, 72 FR [___] 

(Jan. 19, 2007); FERC Stats. & Regs. ¶ 31,327 (Jan. 9, 2007).
Docket No. RM07-1-000 3

opportunity to propose additional changes to the standards of conduct, including, among 

other things, proposing provisions to facilitate integrated resource planning and 

competitive solicitations for electric utility transmission providers. 

3. In this NOPR, the Commission proposes to make permanent the interim 

regulations that made the standards of conduct inapplicable to the relationship between 

natural gas pipeline transmission providers and their energy affiliates. The Commission 

also proposes to: (1) to revise the definition of marketing, sales or brokering at § 358.3(e) 

of the Commission’s regulations; (2) make permanent the changes adopted in the interim 

rule for § 358.4(a)(6) of the Commission’s regulations regarding risk management 

employees and §§ 358.5(c)(4)(i) and (ii) of the Commission’s regulations regarding 

discretionary waivers; (3) remove § 358.5(b)(8) of the Commission’s regulations, which 

permits the transmission provider to share information necessary to maintain the 

operations of its transmission system with its energy affiliates; (4) add and revise various 

sections to facilitate integrated resource planning and competitive solicitations; (5) revise 

§ 358.4(e) of the Commission’s regulations to require each transmission provider to post 

the name of its chief compliance officer, to delete outdated references, and to require that 

transmission provider employees certify that they have completed standards of conduct 

training; and (6) revise the definition of affiliate regarding exempt wholesale generators 

at § 358.3(b)(2) of the Commission’s regulations. 
Docket No. RM07-1-000 4

A. Order No. 2004

4. Prior to Order No. 2004, the Commission had two separate sets of regulations 

governing standards of conduct for transmission providers. The regulations applicable to 

natural gas pipelines were issued in Order No. 497 in 1988,6

 under sections 4 and 5 of the 

Natural Gas Act.7

 In 1996, the Commission issued Order No. 889,8 which created 

standards of conduct regulations applicable to electric utilities under sections 205 and 206 

of the Federal Power Act.9

 Both rules had the same goal -- to prevent transmission 

providers from wielding their market power over transmission to give undue preference 

or unduly discriminatory treatment in favor of their marketing affiliates over non-

 6

 Inquiry Into Alleged Anticompetitive Practices Related to Marketing Affiliates 

of Interstate Pipelines, Order No. 497, 53 FR 22139 (1988), FERC Stats. & Regs., 

Regulations Preambles 1986-1990 ¶ 30,820 (1988); Order No. 497-A, order on reh’g, 

54 FR 52781 (1989), FERC Stats & Regs., Regulations Preambles 1986-1990 ¶ 30,868 

(1989); Order No. 497-B, order extending sunset date, 55 FR 53291 (1990), FERC Stats. 

& Regs., Regulations Preambles 1986-1990 ¶ 30,908 (1990); Order No. 497-C, order 

extending sunset date, 57 FR 9 (1992), FERC Stats. & Regs., Regulations Preambles 

1991-1996 ¶ 30,934 (1991), reh’g denied, 57 FR 5815 (1992), 58 FERC ¶ 61,139 (1992); 

aff’d in part and remanded in part sub nom. Tenneco Gas v. FERC, 969 F.2d 1187 (D.C. 

Cir. 1992). 

7

 15 U.S.C. 717c and 717d; see also former 18 CFR part 161 (2003). 

8

 Open Access Same-Time Information System (Formerly Real-Time Information 

Network) and Standards of Conduct, Order No. 889, 61 FR 21737 (May 10, 1996), FERC 

Stats. & Regs., Regulations Preambles Jan. 1991- June 1996 ¶ 31,035 (Apr. 24, 1996); 

Order No. 889-A, order on reh'g, 62 FR 12484 (Mar. 14, 1997), FERC Stats. & Regs., 

Regulations Preambles 1996-2000 ¶ 31,049 (Mar. 4, 1997); Order No. 889-B, reh'g 

denied, 62 FR 64715 (Dec. 9, 1997), 81 FERC ¶ 61,253 (Nov. 25, 1997).

9

 16 U.S.C. 824d and 824e; see also former 18 CFR 37.4 (2003). 
Docket No. RM07-1-000 5

affiliates. Both rules employed the same general approach, e.g., requiring employees 

engaged in transmission services to function independently from employees of its 

marketing affiliates and imposing prohibitions restricting transmission providers from 

sharing certain information with their marketing affiliates. The rules were designed to 

ensure that affiliated and non-affiliated transmission customers were treated on an equal 

basis. However, the standards of conduct under Order Nos. 497 and 889 contained some 

differences, particularly with respect to the information sharing prohibitions and posting 

requirements. 

5. In Order No. 2004, the Commission revised the standards of conduct so that one 

set of regulations applied uniformly to both natural gas and electric utility transmission 

providers and their affiliates.10 In doing so, the Commission noted several reasons for 

issuing new standards of conduct.11 In Order No. 2004, the Commission also expanded 

the coverage of the standards of conduct to govern the relationships between transmission 

 10 18 CFR 358.3(a)(1) and (2) (definition of transmission provider). 

11 Order No. 2004 at P 6-15. 
Docket No. RM07-1-000 6

providers and energy affiliates. 12 Previously, the standards of conduct governed the 

relationships between transmission providers and their marketing affiliates.13 

B. Matters Appealed

6. Five issues were appealed from Order No. 2004: (1) the extension of the standards 

of conduct to cover the relationship between natural gas transmission providers and their 

energy affiliates under § 358.3(d); (2) the scope of the restrictions on sharing risk 

management employees between natural gas pipeline transmission providers and their 

marketing/energy affiliates under § 358.4(a)(6); (3) the scope of the restrictions on 

sharing lawyers between natural gas pipeline transmission providers and their 

marketing/energy affiliates; (4) the scope of the requirement for natural gas pipeline 

transmission providers to post all discretionary acts under § 358.5(c)(4); and (5) the 

timing as to when newly certificated pipelines become subject to the standards of 

conduct. 

 12 Section 358.3(d) defined energy affiliate as any affiliate which is engaged or 

involved in transmission transactions; manages or controls pipeline capacity; buys, sells, 

trades or administers natural gas or electric energy in domestic energy or transmission 

markets; and engages in financial transactions relating to the sale or transmission of 

natural gas or electric energy in such markets. 18 CFR 358.3(d). 

13 Under Order No. 497, marketing included affiliates and business divisions 

engaged in making sales for resale of natural gas in interstate commerce (former 18 CFR 

161.2(c)); and under Order No. 889, marketing covered affiliates and business divisions 

engaged in making sales for resale of electric energy in interstate commerce (former 

18 CFR 37.3(e)). 
Docket No. RM07-1-000 7

C. The Court's Decision

7. In National Fuel, the court vacated Order No. 2004 as applicable to natural gas 

pipelines because of the expansion of the standards of conduct to include energy 

affiliates. The court explained that the Commission relied on both theoretical grounds 

and on record evidence to justify this expansion. The court concluded that the 

Commission’s record evidence did not withstand scrutiny and, thus, concluded the 

expansion was arbitrary and capricious in violation of the Administrative Procedure 

Act.14 The court vacated Order No. 2004 as applicable to natural gas pipelines. In light 

of this disposition, the court did not address the other four issues raised on appeal 

regarding Order No. 2004. 

II. Discussion

8. The NOPR proposes to make changes to Part 358 (discussed in greater detail 

below) consistent with National Fuel, seeks comment on other issues, and clarifies that 

waivers or exemptions that the Commission issued under Order No. 2004 remain valid 

and are not negatively impacted by the National Fuel decision. 

A. Partially Repromulgating Part 358

9. Order No. 2004 codified many case-by-case exceptions that had evolved during 

the implementation of Order Nos. 497 and 889. These provisions included: codifying 

 14 National Fuel, slip op. at 4. 
Docket No. RM07-1-000 8

exceptions to the independent functioning requirement;15 revising information sharing 

prohibitions to reflect practical considerations16 and emergency circumstances;17

codifying a training requirement;18 revising and imposing new posting requirements to 

improve transparency;19 and requiring transmission providers to designate a chief 

compliance officer.20 The NOPR proposes to re-adopt those sections of Part 358 that 

were not appealed and not found infirm in National Fuel. 

B. The Definition of Energy Affiliates

10. Because the court’s decision focused on the Commission’s lack of evidence to 

support expanding the standards of conduct to govern the relationship between natural 

gas transmission providers and their non-marketing affiliates, the interim rule added a 

new provision stating that the standards of conduct do not govern the relationship 

between natural gas transmission providers and their energy affiliates.21 In this NOPR, 

 15 18 CFR 358.4. 

16 18 CFR 358.5(b)(6) and (8). 

17 18 CFR 358.4(a)(2). 

18 18 CFR 358.4(e)(5). 

19 18 CFR 358.5(a) and (b). 

20 18 CFR 358.4(e)(6). 

21 Interim 18 CFR 358.1(e) states: “The Standards of Conduct in this part do not 

govern the relationship between a natural gas Transmission Provider and its energy 

affiliates.” 
Docket No. RM07-1-000 9

consistent with the court’s decision, the Commission proposes to retain this provision on 

a permanent basis for natural gas transmission providers. We seek comment on whether 

this is sufficient to protect customers. 

11. The Commission also is seeking comment on the current restrictions relating to 

energy affiliates of electric utility transmission providers. The court in National Fuel did 

not address this issue because electric utility transmission providers did not appeal Order 

No. 2004. However, the Commission believes it is important to address the issue here. 

12. The Commission has reviewed the existing regulations, the rationale for 

promulgating them, and other modifications being discussed herein concerning whether 

or not to eliminate the restrictions on energy affiliates of electric utility transmission 

providers. If we were to eliminate these restrictions, the non-marketing energy affiliates 

of electric transmission providers would no longer be subject to the standards of conduct. 

However, since we have not yet received comments on the issue or engaged in outreach, 

this NOPR does not suggest regulatory text on this issue. We intend to carefully examine 

any comments received on this issue and weigh them heavily in our deliberations on a 

Final Rule. 

13. When the Commission adopted the definition of energy affiliate in Order No. 

2004, the Commission focused most closely on examples of the potential for undue 

discrimination in favor of energy affiliates of natural gas pipelines, rather than of electric 
Docket No. RM07-1-000 10

utility transmission providers.22 Although the Commission noted certain violations of 

Order No. 889 by electric utility transmission providers,23 these instances involved undue 

preferences given to an electric transmission provider's merchant function. As we discuss 

further below, the definition of marketing affiliate expressly includes an electric 

transmission provider's merchant function and the Commission sees no reason to delete 

that important protection.24 Furthermore, in an area where the Commission made 

findings of undue discrimination that was not covered by Order No. 889 – undue 

preferences given to asset managers – we are proposing, as discussed below, to broaden 

the definition of marketing affiliate so that the standards of conduct explicitly prohibit 

such undue preferences. 

14. Over the past three years, the Commission has engaged in extensive outreach and 

consultation with the industry regarding the standards of conduct. This outreach has 

included three public technical conferences (held in Houston, Chicago, and Scottsdale, 

Arizona) and numerous meetings between industry participants and our staff. Over the 

course of this outreach, we have received information and comments on many important 

issues arising under the standards of conduct. However, this outreach did not cover the 

issue addressed here – energy affiliate restrictions for electric utility transmission 

 22 Order No. 2004 at P 10-11. 

23 Order No. 2004 at P 14. 

24 18 CFR 358.3(c)(2). 
Docket No. RM07-1-000 11

providers. Accordingly, the Commission seeks comment on whether applying the 

standards of conduct to the relationship between electric utility transmission providers 

and their marketing affiliates, but not to their energy affiliates would be sufficient to 

protect customers. Commenters who believe that it is appropriate to retain the standards 

of conduct for the relationship between electric utility transmission providers and their 

energy affiliates should submit evidence to support continued application of the 

definition of energy affiliates to electric utility transmission providers. Commenters who 

believe that we should not apply the standards of conduct to the relationship between 

electric utility transmission providers and their energy affiliates should provide support 

for their position that customers will be sufficiently protected from undue discrimination. 

15. Commenters should include a focus on the type of energy affiliate that they are 

discussing. Making the standards of conduct inapplicable to electric utility transmission 

providers and their energy affiliates would affect the relationship between a transmission 

provider and the following types of non-marketing energy affiliates (except as otherwise 

noted): 

a. affiliated asset managers;25 

b. affiliated transmission customers that do not make sales for resale;26

 25 See 18 CFR 358.3(d)(1) (“involved in transmission transactions”). Below, the 

Commission proposes to separately make the relationship between transmission providers 

and asset managers subject to the standards of conduct by expanding the definition of 

marketing affiliate. 

26 See 18 CFR 358.3(d)(1) (“engages in... transmission transactions”); Order No. 

2004-A at P 44. 
Docket No. RM07-1-000 12

c. affiliated gas entities, e.g., affiliated producers, affiliated gatherers, 

affiliated gas Local Distribution Companies (LDCs), and affiliated intrastate 

pipelines; 

d. affiliated financial institutions that do not engage in physical transactions, 

but only financial transactions;27

e. affiliated entities that aggregate and re-sell transmission capacity without 

making sales for resales of energy;28

f. affiliated electric LDCs;29 

g. affiliated electronic trading platforms;30 and, 

h. affiliated entities that buy, trade or administer electric energy.31

The Commission seeks comments on whether the standards of conduct should continue to 

apply to these relationships. 

16. In addition, the Commission seeks comment, particularly from companies subject 

to both sets of standards, on whether it is desirable to maintain consistency between the 

standards of conduct applicable to natural gas transmission providers and electric utility 

 27 See 18 CFR 358.3(d)(4). 

28 See 18 CFR 358.3(d)(1). 

29 See 18 CFR 358.3(d)(5); Order No. 2004-C at P 24-25 

30 See 18 CFR 358.3(d)(1); Order No. 2004-A at P 4. 

31 See 18 CFR 358.3(d)(3) (“buys, sells, trades or administers electric energy”). 

The Commission believes that the relationship with affiliates that make wholesale sales 

of electric energy in interstate commerce is governed by the definition of marketing. See

18 CFR 358.3(k). 
Docket No. RM07-1-000 13

transmission providers. We note that retaining the energy affiliate restriction for 

electric transmission providers, but not for natural gas transmission providers, would 

create, for some companies, inconsistent rules for different subsidiaries within a holding 

company. For example, an energy affiliate of an electric utility transmission provider 

would be restricted in communicating with that transmission provider, but if a natural gas 

transmission provider owned that same energy affiliate there would be no such 

restriction. Similarly, if a holding company owned both electric utility and natural gas 

transmission providers, two differing sets of rules would apply within the same holding 

company system. The electric transmission provider would be precluded from dealing 

with all energy affiliates in that system, whereas the natural gas pipeline company would 

not. Uniformity could lessen the compliance burden on the industry and ease oversight 

of compliance by the Commission staff, but the Commission recognizes that uniformity 

does not override the Commission’s mandate for customer protection. 

17. Under the Natural Gas Act and the Federal Power Act, the Commission has the 

statutory mandate to prevent and remedy undue discrimination.32 Even absent the 

standards of conduct regulations promulgated under that authority, the Commission has 

 32 Sections 4 and 5 of the Natural Gas Act , 15 U.S.C. 717c and 717e, state that no 

natural gas company shall make or grant an undue preference or advantage with respect 

to any transportation or sale of natural gas subject to the Commission’s jurisdiction. 

Similarly, under sections 205 and 206 of the Federal Power Act, 16 U.S.C. 824d and 

824e, no public utility shall make or grant an undue preference with respect to any 

transmission or sale subject to the Commission’s jurisdiction. 
Docket No. RM07-1-000 14

the authority to prevent and remedy a transmission provider’s undue preference or 

advantage granted in favor of its affiliates. If a transmission provider provides an undue 

preference or advantage in favor of an affiliate that is not covered by the standards of 

conduct, that undue preference may still be prohibited by the Natural Gas Act or Federal 

Power Act. 

18. We are not disturbing the fundamental protections to consumers and competitors 

of electric transmission providers that were adopted in Order No. 889 and retained in 

Order No. 2004. It will continue to be unlawful for electric utility transmission providers 

to provide any undue preference to their merchant function or any affiliate that owns 

generation or sells electricity. These are the core protections that customers and 

competitors have long supported and that we retain here. It also will continue to be 

unlawful for electric transmission providers to provide any undue preference to an 

affiliate selling or trading natural gas. Each of these protections is covered explicitly by 

the definition of marketing affiliate and is left undisturbed. 

C. Revising the Definition of Marketing, Sales or Brokering

19. The interim rule adopted a temporary regulation for natural gas pipeline 

transmission providers at § 358.3(l) that mirrored the exceptions to the definition of 
Docket No. RM07-1-000 15

marketing that were found in Order No. 497.33 Accordingly, marketing means a sale 

of natural gas to any person or entity by a seller that is not an interstate pipeline, except 

when: (1) the seller is selling gas solely from its own production; (2) the seller is selling 

gas solely from its own gathering or processing facilities; or (3) the seller is an intrastate 

natural gas pipeline or a local distribution company making an on-system sale. The 

NOPR proposes to remove the interim regulation codified at § 358.3(l) and incorporate 

those exceptions in the definition of “Marketing, sales or brokering” for natural gas 

transmission providers currently located at § 358.3(e). 

20. The electric utility and natural gas industries differ in certain respects that are 

relevant to the energy affiliate issue. The Commission is proposing, consistent with the 

National Fuel decision, to revise the definition of marketing affiliate to include certain 

exceptions that were adopted in Order No. 497, but deleted in Order No. 2004. These 

exceptions would remove standards of conduct restrictions for a natural gas pipeline with 

respect to an affiliate's sales of gas from its own production, gathering or processing 

facilities. However, sales of electricity from a transmission provider's own "production" 

 33 Interim 18 CFR 358.3(l) states: 

Marketing or brokering means a sale of natural gas to any person or entity by a 

seller that is not an interstate pipeline, except when: 

(1) the seller is selling gas solely from its own production; 

(2) The seller is selling gas solely from its own gathering or processing facilities; 

or 

(3) The seller is an intrastate natural gas pipeline or a local distribution company 

making an on-system sale. 
Docket No. RM07-1-000 16

facilities – i.e., the generating plants operated by its merchant function – were already 

covered in Order No. 889 and, hence, Order No. 2004 did not represent a change in this 

regard. Thus, we do not propose to disturb this longstanding customer protection, and 

will therefore retain the Order No. 2004 definition of marketing affiliate that explicitly 

covers an electric utility transmission provider's merchant function. We also note that 

the gathering and processing exceptions are also inapplicable to electric utility 

transmission providers and, hence, require no comparable change. We seek comment on 

these revised definitions of marketing affiliate for natural gas and electric transmission 

providers. 

21. The Commission also is proposing to expand the definition of marketing, sales or 

brokering to include entities that manage or control transmission capacity, such as asset 

managers or agents. 34 Frequently, asset managers and agents are involved extensively in 

transmission transactions, they stand in the shoes of the transmission customer and act as 

nominating/balancing agent, and have access to all the transmission customer’s 

transmission information.35 The Commission is proposing to include asset 

 34 Generally, asset managers manage or control gas or electric assets, often 

including a transmission customer’s capacity. Agents frequently are authorized to act in 

the place of transmission customers with respect to specified transmission-related 

activities such as nominations, scheduling or billing. 

35 In the investigation of Cleco Corporation, Commission staff observed that 

corporation’s asset manager performed the following services for Cleco Corporation: 

(1) transmission scheduling services; (2) resource coordination and delivery of power 

trading and ancillary services; (3) fuel purchases for generation use; (4) marketing and 

customer relations services; (5) commodity trading; (6) monitoring, energy management, 

(continued) 
Docket No. RM07-1-000 17

managers/agents within the definition of marketing based on information gathered 

during investigations by the Commission’s Enforcement staff. In each of these matters, 

staff investigated, among other issues, asset managers/agents that were also marketing 

affiliates and whether the asset managers received an undue preference from their 

affiliated transmission providers. All of these matters concluded with settlements 

approved by the Commission, including the payment by American Electric Power 

Company, Inc. (AEP) of $21 million, the largest civil penalty in Commission history,36

and the payment by Cleco Corporation of the largest civil penalty under section 214 of 

the Federal Power Act. 37 The third settlement, involving South Carolina Electric and 

Gas Company (SCEG), resulted in SCEG agreeing to a compliance plan. 38 Because 

these investigations were resolved by settlements, the Commission never made any 

specific findings that asset managers/agents and their affiliates engaged in undue 

discrimination. Still, the activities identified by staff provide a sufficient basis for the 

Commission to propose to include asset managers/agents in the definition of marketing 

affiliates. That is the case even though the settled investigations involved asset managers 

 

scheduling, dispatch and accounting and billing services; (7) interaffiliate billing; 

(8) retail and wholesale marketing; and (9) energy trading. Cleco Corporation, 

104 FERC ¶ 61,025 (2003) (Cleco). 

36 American Electric Power Company, Inc., 110 FERC ¶ 61,061 (2005). 

37 See Cleco, supra note 35. 

38 South Carolina Electric & Gas Company, 111 FERC ¶ 61,217 (2005). 
Docket No. RM07-1-000 18

who were also marketing affiliates. However, a review of the voluntary consent 

postings39 on several transmission providers’ OASIS and Internet Web sites shows that 

sometimes asset managers are marketing affiliates, but that sometimes they are not.40 

22. The Commission believes that the standards of conduct should govern the 

relationship between transmission providers and their affiliated asset managers. It would 

likely be unduly discriminatory to permit a transmission provider to inform its affiliated 

asset manager about an upcoming curtailment or outage, unless all other non-affiliated 

asset managers or transmission customers have comparable access to that information. 

Including affiliated asset managers/agents in the definition of marketing would ensure 

that all asset managers are treated in a comparable fashion. The Commission is soliciting 

comments on whether to include this provision in the definition of marketing and 

encourages commenters to identify potential harm of including or not including asset 

 39 Currently, 18 CFR 358.5(b)(4) requires a transmission provider to post notice if 

a non-affiliated transmission customer voluntarily consents, in writing, to allow the 

transmission provider to share the non-affiliated transmission customer’s information 

with a marketing or energy affiliate. 18 CFR 358.5(b)(4). 

40 For example, El Paso Natural Gas Company’s voluntary consent postings on its 

Internet Web site identify that non-affiliated customers have voluntarily consented to 

allow El Paso to disclose their respective information to El Paso’s marketing and energy 

affiliates, e.g., El Paso Field Services, L.P. (an energy affiliate) and El Paso Marketing 

L.P. (a marketing affiliate.) 

http://tebb.epenergy.com/ebbepg/notices/noticeView.asp?sPipelineCode=EPNG&sSubC 

(Dec. 8, 2006). Similar notices of asset management agreements or agency agreements 

can be found at the voluntary consent links of the OASIS or Internet Web sites for 

National Fuel Gas Supply Corp., Texas Eastern Transmission, LP, Tennessee Gas 

Pipeline Company, Potomac Electric Power Company, and Dominion Transmission Inc. 
Docket No. RM07-1-000 19

managers/agents in the definition of marketing. For that purpose, proposed § 358.3(e) 

reads as follows: 

Marketing, sales or brokering means a sale for resale of natural gas or electric 

energy in interstate commerce in U.S. energy or transmission markets. Marketing also 

includes managing or controlling transmission capacity of a third-party as an asset 

manager or agent. 

 (1) A sales and marketing employee or unit includes: 

 (i) An interstate natural gas pipeline's sales operating unit, to the 

 extent provided in § 284.286 of this chapter, and 

(ii) An electric public utility Transmission Provider's energy sales 

unit, unless such unit engages solely in bundled retail sales. 

 

 (2) Marketing or sales does not include incidental purchases or sales of 

 natural gas to operate interstate natural gas pipeline transmission facilities. 

 (3) Marketing means a sale of natural gas to any person or entity by a seller 

 that is not an interstate pipeline, except where: 

 (i) The seller is selling gas solely from its own production; 

 (ii) The seller is selling gas solely from its own gathering or 

 processing facilities; or 

 (iii) The seller is an intrastate natural gas pipeline or a local 

 distribution company making an on-system sale. 

D. Exceptions to the Independent Functioning Requirement -- Risk 

Management Employees and Lawyers

23. Section 358.4 requires, except in emergency circumstances, the transmission 

function employees41 of the transmission provider to function independently of the 

 41 Section 358.3(j) of the Commission’s regulations currently defines transmission 

function employee as an employee, contractor, consultant or agent of a transmission 

(continued) 
Docket No. RM07-1-000 20

marketing affiliates’ employees. Notwithstanding this requirement, since 1988, the 

Commission has developed a body of case law, permitting certain types of employees to 

be shared between a transmission provider and its marketing affiliate. At the request of 

industry participants, Order No. 2004 reiterated these holdings by codifying exceptions to 

the independent functioning requirement that permit the sharing of officers and members 

of the board of directors (directors),42 support employees,43 field and maintenance 

employees,44 and risk management employees.45 Although industry participants urged 

the Commission to codify a general exception regarding the sharing of lawyers, the 

Commission did not do so stating that, if a lawyer participated in transmission policy 

decisions on behalf of a transmission provider, he or she would be considered a 

transmission function employee (and hence, not permissibly shared).46 

24. In describing these exceptions, the Commission stated that the sharing of these 

non-transmission functions allowed the transmission provider to realize the benefits of 

 

provider who conducts transmission system operations or reliability functions, including, 

but not limited to, those who are engaged in day-to-day duties and responsibilities for 

planning, directing, organizing or carrying out transmission-related operations. 

42 18 CFR 358.4(a)(5). 

43 18 CFR 358.4(a)(4). 

44 18 CFR 358.4(a)(4). 

45 18 CFR 358.4(a)(6). 

46 Order No. 2004-A at P 157. 
Docket No. RM07-1-000 21

cost saving through integration where the shared employees do not have duties or 

responsibilities relating to transmission, and generally would not be in a position to give a 

marketing affiliate an undue preference.47 The Commission also stated that the exception 

allowing the sharing of officers and directors facilitated corporate governance activities, 

but that, to the extent a senior officer or director conducts transmission functions or is 

involved in planning, directing or organizing transmission functions, the officer’s or 

director’s status does not automatically exempt him/her from also being a transmission 

function employee.48 In Order No. 2004-A, the Commission stated that, although it 

permitted the sharing of these categories of employees, it would evaluate, in compliance 

audits and investigations, employees’ actual duties to determine whether the transmission 

provider is appropriately applying the exception.49 In other words, regardless of an 

individual’s title or how his or her responsibilities are labeled, if that individual is 

engaged in day-to-day duties and responsibilities for planning, directing, organizing or 

carrying out transmission-related operations, that individual is a transmission function 

employee (and may not be permissibly shared). 

25. Petitioners appealed the codification of the exception for permissibly shared risk 

management employees and the preamble discussion in Order No. 2004 regarding 

 47 Order No. 2004 at P 97. 

48 Order No. 2004-B at P 57. 

49 Order No. 2004-A at P 134. 
Docket No. RM07-1-000 22

permissibly shared lawyers. As mentioned above, in National Fuel, the court did not 

address these matters, and, accordingly, sub silencio, invalidated these aspects of Order 

No. 2004. Accordingly, the Commission is seeking comment on whether to make 

permanent changes adopted by the interim rule by retaining § 358.4(a)(6).50 The 

Commission also seeks comments on whether to make this change applicable to electric 

public utility transmission providers. The Commission is also seeking comments on 

whether additional guidance with respect to permissibly shared employees, such as 

shared risk management employees, lawyers and officers and directors, would be helpful 

given the different structure, sizes and operations of the various transmission providers. 

E. Discretionary Tariff Provision

26. In Order No. 2004, the Commission required each transmission provider to 

maintain a log detailing the circumstances and manner in which it exercised discretion 

under any terms of its tariff and post that information on its OASIS or Internet Web 

site.51 The regulatory language in Order No. 2004 was substantively identical to the 

requirement under Order No. 889, but it was different than the requirement under Order 

No. 497. Former § 161.3(k) promulgated in Order No. 497 required a pipeline to 

 50 Interim 18 CFR 358.4(a)(6) reads: “Transmission Providers are permitted to 

share risk management employees that are not engaged in Transmission Functions or 

sales or commodity functions with their Marketing and Energy Affiliates. This provision 

does not apply to natural gas transmission providers.” 

51 18 CFR 358.5(c)(4). 
Docket No. RM07-1-000 23

maintain a written log of waivers that the pipeline grants with respect to tariff 

provisions that provide for such discretionary waivers and provide the log to any person 

requesting it within 24 hours of the request. On appeal, one of the petitioners claimed 

that § 358.5(c)(4) was broader than former § 161.3(k), arguing that there was a 

significant difference between granting waivers of tariff provisions that provide for such 

discretionary waivers (former § 161.3(k)) and exercising discretion under any terms of its 

tariff (§ 358.5(c)(4)). 

27. To comply with the court’s mandate in National Fuel, the interim rule modified 

§ 358.5(c)(4)(i) 52 so that it only applies to electric transmission providers and added a 

separate provision for natural gas transmission providers at § 358.5(c)(4)(i) that provides 

that natural gas transmission providers must maintain a written log of waivers that the 

natural gas transmission provider grants with respect to tariff provisions that provide for 

such discretionary waivers and provide the log to any person requesting it within 24 

hours of the request. The purpose of the discretionary waiver posting requirement is to 

enable transmission customers to determine whether they are similarly situated and 

potentially entitled to comparable treatment by the transmission provider. 

 52 Section 358.5(c)(4)(i) provides that Electric Transmission Providers must 

maintain a written log, available for Commission audit, detailing the circumstances and 

manner in which they exercised their discretion under any terms of the tariff. The 

information contained in this log is to be posted on the OASIS or Internet Web site within 

24 hours of when a Transmission Provider exercises its discretion under any terms of the 

tariff. 18 CFR 358.5(c)(4)(i). 
Docket No. RM07-1-000 24

28. As mentioned above, in National Fuel, the court did not address this matter, 

and, accordingly, sub silencio, invalidated this aspect of Order No. 2004. The 

Commission is faced with making permanent this requirement for electric transmission 

providers, while having different requirements for natural gas transmission providers. 

Accordingly, the Commission is seeking comment on whether to make permanent 

changes adopted in the interim rule by retaining §§ 358.5(c)(4)(i) and (ii) and seeking 

suggestions on what type of requirement is appropriate to give similarly situated 

customers sufficient information to determine whether they are being treated in a nondiscriminatory fashion with respect to a transmission provider’s discretionary activities. 

The Commission also encourages commenters to include suggestions on how we can 

craft the scope of the discretionary waiver requirement to minimize the burden on 

transmission providers while balancing the need for transparency in the market. 

F. Timing of When a New Natural Gas Transmission Provider Becomes 

Subject to the Standards of Conduct

29. Under Order No 497, a natural gas transmission provider became subject to the 

standards of conduct when the transmission provider commenced transportation 

transactions with its marketing or brokering affiliate.53 In the preamble of Order No. 

2004, the Commission stated that newly certificated transmission providers would 

become subject to the standards of conduct when the transmission providers begin 

soliciting business or negotiating contracts as those are activities which the Commission 

 53 Former 18 CFR 161.1 (2003). 
Docket No. RM07-1-000 25

considers transmission function activities. In Order No. 2004-B, the Commission 

stated that a new interstate pipeline should observe the standards of conduct when the 

pipeline is granted and accepts a certificate of public convenience and necessity and 

becomes subject to the Commission’s jurisdiction under the Natural Gas Act.54 The 

Commission stated that its goal was to ensure that newly formed pipelines provide nondiscriminatory treatment and limit their ability to unduly favor their marketing and 

energy affiliates.55 The timing of applicability of the standards of conduct was one of the 

items appealed, but not addressed in the National Fuel decision and vacated sub silencio. 

In the interim rule, the Commission did not require natural gas transmission providers to 

observe the standards of conduct until they commence transportation transactions with 

their marketing affiliates. 

30. The issue on appeal was whether the Commission could apply the standards of 

conduct to a holder of a certificate that has not yet commenced transportation of natural 

gas. The Commission does not have any evidence that affiliate abuse has occurred in the 

time period before transportation commences, but believes there is clearly an incentive 

for the transmission provider to give an undue preference to its affiliates. A transmission 

provider must observe the non-discrimination provisions of sections 4 and 5 of the 

Natural Gas Act (and sections 205 and 206 of the Federal Power Act). The Commission 

 54 Order No. 2004-B at P 136. 

55 Order No. 2004-C at P 46. 
Docket No. RM07-1-000 26

seeks comment on when a transmission provider should be required to comply with the 

standards of conduct and is proposing the following modification to § 358.4(e)(2). 

Each Transmission Provider must be in full compliance with the standards of 

conduct within 30 days of becoming subject to the Commission’s jurisdiction. 

G. Revising § 358.5(b)(8) 

31. Currently, § 358.5(b)(8) states that a transmission provider is permitted to share 

information necessary to maintain the operations of the transmission system with its 

energy affiliates. In the Order No. 2004 proceeding, natural gas commenters asked the 

Commission to adopt a provision allowing communication of operational information 

with energy affiliates, such a producers, gatherers or LDCs. They argued that prohibiting 

the sharing of operational information might endanger the reliability of the gas 

transmission systems.56 Accordingly, Order No. 2004 codified current § 358.5(b)(8). In 

Order No. 2004, the Commission provided additional clarification explaining that this 

provision permits a transmission provider to share day-to-day, operational-type 

information with interconnected energy affiliates necessary to maintain the pipelines’ 

operations, such information includes confirmations, nominations and schedulers with 

upstream producers and gathering facilities, operational data relating to interconnection 

points and communications related to the maintenance of interconnected facilities. The 

Commission added that it expected that these types of communications would take place 

 56 For electric transmission providers, a provision allowing communications 

relating to generation dispatch exists at 18 CFR 358.5(b)(6) of the Commission’s 

regulations. 
Docket No. RM07-1-000 27

between the operators of the pipeline or gas control facilities.57 As the Commission is 

proposing that the standards of conduct will no longer govern the relationship between 

natural gas transmission providers and their energy affiliates, it appears that this 

provision is no longer necessary because communications between a natural gas 

transmission provider and its affiliated/interconnected gatherer(s), producer(s) and LDCs 

are not restricted by the standards of conduct. Therefore, the Commission proposes to 

delete § 358.5(b)(8) from the regulations and seeks comments on this proposal. 

H. Changes to Facilitate Integrated Resource Planning and Competitive 

Solicitations 

32. Since Order No. 2004 was issued, industry participants have sought staff guidance 

on standards of conduct requirements to assist with their compliance efforts. To provide 

further guidance, the Commission held three standards of conduct technical conferences, 

the most recent being held on April 7, 2006, and staff posted a “Frequently Asked 

Questions” (FAQs) page on the Commission’s Internet Web site. Following the April 7, 

2006 technical conference, staff began a series of outreach meetings with various 

industry participants, including public utilities, industry trade associations and state 

commissions, to discuss ways for the Commission to address the applicability of the 

standards of conduct in the context of business activity that the Commission did not 

address in Order No. 2004, such as integrated resource planning and competitive 

solicitations. 

 57 Order No. 2004-A at P 203. 
Docket No. RM07-1-000 28

33. To address integrated resource planning and competitive solicitations, the 

Commission proposes to make changes to the standards of conduct intended to make 

public utilities’58 integrated resource planning and procurement more accurate and 

efficient, particularly in their consideration of electric transmission. The standards of 

conduct apply to “any public utility that owns, operates or controls facilities used for the 

transmission of electric energy in interstate commerce,” but do not apply to independent 

system operators (ISOs) or regional transmission organizations (RTOs).59 In conducting 

integrated resource planning, a public utility evaluates its current and future mix of 

generation, transmission, demand-side management and other resources to meet future 

demand while minimizing costs, ensuring reliability, and complying with a state’s 

environmental requirements. As an example, integrated resource planning may help a 

public utility or state commission choose to meet load growth through the addition of a 

new generation resource, a new demand resource, or through new transmission resources. 

There is a wide variety of methods for conducting integrated resource planning. Some 

states require public utilities to periodically submit an integrated resource plan. Such 

 58 Under section 201(e) of the Federal Power Act, a public utility is “any person 

who owns or operates facilities subject to the jurisdiction of the Commission.” 16 U.S.C. 

824(e). The standards of conduct apply to a public utility that is a transmission provider, 

which is defined as “any public utility that owns, operates or controls facilities used for 

the transmission of electric energy in interstate commerce” in addition to certain 

interstate natural gas pipelines. 18 CFR 358.3(a). 

59 18 CFR 358.1(b). 
Docket No. RM07-1-000 29

submissions are typically subject to some review and comment by the public and 

review and approval by the applicable state commission. 

34. The Commission believes that improved coordination between transmission 

planning, generation planning and demand response programs, which are the main 

elements of integrated resource planning, is necessary to improve the economics and 

reliability of the transmission grid. In the next several years, reliability concerns are 

expected to grow as transmission investment has lagged behind load growth.60 As 

recently stated by North American Electric Reliability Council (NERC), “[b]ulk power 

system reliability and adequacy depends on close coordination of generation and 

transmission planning and demand response programs.”61 The Commission also 

understands that some states are requiring greater consideration of transmission in public 

utilities’ integrated resource planning. In consideration of these developments, the 

Commission seeks to ensure that the evaluation of transmission in public utilities’ 

 60 After an extensive assessment, the NERC recently concluded that “[e]xpansion 

and strengthening of the transmission system continues to lag demand growth and 

expansion of generating resources in most areas.” NERC, 2006 LONG-TERM 

RELIABILITY ASSESSMENT, at p. 7 (Oct. 16, 2006). See also Promoting Transmission 

Investment through Pricing Reform, Order No. 679, 71 FR 43293 (July 31, 2006), FERC 

Stats. & Regs. ¶ 31,222, at P 10 (July 20, 2006) (citations omitted) (observing that 

transmission investment has declined while load has doubled), order on reh’g, Order No. 

679-A, 117 FERC ¶ 61,327 (Dec. 22, 2006). 

61 NERC, 2006 LONG-TERM RELIABILITY ASSESSMENT, at p. 8; see also id. at p. 

13 (“In the long term, reliable transmission will depend upon the close coordination of 

generation and transmission planning and construction and the adoption of longer term 

planning horizons....”). 
Docket No. RM07-1-000 30

planning and procurement is as accurate and efficient as possible. The Commission 

proposes to create a category of employees under the standards of conduct, “planning 

employees,” who are permitted to engage in all aspects of “integrated resource planning” 

for bundled retail load, to receive non-public transmission information, and to interact 

with transmission function employees, provided that the integrated resource planning is 

conducted pursuant to state mandate. 

35. The Commission also understands that transmission concerns are becoming a 

greater factor in resource procurement. A public utility’s integrated resource plan often 

serves as the road map for the public utility’s resource procurement. For instance, a 

public utility may present an integrated resource plan that specifically calls for long-term 

procurement of a certain type of energy resource through a competitive solicitation. Such 

competitive solicitations may also be subject to state review and, if they result in the 

award of long-term contract to an affiliate, review by the Commission.62 The 

Commission understands the importance of ensuring that the evaluation of transmission 

in procurement is as accurate and efficient as possible. The Commission also proposes to 

create a category of employees under the standards of conduct, “competitive solicitation 

employees,” who are permitted to conduct competitive solicitations intended to serve 

bundled retail load, and to receive non-public transmission information and to interact 

 62 See, e.g., Southern California Edison on behalf of Mountainview Power Co., 

LLC, 106 FERC ¶ 61,183, at P 58 (2004) (setting forth criteria for section 205 review of 

affiliate sales for contracts of one-year or longer), order on reh’g, 109 FERC ¶ 61,086, 

order on reh’g, 110 FERC ¶ 61,319 (2005). 
Docket No. RM07-1-000 31

with transmission function employees in order to evaluate proposals submitted in a 

competitive solicitation. 

36. These Commission proposals to relax the standards of conduct to facilitate 

integrated resource planning and competitive solicitations are consistent with the 

treatment of bundled retail load in the standards of conduct as outlined in Order No. 

2004. The standards of conduct exempt from the definition of marketing affiliate 

employees, those employees involved “solely in bundled retail sales.”63 As such, 

bundled retail sales employees are not subject to the standards of conduct in most 

respects. In an extension of this policy, the Commission’s proposals are restricted to 

integrated resource planning for, and competitive solicitations to procure supply to serve, 

bundled retail load. 

37. In proposing to facilitate integrated resource planning and competitive 

solicitations through changes to the standards of conduct, the Commission is mindful of 

the goal of the standards of conduct to prevent undue preferences, specifically by 

preventing transmission providers from providing unduly preferential treatment to their 

marketing and energy affiliates. Thus, the Commission will place restrictions on both 

planning employees and competitive solicitation employees in order to prevent those 

employees from providing an undue preference to the transmission provider’s marketing 

and energy affiliates. The Commission seeks to strike a balance between the goal of 

 63 18 CFR 358.3(e)(2). 
Docket No. RM07-1-000 32

diminishing opportunities for undue preferences with the goal of improving the 

efficiency and accuracy of integrated resource planning and competitive solicitations. 

Along these lines, as discussed below, the Commission seeks comment on whether or not 

the proposal to limit the new categories of planning employees and competitive 

solicitation employees to perform their functions only for bundled retail load is necessary 

to prevent undue discrimination. 

1. Integrated Resource Planning – Planning Employees

38. In its outreach regarding integrated resource planning, staff heard a common 

refrain from public utilities, that the standards of conduct restrict their ability to conduct 

integrated resource planning because they restrict access to non-public transmission 

information and restrict transmission function employees from interacting with 

employees conducting integrated resource planning. Similarly, in its comments on the 

Open Access Transmission Tariff (OATT) Reform NOPR,64 the National Association of 

Regulatory Utility Commissioners called for “allow[ing] communications between 

resource and transmission planners for the purpose of developing long-term resource 

 64 Preventing Undue Discrimination and Preference in Transmission Service, 

Docket No. RM05-25-000, 71 FR 32635 (June 6, 2006), 71 FR 39251 (July 12, 2006), 

FERC Stats. & Regs. ¶ 32,603 (May 19, 2006) (OATT Reform NOPR). 
Docket No. RM07-1-000 33

planning documents to satisfy State-commission integrated resource planning 

requirements.”65 

39. The information sharing prohibitions of the standards of conduct affect the type of 

transmission information that planners use to conduct integrated resource planning. 

Public utilities relying on marketing or energy affiliate employees to perform their 

integrated resource planning are prohibited from obtaining non-public transmission 

information from the transmission provider and, instead, use publicly-available 

information. In staff’s outreach sessions, some public utilities raised concerns, for 

example, that this prohibition precludes long-term planners from obtaining information 

about generation projects in the interconnection queue, or from obtaining information 

regarding planned retirements of generation. With incomplete transmission information, 

public utilities contended, transmission analysis for integrated resource planning is 

incomplete. As a result, they added, the IRP process is less efficient and more costly, and 

the resulting integrated resource plan is inferior. Public utilities contended, in effect, that 

the information sharing prohibitions of the standards of conduct create a gap between the 

transmission information needed to conduct integrated resource planning and the 

transmission information available to their employees who conduct integrated resource 

planning. 

 65 Comments of National Association of Regulatory Utility Commissioners, 

Preventing Undue Discrimination and Preference in Transmission Service, Docket No. 

RM05-25-000, at p. 12 (filed Aug. 8, 2006).
Docket No. RM07-1-000 34

40. Public utilities also asserted that the independent functioning requirement of the 

standards of conduct hinders integrated resource planning because the requirement 

prohibits planners from working with transmission function employees and taking 

advantage of their understanding of the transmission system. 

41. The Commission seeks comment on whether and how the standards of conduct 

preclude those who conduct integrated resource planning from obtaining needed 

transmission information. Commenters should explain what types of information, if any, 

cannot reach such planners under the current standards of conduct and how such 

information assists in creating an accurate integrated resource plan. The Commission 

also seeks comment on whether planning employees would also need access to nonpublic customer information in addition to non-public transmission information. 

42. The Commission proposes to create a new category of employees called “planning 

employees” who would be permitted to direct, organize, and carry out all aspects of 

integrated resource planning including aspects related to transmission and generation 

planning. For the purpose of conducting integrated resource planning, planning 

employees would be permitted to receive non-public transmission information (but not 

non-public customer information) from the transmission provider and to interact with 

transmission function employees. 66 In order to allow planning employees to interact 

 66 To the extent that transmission function employees disclose non-public 

transmission information that is not related to integrated resource planning, the 

transmission provider must observe the posting requirements of 18 CFR 358.5(b)(2). 
Docket No. RM07-1-000 35

with transmission function employees, planning employees would be exempt from the 

independent functioning requirement. The Commission seeks comment on the creation 

of this category, including the potential benefit and harm to the market. 

43. To ensure that an undue preference is not given to marketing or energy affiliates, 

the Commission also proposes several restrictions and limitations. As part of this 

proposal, the Commission would add a definition for the term “integrated resource 

planning” to the standards of conduct, which would serve to describe and delineate the 

types of resource planning activities in which planning employees could participate. The 

definition is intended to include all integrated resource planning to serve bundled retail 

load conducted by public utilities that is mandated by the states. The Commission does 

not intend to exclude from this definition any state’s mandated integrated resource 

planning to serve bundled retail load.67

44. We understand that some public utilities conduct integrated resource planning that 

is not subject to state review. Under the proposed regulations, if a public utility conducts 

integrated resource planning that is not required by state mandate, it could not take 

advantage of the planning employees category. The Commission also seeks comment on 

this limitation. For example, are there states that do not have an explicit integrated 

resource planning mandate, but that, nonetheless, review and approve integrated resource 

plans prepared and submitted by the public utilities? 

 67 The Commission also understands that some states refer to integrated resource 

planning by different terms. 
Docket No. RM07-1-000 36

45. The Commission also proposes to limit the definition of “integrated resource 

planning” to planning that is designed to meet “future bundled retail load obligations.” 

This limitation cabins the work of planning employees to work on bundled retail load 

obligations and, thereby, precludes them from working on a public utility’s other load 

obligations, such as wholesale load obligations arising from contract. By this limitation, 

the Commission seeks to ensure that the benefits of this proposal accrue to a public utility 

in service of its retail customers and not to benefit a utility in competition with other 

wholesale market participants. We seek comments on whether or not this limitation is 

necessary to prevent undue discrimination. 

46. To further restrict opportunities for planning employees to provide undue 

preferences to the transmission provider’s marketing or energy affiliates, planning 

employees would be subject to the “no-conduit rule;” that is, they could not relay any 

non-public transmission information received to any marketing or energy affiliate. 

Planning employees also would be restricted from participating in the sales or purchases 

of energy, capacity, ancillary services or transmission services to ensure that they did not 

use their access to transmission information and to transmission function employees to 

benefit the public utility or its affiliates in transactions with other market participants. In 

other words, if the integrated resource planning involves bundled retail load and is the 

result of a state mandate, the planning and the employees conducting it are not subject to 

all of the usual restrictions of the standards of conduct, although they would be subject to 

other restrictions outlined here. 
Docket No. RM07-1-000 37

47. The Commission seeks comment on whether planning employees should be 

restricted to planning for bundled retail load or whether they should also be permitted to 

plan for Provider of Last Resort (POLR) load, grandfathered wholesale requirements 

contracts, and wholesale full requirements load. Commenters addressing this issue 

should indicate the type of load for which they conduct integrated resource planning or 

for which their state requires integrated resource planning, e.g., only for bundled retail 

load, or for bundled retail load, POLR load, and wholesale requirements load.68 We note 

that for purposes of Order No. 888 and the Commission’s enforcement practices, we have 

treated pre-1996, grandfathered wholesale requirements contracts similar to how we have 

treated bundled retail load.69 We seek comments on whether or not the Commission 

should continue this practice for integrated resource planning. Commenters should also 

address whether the Commission could sufficiently facilitate integrated resource planning 

by limiting the definition of integrated resource planning in the regulations to planning 

 68 Here, the Commission delineates integrated resource planning by type of load or 

contract. Staff research indicates that some state regulations do not delineate the scope of 

their integrated resource planning requirement in the same way. For instance, some 

states require that a utility conduct integrated resource planning for its “customers” 

without any delineation between wholesale or retail customers. Other states require 

planning for “wholesale customers” without delineation between wholesale requirements 

customers and other wholesale customers. To assist in clarification of this issue, 

commenters should delineate precisely the scope of a state’s planning requirements 

69 Cf. 18 CFR 35.28(c)(2)(i) and (ii). 
Docket No. RM07-1-000 38

only for bundled retail load. Commenters should address whether it is more costeffective and efficient to permit planning employees to conduct integrated resource 

planning for obligations other than bundled retail sales and what, if any, protections 

should be put in place to guard against undue preferences to marketing and energy 

affiliates. Does limiting planning employees to bundled retail sales load unnecessarily 

divide a utility’s integrated resource planning? 

48. Under this proposal, public utility transmission providers that no longer have 

bundled retail load obligations but have POLR obligations because they operate in states 

that have retail access or retail choice would not be permitted to share non-public 

transmission information to conduct integrated resource planning.70 In Order No. 2004-

A, the Commission rejected a generic request to treat POLR service obligations under 

state law as equivalent to a transmission provider’s bundled retail sales obligations, 

which would have exempted POLR service from the definition of marketing affiliate.71 

The Commission also indicated that it would entertain case-by-case requests for 

exemption of POLR service. In several instances, the Commission has granted requests 

by transmission providers that, under specific conditions, the POLR service should be 

 70 The standards of conduct apply to merchant functions that are engaged in sales 

or purchases of power that will be resold at retail under state retail choice programs. 

Order No. 2004 at P 78. 

71 See Order No. 2004-A at P 127. 
Docket No. RM07-1-000 39

accorded the same treatment as bundled retail sales.72 The Commission seeks 

comment on whether utilities with POLR service obligations also should be allowed to 

take advantage of the planning employees category, or whether expanding the category to 

include POLR service obligations might harm competition or give marketing or energy 

affiliates an undue preference. 

49. Finally, we are concerned that planning employees not be used in a manner that 

unduly discriminates against non-affiliated wholesale suppliers. Specifically, in 

permitting planning employees access to non-public transmission information and to 

transmission function employees, we are concerned that such access could be used to 

favor utility-owned generation over purchases from non-affiliates. For example, in the 

IRP process, planning employees could use non-public transmission information to 

evaluate only self-build options and ignore any consideration of purchases from third 

parties. Such an action would be inconsistent with the underlying purpose of the 

proposal, which is to increase the economic use of the grid by allowing planning 

employees to integrate the consideration of economic alternatives. 

50. To address this concern, the Commission proposes to limit the definition of 

integrated resource planning to instances in which the IRP process includes evaluation of 

third-party resources. The proposed limit is designed to balance the goal of facilitating 

least-cost resource procurement with the concern that the planning employees category 

 72 See, e.g., Cinergy Services, Inc., 111 FERC ¶ 61,512 (2005). 
Docket No. RM07-1-000 40

not be used to discriminate against non-affiliates. We wish to clarify, however, that 

such a limitation does not mean the Commission intends to supervise or otherwise 

prescribe the manner in which states consider third-party resources as part of their IRP 

processes or that the Commission intends a final integrated resource plan to necessarily 

include third-party resources. The states are in the best position to make those decisions 

as they are responsible for resource procurement for bundled retail load. Therefore, the 

Commission will not second-guess the manner in which states evaluate third-party 

resources; we only require that such resources be considered if a public utility seeks to 

use the planning employees category.73

51. We seek comment on the foregoing restrictions placed on planning employees’ 

activities. In their comments, commenters should address the balance the Commission is 

trying to achieve between providing planning employees with sufficient access to 

transmission information and to transmission function employees to conduct accurate and 

efficient integrated resource planning while at the same time ensuring that such access 

does not enlarge opportunities for planning employees to provide undue preferences to 

the transmission provider’s marketing or energy affiliates. Thus, commenters who 

believe that the restrictions go too far should explain why, and, also, explain why the 

restrictions are unnecessary to prevent granting an undue preference. Likewise, 

 73 This approach is consistent with the category being created below for 

competitive solicitations. We would permit competitive solicitation employees to have 

access to non-public transmission information and transmission function employees 

because, in those situations, the utility has allowed participation by third-party suppliers. 
Docket No. RM07-1-000 41

commenters who believe that the restrictions do not go far enough to prevent the 

granting of undue preferences should explain why and articulate how further restrictions 

can be fashioned while still providing planning employees with sufficient access to 

transmission information and to transmission function employees. Finally, commenters 

supporting the restrictions should explain the basis for their support. We urge 

commenters to be as specific as possible in their comments. 

2. Competitive Solicitation Employees

52. In staff’s outreach sessions, some public utilities also asserted that the standards of 

conduct hinder their ability to conduct efficient competitive solicitations, which are often 

conducted pursuant to an integrated resource plan. Some public utilities contended that 

the standards of conduct hinder their ability to evaluate the transmission impacts and 

costs of proposals responsive to competitive solicitations. 

53. In raising this concern, some public utilities focused on the independent 

functioning requirement of the standards of conduct, because this requirement prohibits 

transmission function employees from working with bid evaluators to determine the 

transmission costs of bids responsive to a competitive solicitation. To make the 

evaluation of transmission costs more accurate, public utilities that conduct competitive 

solicitations seek to allow greater interaction between transmission function employees 

and those employees who conduct competitive solicitations. In staff’s outreach, some 

public utilities contended that greater interaction would allow employees conducting 

competitive solicitations to engage in an iterative method for determining the “all-in” 
Docket No. RM07-1-000 42

costs of a bid or combination of bids, i.e., the “net effect of a portfolio.” For instance, 

two 100-MW projects evaluated together may cost less in transmission upgrades than the 

same two projects would cost if calculated separately because one may alleviate a 

constraint caused by the other. Through an iterative method, bid evaluators could, for 

example, submit a portfolio of bid options to transmission function employees, receive 

feedback on transmission costs related to the portfolio, refine the portfolio, and re-submit 

it to transmission function employees for further evaluation, and, if necessary, repeat 

these steps until a complete evaluation is achieved. In sum, some public utilities 

contended that, currently, they are unable to obtain an accurate picture of the true 

transmission costs of a bid and may not select the least-cost proposal. 

54. The Commission proposes to add a new category of “competitive solicitation 

employees,” who would be permitted to direct, organize and execute certain “competitive 

solicitations.” Under this proposal, competitive solicitation employees could obtain nonpublic transmission information (but not non-public customer information) from the 

transmission provider to the extent necessary to evaluate bids or proposals responsive to a 

competitive solicitation.74 The Commission does not believe that competitive solicitation 

employees have a need for non-public customer information. To the same extent, 

competitive solicitation employees could interact with transmission function employees. 

 74 To the extent that transmission function employees disclose transmission 

information that is not related to competitive solicitations, the transmission provider must 

observe the posting requirements of 18 CFR 358.5(b)(3). 
Docket No. RM07-1-000 43

In order to allow competitive solicitation employees to interact with transmission 

function employees, competitive solicitation employees would be exempt from the 

independent functioning requirement. 

55. To ensure that an undue preference is not given to marketing or energy affiliates, 

the Commission proposes several restrictions and limitations.75 The term “competitive 

solicitations” would be defined as a solicitation by a public utility to obtain energy, 

capacity, or ancillary services to serve bundled retail load pursuant to an integrated 

resource plan. The definition would be limited to competitive solicitations that: (1) are 

for the purposes of meeting bundled retail load and (2) are made pursuant to a statemandated integrated resource plan. The Commission intends the first limitation to ensure 

that competitive solicitation employees are acting for the benefit of bundled retail load 

customers and not obtaining energy, capacity, or ancillary services for the purpose of 

meeting a public utility’s other obligations. The Commission intends the second 

limitation to ensure that the public utility does not use competitive solicitation employees 

for any attempt to obtain energy, capacity or ancillary services. Thus, this limitation 

ensures that competitive solicitation employees are used only for relatively major 

procurements by virtue of their having been conducted as part of integrated resource 

planning. This limitation on competitive solicitations would also ensure state 

 75 If a utility’s competitive solicitation results in the award of a contract to its 

affiliate, the Commission will review the resulting contract under the guidelines set forth 

in Allegheny Energy Supply Company, LLC, 108 FERC ¶ 61,082, at P 22 (2004). 
Docket No. RM07-1-000 44

involvement as integrated resource planning is defined as planning undertaken 

pursuant to state mandate. 

56. The Commission seeks comment on the type of load and contracts that would fall 

within the definition of a competitive solicitation and, thereby, be eligible to be supplied 

through a competitive solicitation that benefits from non-public transmission information 

and access to transmission function employees and what, if any, other protections should 

be put in place to guard against undue preferences to marketing and energy affiliates. As 

noted above, for purposes of Order No. 888 and the Commission’s enforcement practices, 

we have treated pre-1996, grandfathered wholesale requirements contracts similar to how 

we have treated bundled retail load. We seek comments on whether or not the 

Commission should continue this practice for competitive solicitations. Should load 

arising from POLR obligations or from wholesale requirements contracts, full or partial, 

be supplied through such a competitive solicitation? The Commission recognizes that 

supply obtained for bundled retail sales sometimes is used to make wholesale sales, for 

instance, when bundled retail load decreases. Does this make restricting competitive 

solicitations to bundled retail sales unworkable? 

57. In order to protect against the potential for undue preferences, the Commission 

proposes further restrictions on competitive solicitation employees’ activities similar to 

the restrictions on planning employees. Competitive solicitation employees would be 

subject to the “no-conduit rule,” that is, they could not relay any non-public transmission 
Docket No. RM07-1-000 45

information received to any marketing or energy affiliate.76 Competitive solicitation 

employees also would be restricted from participating in the sales or purchases of energy, 

capacity, ancillary services or transmission services, other than in competitive 

solicitations, to ensure that they do not use their access to non-public transmission 

information and to transmission function employees to benefit the public utility or its 

affiliates in transactions with other market participants. Competitive solicitation 

employees could not direct, organize, or participate in the development of a bid, or 

proposal submitted in a competitive solicitation or a benchmark used in a competitive 

solicitation. Further, analogous to the no-conduit rule, competitive solicitation 

employees could not provide any non-public bid or competitive solicitation information 

to marketing or energy affiliates. In other words, if the competitive solicitation involves 

bundled retail load and is the result of a state-mandated integrated resource plan, the 

competitive solicitation and the employees conducting it are not subject to all of the usual 

restrictions of the standards of conduct, although they would be subject to other 

restrictions outlined here. 

58. The Commission seeks comment on its competitive solicitation employees 

proposal and the restrictions that should apply to their activities, including the potential 

benefit and harm to the market, specifically, whether competitive solicitation employees 

would need access to non-public customer information in addition to non-public 

 76 Proposed 18 CFR 358.5(b)(9). 
Docket No. RM07-1-000 46

transmission information. The Commission would permit planning employees to serve 

as competitive solicitation employees and vice-versa. The Commission seeks comment 

on whether employees should be permitted to serve in both capacities. Because 

competitive solicitation employees would have access to non-public transmission 

information and to transmission function employees only for the purpose of conducting a 

competitive solicitation, the Commission expects that competitive solicitation employees 

would not need this access until after responses to a competitive solicitation are received. 

The Commission seeks comment on this restriction. 

59. This proposed category of competitive solicitation employees may increase the 

opportunities to provide an undue preference that is not sufficiently offset by the 

proposed restrictions on the activities of competitive solicitation employees. Concerns 

about undue preferences are greater in the competitive solicitation process than in the IRP 

process, because an undue preference provided in a competitive solicitation can lead to a 

more concrete, nearer-term benefit, e.g., a contract, than a similar preference granted in 

the IRP process, which has a longer term focus and typically results in non-binding 

recommendations. Further, competitive solicitation employees may be evaluating thirdparty proposals in competition with proposals by affiliates or proposals by the public 

utility to build itself the resources required. Thus, it is important to ensure that 

competitive solicitation employees do not provide an undue preference, particularly 

through the use of non-public transmission information or access to transmission function 

employees, throughout the competitive solicitation process from design through contract 
Docket No. RM07-1-000 47

award.77 Accordingly, the Commission seeks comments on whether its proposal 

strikes an appropriate balance between allowing access to transmission information and 

to transmission function employees while at the same time including appropriate 

restrictions to prevent undue preferences. 

60. The Commission seeks comment on whether, instead of having separate categories 

for planning employees and for competitive solicitation employees, it should establish 

one category to include both sets of employees. States and utilities treat integrated 

resource planning and competitive solicitations differently in some respects; in other 

respects, the two are treated together. Commenters should explain whether they would 

use the same personnel for each category. Commenters should also address whether 

keeping the categories separate assists in preventing undue discrimination. Commenters 

advocating a single category for both planning and competitive solicitation employees 

should describe the permissible activities for such employees and set forth the restrictions 

that would apply to their activities. 

3. Specific Proposals

61. In light of the discussion above, the Commission proposes the following 

regulatory changes. We propose the following revision to the definition of Transmission 

Function employee in § 358.3(j): 

 77 This concern about undue preference is lessened in states that require an 

independent evaluator to play a role in a public utility’s competitive solicitation. 
Docket No. RM07-1-000 48

 (j) Transmission Function employee means an employee, contractor, 

consultant or agent of a Transmission Provider, other than a Planning Employee 

as defined in § 358.3(o), who conducts transmission system operations or 

reliability functions, including, but not limited to, those who are engaged in dayto-day duties and responsibilities for planning, directing, organizing or carrying 

out transmission-related operations. 

We propose the following additions to the definitions in § 358.3: 

 (l) Integrated Resource Planning means a process to establish a plan, 

required by state law, regulation or other state mandate, for a public utility to 

meet its future bundled retail load obligations that evaluates a range of 

alternatives that includes consideration of third party resources. 

(m) Competitive Solicitation means a solicitation by a public utility to 

obtain energy, capacity, or ancillary services for the purposes of meeting the 

public utility’s bundled retail load obligations pursuant to an Integrated Resource 

Planning obligation. 

(n) Competitive Solicitation Employee means an employee, contractor, 

consultant or agent of a public utility who directs, organizes, or executes the 

public utility’s Competitive Solicitations. 

(o) Planning Employee means an employee, contractor, consultant or 

agent of a public utility who directs, organizes or conducts the public utility’s 

Integrated Resource Planning. 

We propose the following additions to the Independent Functioning section, § 358.4: 

(a) (7) A Transmission Function employee may interact with a Planning 

Employee for the purpose of engaging in Integrated Resource Planning. A 

Planning Employee, who receives non-public transmission information pursuant 

to § 358.5(b)(8) or who interacts with a Transmission Function employee, must 

not: 

(i) Participate in sales of energy, capacity or ancillary services or in sales 

of transmission services, including directing, organizing, or otherwise preparing 

a bid, benchmark, or proposal by the public utility or by the public utility’s 

Marketing or Energy Affiliates to supply energy, capacity or ancillary services; 

(ii) Participate in purchases of energy, capacity or ancillary services or of 

purchases of transmission services other than in a Competitive Solicitation on 

behalf of its public utility Transmission Provider; or 
Docket No. RM07-1-000 49

(iii) Participate in non-planning transmission functions. 

(a) (8) A Transmission Function employee may interact with a 

Competitive Solicitation Employee for the purpose of evaluating the 

transmission component of bids or proposals considered in a Competitive 

Solicitation. A Competitive Solicitation Employee, who receives non-public 

transmission information pursuant to § 358.5(b)(9) or who interacts with a 

Transmission Function employee, must not: 

(i) Provide any non-public bid, proposal, or Competitive Solicitation 

information to the Marketing or Energy Affiliate employees; 

(ii) Participate in sales of energy, capacity, ancillary services or in sales of 

transmission services, including directing, organizing, or otherwise preparing a 

bid, benchmark, or proposal by the public utility or by the public utility’s 

Marketing or Energy Affiliates to supply energy, capacity or ancillary services; 

or 

(iii) Participate in any purchases of energy, capacity or ancillary services 

or of transmission services other than a Competitive Solicitation on behalf of its 

public utility Transmission Provider. 

We propose the following additions to the Non-Discrimination Requirements 

section in § 358.5(b): 

 (8) A Transmission Provider may share transmission information covered by 

§§ 358.5(a) and (b)(1) with Planning Employees to the extent those employees 

need that information to direct, organize or carry out Integrated Resource 

Planning, provided that such employees do not act as a conduit to share such 

information with any Marketing or Energy Affiliates. 

 (9) A Transmission Provider may share transmission information covered by 

§§ 358.5(a) and (b)(1) with Competitive Solicitation Employees to the extent 

those employees need that information to direct, organize, or execute 

Competitive Solicitations, provided that such employees do not act as a conduit 

to share such information with any Marketing or Energy Affiliates. 

I. Changes to the Definition of Exempt Wholesale Generator

62. Currently, the standards of conduct define affiliate for an exempt wholesale 

generator (EWG) by referring to section 32a of Public Utility Holding Company Act of 

1935 (PUHCA) and section 214 of the Federal Power Act (which in turn references, 
Docket No. RM07-1-000 50

section 2(a) of PUHCA).78 With respect to the standards of conduct, a determination 

of affiliation for EWGs is based on whether one company controls five percent or more 

of its stock.79 The Commission proposes changes to the definition of affiliate with 

respect to EWGs in light of the repeal of the PUHCA. Specifically, the Commission 

proposes to make conforming changes to the definition of EWG to delete the reference to 

PUHCA and direct the reader to 18 CFR 366.1, which contains a definition of EWG and 

a definition of affiliate that applies to an EWG.80 

63. Accordingly, the Commission proposes that § 358.3(b)(2) will read as follows: 

For any exempt wholesale generator (as defined under § 366.1 of this chapter), 

an affiliate means the same as the definition of “affiliate” provided in § 366.1 of 

this chapter. 

J. Revisions to Written Procedures 

64. The Commission proposes several changes to the written procedures required of a 

transmission provider to delete outdated references, to clarify training certification, and to 

post the name of a transmission provider’s chief compliance officer. 

 78 18 CFR 358.3(b)(2). 

79 For non-EWG affiliates, a voting interest of 10 percent or more creates a 

rebuttable presumption of control or affiliation. 18 CFR 358.3(c). 

80 18 CFR 366.1 implements the Public Utility Holding Company Act of 2005. 

(PUHCA 2005). The Energy Policy Act of 2005 (EPAct 2005), Pub. L. No. 109-58, 

119 Stat. 594 (2005), repealed PUHCA, 15 U.S.C. 79a et seq. (2000), and enacted the 

Public Utility Holding Company Act of 2005 (PUHCA 2005), EPAct 2005 at 1261 et seq.
Docket No. RM07-1-000 51

65. With emphasis added, § 358.4(e)(1) of the Commission’s regulations reads: 

By February 9, 2004, each Transmission Provider is required to file with the 

Commission and post on the OASIS or Internet website a plan and schedule for 

implementing the standards of conduct. 

With emphasis added, § 358.4(e)(3) of the Commission’s regulations reads: 

 The Transmission Provider must post on the OASIS or Internet website, current 

written procedures implementing the standards of conduct in such detail as will enable 

customers and the Commission to determine that the Transmission Provider is in 

compliance with the requirements of this section by September 22, 2004 or within 30 

days of becoming subject to the requirements of part 358. 

The Commission proposes to delete § 358.4(e)(1) because the date for submitting a plan 

and schedule for implementing the standards of conduct has passed and the Commission 

does not need a new plan and schedule with respect to § 358.4(e)(3). The Commission 

proposes deleting “by September 22, 2004 or” because that date has passed and we are 

proposing to require in § 358.4(e)(3) that a transmission provider must comply with the 

standards of conduct within 30 days of becoming subject to the requirements of part 358. 

66. Section 358(e)(5) of the Commission’s regulations require training on the 

standards of conduct for certain employees of the transmission provider. Those 

employees are required to “sign a document or certify electronically that s/he has 

participated in the training.” In order to ensure that such employees not only participate 

in, but, also, complete such training, the Commission proposes replacing the words 

“participated in” with the word “completed” so that the applicable sentence would read: 
Docket No. RM07-1-000 52

“The Transmission Provider must require each employee to sign a document or certify 

electronically signifying that s/he has completed the training.”81

67. Section 358.4(e)(6) requires transmission providers to designate a chief 

compliance officer who will be responsible for standards of conduct compliance. 

Recently, Commission staff has tried to identify the name of the chief compliance 

officers of several transmission providers, and noticed that some transmission providers 

do not publicly identify the name of the chief compliance officer. Therefore, the 

Commission proposes to add the following sentence to § 358.4(e)(6) as follows: 

“Transmission Providers must post the name of the Chief Compliance Officer and 

provide contact information on the OASIS or Internet Web site, as applicable.” 

III. Information Collection Statement

68. The Office of Management and Budget (OMB) regulations require approval of 

certain information collection requirements imposed by agency rules.82 In this NOPR, 

the Commission proposes to reinstate the provisions remanded by the court in National 

Fuel. 

69. Previously, the Commission submitted to OMB the information collection 

requirements arising from the standards of conduct adopted in Order No. 2004. OMB 

 81 Proposed 18 CFR 358.3(e)(5). 

82 5 CFR 1320.11. 
Docket No. RM07-1-000 53

approved those requirements.83 The revisions to the standards of conduct proposed in 

this issuance do not impose any additional information collection burden on industry 

participants. In fact, by proposing that the standards of conduct will no longer govern the 

relationship between transmission providers and their energy affiliates, the information 

collection burden will likely decrease. 

70. The Commission is submitting notification of the information collection 

requirements imposed in the NOPR to OMB for its review and approval under section 

3507(d) of the Paperwork Reduction Act of 1995.84 Comments are solicited on the 

Commission’s need for this information, whether the information will have practical 

utility, the accuracy of provided burden estimates, ways to enhance the quality, utility, 

and clarity of the information to be collected, and any suggested methods of minimizing 

respondent’s burden, including the use of automated information techniques. 

71. OMB regulations require OMB to approve certain information collection 

requirements imposed by agency rule. The Commission is submitting notification of this 

proposed rule to OMB. 

Title: FERC- 592 and 717 

Action: Proposed Collection 

 83 Letter from OMB to the Commission (Jan. 20, 2004) (OMB Control Number 

1902-0157); “Notice of Action” letter from OMB to the Commission (Jan. 20, 2004) 

(OMB Control Number 1902-0173). 

84 44 U.S.C. 3507(d). 
Docket No. RM07-1-000 54

OMB Control No: 1902- 0157 and 1902-173 

Respondents: Business or other for profit. 

Frequency of Responses: On occasion. 

Necessity of the Information: The information is necessary to ensure that all regulated 

transmission providers treat all transmission customers on a non-discriminatory basis. 

Internal Review: The Commission has reviewed the requirements pertaining to natural 

gas pipelines and transmitting electric utilities and determined the proposed revisions are 

necessary because of changes in transmission provider practices and in the energy 

market. The Commission proposes to revise the standards of conduct to be consistent 

with the recent court decisions and to make certain transmission provider practices more 

efficient and less costly. 

72. These requirements conform to the Commission's plan for efficient information 

collection, communication, and management within the natural gas and electric utility 

industries. The Commission has assured itself, by means of internal review, that there is 

specific, objective support for the burden estimates associated with the information 

requirements. 

73. Interested persons may obtain information on the reporting requirements by 

contacting: Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, 

D.C. 20426, [Attention: Michael Miller, Office of the Chief Information Officer], phone: 

(202) 502-8415, fax: (202) 208-2425, e-mail: Michael.miller@ferc.gov. Comments on 

the requirements of the proposed rule also may be sent to the Office of Information and 
Docket No. RM07-1-000 55

Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission]. 

IV. Environmental Analysis

74. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.85 The Commission has categorically excluded certain 

actions from these requirements as not having a significant effect on the human 

environment.86 The action proposed here falls within the categorical exclusions provided 

in the Commission’s regulations because this rule is clarifying and corrective and does 

not substantially change the effect of the regulations being amended.87 Therefore, an 

environmental assessment is unnecessary and has not been prepared in this rulemaking. 

V. Regulatory Flexibility Act

75. The Regulatory Flexibility Act of 1980 (RFA)88 generally requires a description 

and analysis of final rules that will have significant economic impact on a substantial 

number of small entities. Because most transmission providers do not fall within the 

 85 Regulations Implementing the National Environmental Policy Act, Order No. 

486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 

(1987). 

86 18 CFR 380.4. 

87 18 CFR 380.4(a)(2)(ii) and 380.4(a)(5). 

88 5 U.S.C. 601-612. 
Docket No. RM07-1-000 56

definition of “small entity,”89 the Commission certifies that this rule will not have a 

significant economic impact on a substantial number of small entities. 

VI. Comment Procedures

76. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments must be filed on or before 

[insert date that is 45 days after date of publication in the FEDERAL REGISTER]. 

Reply comments must be filed on or before [insert date that is 65 days after date of 

publication in the FEDERAL REGISTER]. Comments and reply comments must refer 

to Docket No. RM07-1-000, and must include the commenter’s name, the organization he 

or she represents, if applicable, and his or her address. 

77. Comments may be filed electronically via the eFiling link on the Commission’s 

website at http://www.ferc.gov. The Commission accepts most standard word processing 

formats, and commenters may attach additional files with supporting information in 

certain other file formats. Commenters filing electronically do not need to make a paper 

filing. 

78. Commenters who are not able to file comments electronically must send an 

original and 14 copies of their comments to: Federal Energy Regulatory Commission, 

Office of the Secretary, 888 First Street, N.E., Washington, D.C. 20426. 

 89 See 5 U.S.C. 601(3). 
Docket No. RM07-1-000 57

79. 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 NOPR are not required to serve copies of their 

comments on other commenters. 

VII. Document Availability

80. 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 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington D.C. 20426. 

81. 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. 

82. User assistance is available for eLibrary and the FERC's website during normal 

business hours from our Help line at (202)502-8222 or the Public Reference Room at 

(202) 502-8371 Press 0, TTY (202)502-8659. E-Mail the Public Reference Room at 

public.referenceroom@ferc.gov. 
Docket No. RM07-1-000 58

List of subjects in 18 CFR Part 358: 

Electric power plants, Electric utilities, Natural gas, Reporting and recordkeeping 

requirements.

By direction of the Commission. 

 Magalie R. Salas, 

 Secretary. 
Docket No. RM07-1-000 59

 In consideration of the foregoing, the Commission proposes to revise part 358, 

Chapter I, Title 18, Code of Federal Regulations, as follows: 

Part 358 -- STANDARDS OF CONDUCT 

Sec. 

358.1 Applicability. 

358.2 General principles. 

358.3 Definitions. 

358.4 Independent functioning. 

358.5 Non-discrimination requirements. 

Authority: 15 USC 717-717w, 3301-3432; 16 USC 791-825r, 2601-2645; 31 USC 9701; 

42 USC 7101-7352.

§ 358.1 Applicability. 

 (a) This part applies to any interstate natural gas pipeline that transports gas for 

others pursuant to subpart A of part 157 or subparts B or G of part 284 of this chapter. 

 (b) This part applies to any public utility that owns, operates, or controls facilities 

used for the transmission of electric energy in interstate commerce. 

 (c) This part does not apply to a public utility Transmission Provider that is a 

Commission-approved Independent System Operator (ISO) or Regional Transmission 

Organization (RTO). If a public utility transmission owner participates in a Commissionapproved ISO or RTO and does not operate or control its transmission facilities and has 
Docket No. RM07-1-000 60

no access to transmission, customer or market information covered by § 358.5(b), it 

may request an exemption from this part. 

 (d) A Transmission Provider may file a request for an exemption from all or some 

of the requirements of this part for good cause. 

(e) The Standards of Conduct in this part do not govern the relationship between a 

natural gas Transmission Provider as defined in § 358.3(a)(2) and its Energy Affiliates. 

§ 358.2 General principles. 

 (a) A Transmission Provider's employees engaged in transmission system 

operations must function independent from employees of its Marketing and Energy 

Affiliates. 

 (b) A Transmission Provider must treat all transmission customers, affiliated and 

non-affiliated, on a non-discriminatory basis, and must not operate its transmission 

system to preferentially benefit Marketing and Energy Affiliates. 

§ 358.3 Definitions. 

(a) Transmission Provider means: 

 (1) Any public utility that owns, operates or controls facilities used for the 

transmission of electric energy in interstate commerce; or 

 (2) Any interstate natural gas pipeline that transports gas for others pursuant to 

subpart A of part 157 or subparts B or G of part 284 of this chapter. 

 (3) A Transmission Provider does not include a natural gas storage provider 

authorized to charge market-based rates that is not interconnected with the jurisdictional 
Docket No. RM07-1-000 61

facilities of any affiliated interstate natural gas pipeline, has no exclusive franchise 

area, no captive ratepayers and no market power. 

(b) Affiliate means: 

 (1) Another person which controls, is controlled by or is under common control 

with, such person. An affiliate includes a division that operates as a functional unit, 

 (2) For any exempt wholesale generator (as defined under § 366.1 of this chapter), 

an affiliate means the same as the definition of “affiliate” provided in § 366.1 of this 

chapter. 

 (c) Control (including the terms "controlling," "controlled by," and "under 

common control with") as used in this part and § 250.16 of this chapter, includes, but is 

not limited to, the possession, directly or indirectly and whether acting alone or in 

conjunction with others, of the authority to direct or cause the direction of the 

management or policies of a company. A voting interest of 10 percent or more creates a 

rebuttable presumption of control. 

 (d) Energy Affiliate means an affiliate of a Transmission Provider that: 

 (1) Engages in or is involved in transmission transactions in U.S. energy or 

transmission markets; or 

 (2) Manages or controls transmission capacity of a Transmission Provider in U.S. 

energy or transmission markets; or 

 (3) Buys, sells, trades or administers natural gas or electric energy in U.S. energy 

or transmission markets; or 
Docket No. RM07-1-000 62

 (4) Engages in financial transactions relating to the sale or transmission of 

natural gas or electric energy in U.S. energy or transmission markets. 

 (5) An LDC division of an electric public utility Transmission Provider shall be 

considered the functional equivalent of an Energy Affiliate, unless it qualifies for the 

exemption in § 358.3(d)(6)(v). 

 (6) An Energy Affiliate does not include: 

(i) A foreign affiliate that does not participate in U.S. energy markets; 

(ii) An affiliated Transmission Provider or an interconnected foreign 

affiliated natural gas pipeline that is engaged in natural gas transmission activities 

that are regulated by the state, provincial or national regulatory boards of the 

foreign country in which such facilities are located. 

(iii) A holding, parent or service company that does not engage in energy or 

natural gas commodity markets or is not involved in transmission transactions in 

U.S. energy markets; 

 (iv) An affiliate that purchases natural gas or energy solely for its own 

consumption. “Solely for its own consumption” does not include the purchase of natural 

gas or energy for the subsequent generation of electricity. 

 (v) A State-regulated local distribution company that acquires interstate 

transmission capacity to purchase and resell gas only for on-system sales, and otherwise 

does not engage in the activities described in § 358.3(d)(1), (2), (3) or (4), except to the 
Docket No. RM07-1-000 63

limited extent necessary to support on-system sales and to engage in de minimis sales 

necessary to remain in balance under applicable pipeline tariff requirements. 

(vi) A processor, gatherer, Hinshaw pipeline or an intrastate pipeline that makes 

incidental purchases or sales of de minimis volumes of natural gas to remain in balance 

under applicable pipeline tariff requirements and otherwise does not engage in the 

activities described in §§ 358.3(d)(1), (2), (3) or (4). 

 (e) Marketing, sales or brokering means a sale for resale of natural gas or electric 

energy in interstate commerce in U.S. energy or transmission markets. Marketing also 

includes managing or controlling transmission capacity of a third-party as an asset 

manager or agent. 

(1) A sales and marketing employee or unit includes: 

(i) An interstate natural gas pipeline's sales operating unit, to the extent provided 

in § 284.286 of this chapter, and 

(ii) A public utility Transmission Provider's energy sales unit, unless such unit 

engages solely in bundled retail sales. 

(2) Marketing or sales does not include incidental purchases or sales of natural gas 

to operate interstate natural gas pipeline transmission facilities. 

(3) Marketing means a sale of natural gas to any person or entity by a seller that is 

not an interstate pipeline, except where: 
Docket No. RM07-1-000 64

(i) The seller is selling gas solely from its own production; 

(ii) The seller is selling gas solely from its own gathering or processing facilities; 

or 

(iii) The seller is an intrastate natural gas pipeline or a local distribution company 

making an on-system sale.

(f) Transmission means natural gas transportation, storage, exchange, backhaul, or 

displacement service provided pursuant to subpart A of part 157 or subparts B or G of 

part 284 of this chapter; and electric transmission, network or point-to-point service, 

reliability service, ancillary services or other methods of transportation or the 

interconnection with jurisdictional transmission facilities. 

 (g) Transmission Customer means any eligible customer, shipper or designated 

agent that can or does execute a transmission service agreement or can or does receive 

transmission service, including all persons who have pending requests for transmission 

service or for information regarding transmission. 

 (h) Open Access Same-time Information System or OASIS refers to the Internet 

location where a public utility posts the information, by electronic means, required by 

part 37 of this chapter. 

 (i) Internet Web site refers to the Internet location where an interstate natural gas 

pipeline posts the information, by electronic means, required by §§ 284.12 and 284.13 of 

this chapter. 
Docket No. RM07-1-000 65

 (j) Transmission Function employee means an employee, contractor, consultant 

or agent of a Transmission Provider, other than a Planning Employee as defined in 

§ 358.3(o), who conducts transmission system operations or reliability functions, 

including, but not limited to, those who are engaged in day-to-day duties and 

responsibilities for planning, directing, organizing or carrying out transmission-related 

operations. 

(k) Marketing Affiliate means an Affiliate as that term is defined in § 358.3(b) or a 

unit that engages in marketing, sales or brokering activities as those terms are defined at 

§ 358.3(e).

 (l) Integrated Resource Planning means a process to establish a plan, required 

by state law, regulation or other state mandate, for a public utility to meet its future 

bundled retail load obligations that evaluates a range of alternatives that includes 

consideration of third party resources. 

(m) Competitive Solicitation means a solicitation by a public utility to obtain 

energy, capacity, or ancillary services for the purposes of meeting the public utility’s 

bundled retail load obligations pursuant to an Integrated Resource Planning 

obligation. 

(n) Competitive Solicitation Employee means an employee, contractor, 

consultant or agent of a public utility who directs, organizes, or executes the public 

utility’s Competitive Solicitations. 
Docket No. RM07-1-000 66

(o) Planning Employee means an employee, contractor, consultant or agent of a 

public utility who directs, organizes or conducts the public utility’s Integrated 

Resource Planning. 

§ 358.4 Independent functioning. 

 (a) Separation of functions. 

(1) Except in emergency circumstances affecting system reliability, the 

transmission function employees of the Transmission Provider must function 

independently of the Transmission Provider's Marketing or Energy Affiliates’ employees. 

 (2) Notwithstanding any other provisions in this section, in emergency 

circumstances affecting system reliability, a Transmission Provider may take whatever 

steps are necessary to keep the system in operation. Transmission Providers must report 

to the Commission and post on the OASIS or Internet website, as applicable, each 

emergency that resulted in any deviation from the standards of conduct, within 24 hours 

of such deviation. 

 (3) The Transmission Provider is prohibited from permitting the employees of its 

Marketing or Energy Affiliates from: 

 (i) Conducting transmission system operations or reliability functions; and 

 (ii) Having access to the system control center or similar facilities used for 

transmission operations or reliability functions that differs in any way from the access 

available to other transmission customers. 
Docket No. RM07-1-000 67

 (4) Transmission Providers are permitted to share support employees and field 

and maintenance employees with their Marketing and Energy Affiliates. 

(5) Transmission Providers are permitted to share with their Marketing or Energy 

Affiliates senior officers and directors who are not “Transmission Function Employees” 

as that term is defined in § 358.3(j). A Transmission Provider may share transmission 

information covered by §§ 358.5(a) and (b) with its shared senior officers and directors 

provided that they do not participate in directing, organizing or executing transmission 

system operations or marketing functions; or act as a conduit to share such information 

with a Marketing or Energy Affiliate. 

(6) Transmission Providers are permitted to share risk management employees that 

are not engaged in Transmission Functions or sales or commodity functions with their 

Marketing and Energy Affiliates. This provision does not apply to natural gas 

transmission providers. 

(7) A Transmission Function employee may interact with a Planning 

Employee for the purpose of engaging in Integrated Resource Planning. A Planning 

Employee, who receives non-public transmission information pursuant to 

§ 358.5(b)(8) or who interacts with a Transmission Function employee, must not: 

(i) Participate in sales of energy, capacity or ancillary services or in sales of 

transmission services, including directing, organizing, or otherwise preparing 

a bid, benchmark, or proposal by the public utility or by the public utility’s 
Docket No. RM07-1-000 68

Marketing or Energy Affiliates to supply energy, capacity or ancillary services; 

(ii) Participate in purchases of energy, capacity or ancillary services or of 

purchases of transmission services other than in a Competitive Solicitation on 

behalf of its public utility Transmission Provider; or 

(iii) Participate in non-planning transmission functions. 

(8) A Transmission Function employee may interact with a Competitive 

Solicitation Employee for the purpose of evaluating the transmission component of 

bids or proposals considered in a Competitive Solicitation. A Competitive 

Solicitation Employee, who receives non-public transmission information pursuant to 

§ 358.5(b)(9) or who interacts with a Transmission Function employee, must not: 

(i) Provide any non-public bid, proposal, or Competitive Solicitation 

information to the Marketing or Energy Affiliate employees; 

(ii) Participate in sales of energy, capacity, ancillary services or in sales of 

transmission services, including directing, organizing, or otherwise preparing a bid, 

benchmark, or proposal by the public utility or by the public utility’s Marketing or 

Energy Affiliates to supply energy, capacity or ancillary services; or 

(iii) Participate in any purchases of energy, capacity or ancillary services or of 

transmission services other than a Competitive Solicitation on behalf of its public 

utility Transmission Provider. 
Docket No. RM07-1-000 69

(b) Identifying affiliates on the public Internet.

 (1) A Transmission Provider must post the names and addresses of Marketing and 

Energy Affiliates on its OASIS or Internet Web site. 

 (2) A Transmission Provider must post on its OASIS or Internet Web site, as 

applicable, a complete list of the facilities shared by the Transmission Provider and its 

Marketing and Energy Affiliates, including the types of facilities shared and their 

addresses. 

 (3) A Transmission Provider must post comprehensive organizational charts 

showing: 

 (i) The organizational structure of the parent corporation with the relative position 

in the corporate structure of the Transmission Provider, Marketing and Energy Affiliates; 

 (ii) For the Transmission Provider, the business units, job titles and descriptions, 

and chain of command for all positions, including officers and directors, with the 

exception of clerical, maintenance, and field positions. The job titles and descriptions 

must include the employee's title, the employee's duties, whether the employee is 

involved in transmission or sales, and the name of the supervisory employees who 

manage non-clerical employees involved in transmission or sales. 

 (iii) For all employees who are engaged in transmission functions for the 

Transmission Provider and marketing or sales functions or who are engaged in 

transmission functions for the Transmission Provider and are employed by any of the 

Energy Affiliates, the Transmission Provider must post the name of the business unit 
Docket No. RM07-1-000 70

within the marketing or sales unit or the Energy Affiliate, the organizational structure 

in which the employee is located, the employee's name, job title and job description in the 

marketing or sales unit or Energy Affiliate, and the employee's position within the chain 

of command of the Marketing or Energy Affiliate. 

 (iv) The Transmission Provider must update the information on its OASIS or 

Internet Web site, as applicable, required by §§ 358.4(b)(1), (2) and (3) within seven 

business days of any change, and post the date on which the information was updated. 

 (v) The Transmission Provider must post information concerning potential merger 

partners as affiliates within seven days after the potential merger is announced. 

(vi) All OASIS or Internet Web site postings required by part 358 must 

comply, as applicable, with the requirements of § 37.6 or §§ 284.12(a) and (c)(3)(v) 

of this chapter. 

(c) Transfers. Employees of the Transmission Provider, Marketing or Energy 

Affiliates are not precluded from transferring among such functions as long as such 

transfer is not used as a means to circumvent the Standards of Conduct. Notices of any 

employee transfers between the Transmission Provider, on the one hand, and the 

Marketing or Energy Affiliates on the other, must be posted on the OASIS or Internet 

Web site, as applicable. The information to be posted must include: the name of the 

transferring employee, the respective titles held while performing each function (i.e., on 

behalf of the Transmission Provider, Marketing or Energy Affiliate), and the effective 
Docket No. RM07-1-000 71

date of the transfer. The information posted under this section must remain on the 

OASIS or Internet Web site, as applicable, for 90 days. 

(d) Books and records. A Transmission Provider must maintain its books of 

account and records (as prescribed under parts 101, 125, 201 and 225 of this chapter) 

separately from those of its Energy Affiliates and these must be available for 

Commission inspections. 

 (e) Written procedures. 

 (1) [Reserved.] 

 (2) Each Transmission Provider must be in full compliance with the standards of 

conduct within 30 days of becoming subject to the Commission’s jurisdiction. 

 (3) The Transmission Provider must post on the OASIS or Internet Web site, 

current written procedures implementing the standards of conduct in such detail as will 

enable customers and the Commission to determine that the Transmission Provider is in 

compliance with the requirements of this section within 30 days of becoming subject to 

the requirements of part 358. 

(4) Transmission Providers will distribute the written procedures to all 

Transmission Provider employees and employees of the Marketing and Energy Affiliates. 

(5) Transmission Providers shall train officers and directors as well as employees 

with access to transmission information or information concerning gas or electric 

purchases, sales or marketing functions. The Transmission Provider must require each 
Docket No. RM07-1-000 72

employee to sign a document or certify electronically signifying that s/he has 

completed the training. 

 (6) Transmission Providers are required to designate a Chief Compliance Officer 

who will be responsible for standards of conduct compliance. Transmission Providers 

must post the name of the Chief Compliance Officer and provide contact information on 

the OASIS or Internet Web site, as applicable. 

§ 358.5 Non-discrimination requirements. 

 (a) Information access. 

 (1) The Transmission Provider must ensure that any employee of its Marketing or

Energy Affiliate may only have access to that information available to the Transmission 

Provider's transmission customers (i.e., the information posted on the OASIS or Internet 

Web site, as applicable), and must not have access to any information about the 

Transmission Provider's transmission system that is not available to all users of an 

OASIS or Internet Web site, as applicable. 

 (2) The Transmission Provider must ensure that any employee of its Marketing or

Energy Affiliate is prohibited from obtaining information about the Transmission 

Provider's transmission system (including, but not limited to, information about available 

transmission capability, price, curtailments, storage, ancillary services, balancing, 

maintenance activity, capacity expansion plans or similar information) through access to 

information not posted on the OASIS or Internet Web site or that is not otherwise also 

available to the general public without restriction. 
Docket No. RM07-1-000 73

(b) Prohibited disclosure. 

(1) An employee of the Transmission Provider may not disclose to its Marketing 

or Energy Affiliates any information concerning the transmission system of the 

Transmission Provider or the transmission system of another (including, but not limited 

to, information received from non-affiliates or information about available transmission 

capability, price, curtailments, storage, ancillary services, balancing, maintenance 

activity, capacity expansion plans, or similar information) through non-public 

communications conducted off the OASIS or Internet Web site, through access to 

information not posted on the OASIS or Internet Web site that is not contemporaneously 

available to the public, or through information on the OASIS or Internet Web site that is 

not at the same time publicly available. 

 (2) A Transmission Provider may not share any information, acquired from nonaffiliated transmission customers or potential non-affiliated transmission customers, or 

developed in the course of responding to requests for transmission or ancillary service on 

the OASIS or Internet Web site, with employees of its Marketing or Energy Affiliates, 

except to the limited extent information is required to be posted on the OASIS or Internet 

Web site in response to a request for transmission service or ancillary services. 

 (3) If an employee of the Transmission Provider discloses information in a manner 

contrary to the requirements of §§ 358.5(b)(1) and (2), the Transmission Provider must 

immediately post such information on the OASIS or Internet web site. 
Docket No. RM07-1-000 74

 (4) A non-affiliated transmission customer may voluntarily consent, in writing, 

to allow the Transmission Provider to share the non-affiliated customer's information 

with a Marketing or Energy Affiliate. If a non-affiliated customer authorizes the 

Transmission Provider to share its information with a Marketing or Energy Affiliate, the 

Transmission Provider must post notice on the OASIS or Internet Web site of that 

consent along with a statement that it did not provide any preferences, either operational 

or rate-related, in exchange for that voluntary consent.

 (5) A Transmission Provider is not required to contemporaneously disclose to all 

transmission customers or potential transmission customers information covered by 

§ 358.5(b)(1) if it relates solely to a Marketing or Energy Affiliate’s specific request for 

transmission service. 

 (6) A Transmission Provider may share generation information necessary to 

perform generation dispatch with its Marketing and Energy Affiliate that does not include 

specific information about individual third party transmission transactions or potential 

transmission arrangements. 

(7) Neither a Transmission Provider nor an employee of a Transmission Provider 

is permitted to use anyone as a conduit for sharing information covered by the 

prohibitions of §§ 358.5(b)(1) and (2) with a Marketing or Energy Affiliate. A 

Transmission Provider may share information covered by §§ 358.5(b)(1) and (2) with 

employees permitted to be shared under §§ 358.4(a)(4), (5) and (6) provided that such 
Docket No. RM07-1-000 75

employees do not act as a conduit to share such information with any Marketing or 

Energy Affiliates. 

(8) A Transmission Provider may share transmission information covered by 

§§ 358.5(a) and (b)(1) with Planning Employees to the extent those employees need that 

information to direct, organize or carry out Integrated Resource Planning, provided that 

such employees do not act as a conduit to share such information with any Marketing or 

Energy Affiliates. 

(9) A Transmission Provider may share transmission information covered by 

§§ 358.5(a) and (b)(1) with Competitive Solicitation Employees to the extent those 

employees need that information to direct, organize, or execute Competitive Solicitations, 

provided that such employees do not act as a conduit to share such information with any 

Marketing or Energy Affiliates. 

 (c) Implementing tariffs. 

 (1) A Transmission Provider must strictly enforce all tariff provisions relating to 

the sale or purchase of open access transmission service, if these tariff provisions do not 

permit the use of discretion. 

 (2) A Transmission Provider must apply all tariff provisions relating to the sale or 

purchase of open access transmission service in a fair and impartial manner that treats all 

transmission customers in a non-discriminatory manner, if these tariff provisions permit 

the use of discretion. 
Docket No. RM07-1-000 76

 (3) A Transmission Provider must process all similar requests for transmission 

in the same manner and within the same period of time. 

 (4) (i) Electric Transmission Providers must maintain a written log, available for 

Commission audit, detailing the circumstances and manner in which they exercised their 

discretion under any terms of the tariff. The information contained in this log is to be 

posted on the OASIS or Internet Web site within 24 hours of when a transmission 

Provider exercises its discretion under any terms of the tariff. 

 (ii) Natural gas Transmission Providers must maintain a written log of waivers that 

the natural gas Transmission Provider grants with respect to tariff provisions that 

provider for such discretionary waivers and provide the log to any person requesting it 

within 24 hours of the request. 

 (5) The Transmission Provider may not, through its tariffs or otherwise, give 

preference to its Marketing or Energy Affiliate, over any other wholesale customer in 

matters relating to the sale or purchase of transmission service (including, but not limited 

to, issues of price, curtailments, scheduling, priority, ancillary services, or balancing). 

(d) Discounts. 

 Any offer of a discount for any transmission service made by the Transmission 

Provider must be posted on the OASIS or Internet Web site contemporaneous with the 

time that the offer is contractually binding. The posting must include: the name of the 

customer involved in the discount and whether it is an affiliate or whether an affiliate is 

involved in the transaction, the rate offered; the maximum rate; the time period for which 
Docket No. RM07-1-000 77

the discount would apply; the quantity of power or gas upon which the discount is 

based; the delivery points under the transaction; and any conditions or requirements 

applicable to the discount. The posting must remain on the OASIS or Internet Web site 

for 60 days from the date of posting.