UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Chapter I 

(Docket No. RM05-25-000) 

Preventing Undue Discrimination and Preference in Transmission Services 

 

(September 16, 2005) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Inquiry (NOI). 

SUMMARY: The Federal Energy Regulatory Commission (Commission) is inviting 

comments on whether reforms are needed to the Order No. 888 pro forma open access 

transmission tariff (OATT) and the OATTs of public utilities to ensure that services 

thereunder are just, reasonable and not unduly discriminatory or preferential. The 

Commission is also inviting comments on the implementation of the newly established 

section 211A of the Federal Power Act (concerning the provision of open access 

transmission service by unregulated transmitting utilities). Finally, the Commission is 

inviting comments on section 1233 of the Energy Policy Act of 2005, which defines 

native load service obligation. 

DATES: Comments on this NOI are due on [insert date 60 days after publication in 

the FEDERAL REGISTER]. 
ADDRESSES: Comments may be filed electronically via the eFiling link on the 

Commission's web site at http://www.ferc.gov. Commenters unable 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. Refer to the Procedure for Comments section of the preamble for additional 

information on how to file comments. 

FOR FURTHER INFORMATION CONTACT: 

Daniel Hedberg (Technical Information) 

Office of Markets, Tariffs & Rates 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502- 6243 

David Withnell (Legal Information) 

Office of General Counsel – Markets, Tariffs & Rates 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502- 8421 

SUPPLEMENTARY INFORMATION:
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Preventing Undue Discrimination and Docket No. RM05-25-000 

Preference in Transmission Service 

NOTICE OF INQUIRY 

(September 16, 2005) 

Introduction

1. The Federal Energy Regulatory Commission (Commission) has a mandate under 

sections 205 and 206 of the Federal Power Act (FPA)1

 to ensure that, with respect to any 

transmission in interstate commerce or any sale of electric energy for resale in interstate 

commerce by a public utility, no person is subject to any undue prejudice or 

disadvantage. Under these sections, the Commission must determine whether any rule, 

regulation, practice, or contract affecting rates for such transmission or sale for resale is 

unduly discriminatory or preferential, and we must disapprove any of the foregoing that 

do not meet this standard. Pursuant to that mandate, in 1996, the Commission issued 

 1

 16 U.S.C. §§ 824d - 824e (2000). Section 205(b) states that “[n]o public utility 

shall, with respect to any transmission or sale subject to the jurisdiction of the 

Commission, (1) make or grant any undue preference or advantage to any person or 

subject any person to any undue preference or disadvantage. ...” In addition, section 

206(a) states that “[w]henever the Commission ... shall find that any rate, charge, or 

classification demanded, observed, charged or collected by any public utility for any 

transmission or sale subject to the jurisdiction of the Commission, or that any rule, 

regulation, practice, or contract affecting such rate, charge, or classification is unjust, 

unreasonable, unduly discriminatory or preferential, the Commission shall determine the 

just and reasonable rate, charge, classification, rule, regulation, practice or contract to be 

thereafter observed and in force, and shall fix the same by order.” 
Docket No. RM05-25-000 - 2 -

Order No. 8882

 to remedy undue discrimination or preference in access to the monopoly 

owned transmission wires that control whether and to whom electricity can be transported 

in interstate commerce.3

 

2. The Commission is issuing this Notice of Inquiry to seek comments on whether 

reforms are needed to the Order No. 888 pro forma open access transmission tariff 

(OATT) and to the OATTs of public utilities to prevent undue discrimination and 

preference in the provision of transmission services. The Commission’s preliminary 

view is that the pro forma OATT and public utilities’ OATTs should be reformed to 

reflect lessons learned during nearly a decade of the electric utility industry’s and the 

Commission’s experience with open access transmission. In addition, the Commission is 

concerned that public utility transmission providers have come to different interpretations 

of provisions of their OATTs and have implemented them in ways that need clarification 

by the Commission to avoid unduly discriminatory or preferential terms and conditions. 

The Commission’s preliminary view is that reforms to the pro forma OATT and public 

utilities’ OATTs appear necessary and the Commission seeks comments on how best to 

 2 Promoting Wholesale Competition Through Open Access Non-discriminatory 

Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities 

and Transmitting Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), FERC 

Stats. & Regs. ¶ 31,036 (1996), order on reh'g, Order No. 888-A, 62 Fed. Reg. 12,274 

(March 14, 1997), FERC Stats. & Regs. ¶ 31,048 (1997), order on reh'g, Order No. 888-

B, 81 FERC ¶ 61,248 (1997), order on reh'g, Order No. 888-C, 82 FERC ¶ 61,046 

(1998), aff'd in relevant part sub nom. Transmission Access Policy Study Group v. 

FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 

(2002). 

3

 Order No. 888 at 31,669. 
Docket No. RM05-25-000 - 3 -

accomplish that. Further, the Commission is seeking comments on how best to 

implement section 1231 of the Energy Policy Act of 2005 (establishing section 211A of 

the FPA, which concerns the provision of open access transmission service by 

unregulated transmitting utilities). Finally, the Commission is seeking comments on 

section 1233 of EPAct 2005 (which defines native load service obligation).4

 

Background

3. In Order No. 888, the Commission required, as a remedy for undue discrimination, 

that all public utilities provide open access transmission service consistent with the terms 

and conditions of a pro forma OATT. The Commission determined that nondiscriminatory open access transmission service, including access to transmission 

information, and stranded cost recovery were the most critical components of a 

successful transition to competitive wholesale markets. To achieve this, the Commission 

required all public utilities that own, control or operate facilities used for transmitting 

electric energy in interstate commerce to file OATTs containing certain non-price terms 

and conditions, and to functionally unbundle wholesale power services from transmission 

services.5

 With functional unbundling, public utilities must: (1) take wholesale 

transmission services under the same tariff of general applicability as they offer their 

customers; (2) state separate rates for wholesale generation, transmission and ancillary 

 4

 Energy Policy Act of 2005, Pub. L. No. 109-58, §§ 1231, 1233 119 Stat. 594 

(2005) (EPAct 2005). 

5

 The Commission did not require corporate unbundling, stating that efforts to 

remedy undue discrimination should begin by requiring the less intrusive functional 

unbundling approach. 
Docket No. RM05-25-000 - 4 -

services; and (3) rely on the same electronic information network that their transmission 

customers rely on to obtain information about the utilities’ transmission systems.6

 While 

Order No. 888 set the foundation upon which to attain competitive electric markets, the 

Commission has recognized that Order No. 888 did not eliminate the potential to engage 

in undue discrimination and preference in the provision of transmission service.7

 

4. In Order No. 888, the Commission found that transmission utilities own the 

transportation system over which bulk power competition occurs and transmission 

service was a natural monopoly.8

 The electric industry has changed considerably since 

Order No. 888 was issued. It has evolved from one characterized by large, vertically 

integrated utilities to an industry with increasing wholesale trade and increasing numbers 

 6

 Concurrent with the issuance of Order No. 888, the Commission issued Order 

No. 889 that imposed standards of conduct governing communications between the 

utility’s transmission and wholesale power functions, to prevent the utility from giving its 

power marketing arm preferential access to transmission information. It also required all 

public utilities that own, control or operate facilities used in the transmission of electric 

energy in interstate commerce to create or participate in an Open Access Same-Time 

Information Systems (OASIS) that provides existing and potential transmission 

customers the same access to transmission information. Open Access Same-Time 

Information System (Formerly Real-Time Information Networks) and Standards of 

Conduct, Order No. 889, 61 Fed. Reg. 21,737 (May 10, 1996), FERC Stats. & Regs. 

¶ 31,035 at 31,583 (1996), order on reh'g, Order No. 889-A, FERC Stats. & Regs. 

¶ 31,049 (1997), order on reh'g, Order No. 889-B, 81 FERC ¶ 61,253 (1997). 

7

 In Order No. 2000, the Commission found that “opportunities for undue 

discrimination continue to exist that may not be remedied adequately by [the] functional 

unbundling [remedy of Order No. 888]... .” Regional Transmission Organizations, Order 

No. 2000, FERC Stats. & Regs. ¶ 31,089 at 31,105 (1999), order on reh'g, Order No. 

2000-A, FERC Stats. & Regs. ¶ 31,092 (2000), aff'd sub nom. Public Utility District No. 

1 of Snohomish County, Washington v. FERC, 272 F.3d 607 (D.C. Cir. 2001). 

8

 Order No. 888 at 31,652. 
Docket No. RM05-25-000 - 5 -

of independent buyers and sellers of wholesale power. Public utilities today purchase 

significantly more wholesale power to meet their load than in the past and seek nondiscriminatory access to transmission facilities. Transactions have become less localized, 

with trade occurring on a more regionalized basis. Improved information about 

transmission systems has become available to all participants in the bulk power market. 

The Commission has approved the voluntary formation of a number of independent 

system operators (ISO) and regional transmission organizations (RTOs). New generation 

resources have been developed in areas that had experienced generation shortages. 

Regional trading patterns have expanded. Large numbers of merger applications and 

applications to charge market-based rates have been accepted by the Commission. 

5. In the wake of these industry changes, questions have arisen concerning the 

efficacy of various terms and conditions of the transmission providers’ OATTs. As the 

Commission noted in Order No. 888, it is in the economic self-interest of transmission 

monopolists, particularly those with high-cost generation assets, to deny transmission or 

to offer transmission on a basis that is inferior to that which they provide themselves.9

 

This is still the view of the Commission. We have observed that public utilities continue 

to have the discretion and the incentive to interpret and apply the provisions of their 

OATTs in a manner that can result in unduly discriminatory behavior on each particular 

 9 Id. at 31,682. 
Docket No. RM05-25-000 - 6 -

public utility’s transmission system.10 This is exacerbated by the fact that, in a number of 

respects, Order No. 888 and the pro forma OATT allow public utilities discretion in 

implementing the terms and conditions of providing transmission service. This not only 

makes it difficult for public utilities to comply, but makes it difficult for the Commission 

to identify violations.11 Further, this can lead to inconsistent results across public utility 

systems to the detriment of customers. Transmission customers have also found ways to 

use the OATTs to their own advantage, particularly in the scheduling and queuing 

processes.

12 Moreover, OATT provisions have been modified in numerous ways on a 

company-by-company basis, leading to uncertainties within the industry as to the proper 

 10 For example, remaining corporate ties between generation and transmission 

within public utilities have proven problematic for transmission access by new generators 

and new load-serving entities. Also, transmission providers have delayed the processing 

of a competitor’s request for new service. Further, concerns regarding the calculation of 

available transfer capability (ATC) have arisen. (We note that the Commission used the 

term "Available Transmission Capability" in Order No. 888 to describe the amount of 

additional capability available in the transmission network to accommodate additional 

transmission services. To be consistent with the term generally accepted throughout the 

industry, "Available Transfer Capability" will be used). 

11 See, e.g., Order No. 2003 at P 696 (noting that many decisions under the OATT 

are “subjective” and that a “[t]ransmission [p]rovider that is not an independent entity has 

the ability and the incentive to exploit this subjectivity to its own advantage”).

Standardization of Generator Interconnection Agreements and Procedures, Order No. 

2003, 68 Fed. Reg. 49,845 (Aug. 19, 2003), FERC Stats. & Regs. ¶ 31,146 (2003), order 

on reh'g, Order No. 2003-A, 69 Fed. Reg. 15,932 (Mar. 26, 2004), FERC Stats. & Regs. 

¶ 31,160 (2004), order on reh'g, Order No. 2003-B, 70 Fed. Reg. 265 (Jan. 4, 2005), 

FERC Stats. & Regs. ¶ 31,171 (2005), order on reh'g, Order No. 2003-C, 70 Fed. Reg. 

37,661 (June 30, 2005) FERC Stats. & Regs. ¶ 31,190 (2005). 

12 See, e.g., 2004 State of the Market Report: Midwest ISO at 30-31, 34, 

http://www.midwestmarket.org/publish/Document/2b8a32_103ef711180_-

7bf20a48324a/2004%20MISO%20SOM%20Report.pdf?action=download&_property=A

ttachment.
Docket No. RM05-25-000 - 7 -

interpretation of those provisions and to unnecessarily inconsistent treatment of 

customers across public utilities. While some market participants have raised concerns 

with the implementation of OATTs, others may be reluctant to bring issues to the 

Commission. 

6. We are also concerned that undue discrimination and preferential treatment is 

much more difficult to detect when the transmission grid is constrained. For example, 

some transmission constraints have created fairly small local load pockets in primarily 

urban areas, e.g., New York City, Long Island, Boston, parts of Connecticut, and the San 

Francisco Bay Area. Other load pocket concerns have arisen in parts of northern 

Virginia, New Orleans and various load centers in the Southwest Power Pool (SPP). Still 

other constraints are more regional in scope: (1) from the Midwest to the Mid-Atlantic; 

(2) from the Midwest to the Tennessee Valley Authority (TVA); (3) into and within 

California; (4) from TVA and the Southern Companies into Entergy; (5) from MidAmerica Interconnected Network into Wisconsin Upper Michigan Systems and (6) into 

Florida. The existence of these and other constraints affects transmission systems 

resulting in a reduction in available transfer capability, a possible increase in the 

frequency of denials of requests for transmission service, and a possible increase in the 

frequency of transmission service interruptions and/or curtailments of transmission 

service. While such results may be legitimate because of such things as reliability or 

native load priority, these same results may provide an increased opportunity for 

transmission providers to engage in actions that are unduly discriminatory. 

Distinguishing between the two may be difficult to achieve. Consequently, the existence 
Docket No. RM05-25-000 - 8 -

of transmission constraints and their effect on transmission system operations make it 

more difficult for us to carry out our statutory responsibility to ensure that transmission 

providers provide nondiscriminatory open access transmission service. In recognition of 

this problem, Congress, in section 1241 of the EPAct 2005, has directed the Commission 

to issue a rule to promote investment in the transmission grid by establishing incentivebased rate treatments “for the purpose of benefiting consumers by ensuring reliability and 

reducing the cost of delivered power by reducing transmission congestion.” We will do 

so, but in a proceeding separate from this one and at a later date. 

7. The Commission recognizes that the question of whether Order No. 888 

adequately remedies undue discrimination can be contentious. Customers often argue 

that undue discrimination can be remedied only through structural reforms or by applying 

the OATT to bundled retail load. Transmission providers often argue that the 

Commission should not consider such broader remedies because it lacks the authority to 

do so or because Order No. 888 is working well as it is. State commissions often express 

concern that, although the Commission should seek to remedy undue discrimination at 

the wholesale level, it should not do so in ways that will intrude on state jurisdiction over 

bundled retail load. In issuing this NOI, the Commission emphasizes its desire to avoid 

the more polarizing elements of this debate and to pursue instead a pragmatic approach to 

reforming Order No. 888 that focuses on the specific problems that continue to exist and 

targeted remedies to address them. To that end, we encourage the parties to identify with 

specificity any alleged defects in Order No. 888 and to recommend reforms that are 
Docket No. RM05-25-000 - 9 -

appropriately targeted to remedying those defects. Sweeping generalizations regarding 

undue discrimination (or the lack thereof) are not encouraged. 

The Subject of the Notice of Inquiry

8. The Commission seeks to explore whether, and if so, which, reforms are necessary 

to the Order No. 888 pro forma OATT and to the individual public utility OATTs, given 

the current state of the electric industry and the apparent uncertainties and inconsistent 

application concerning various tariff provisions that have arisen since implementation of 

Order No. 888. The Commission’s goal continues to be to prevent undue discrimination 

and preference in the provision of transmission service. Our preliminary view is that 

reforms to Order No. 888 are necessary to accomplish that goal and discharge our 

obligations under the FPA. The Commission is particularly interested in receiving 

comments describing specific enhancements that are needed to: (1) remedy any unduly 

discriminatory or preferential application of the pro forma OATT or (2) improve the 

clarity of the Order No. 888 pro forma OATT and the individual public utility OATTs in 

order to more readily identify violations and facilitate compliance. In addition, the 

Commission is seeking comments on how best to implement the newly established 

section 211A (concerning the provision of open access transmission service by 

unregulated transmitting utilities). 

9. Significantly, the Commission emphasizes that it is not proposing to change the 

native load preference established in Order No. 888. Section 1233 of EPAct 2005 defines 

native load service obligation. The Commission seeks comments on whether or not the 
Docket No. RM05-25-000 - 10 -

approach the Commission took in Order No. 888 is the same as that set forth in section 

1233. If it is not, the Commission requests commenters to identify the differences.

Questions for Response

10. The Commission encourages any and all comments regarding the topics broadly 

discussed above. Commenters are invited to share with the Commission their overall 

thoughts, including technical and legal matters, on how the pro forma OATT has worked 

thus far, e.g., which portions of the pro forma OATT have worked well, which portions 

of the pro forma OATT could be improved, and what are the best practices of individual 

transmission providers and should these practices be made a part of the pro forma OATT 

and thus applicable to all public utility transmission providers. In addition, the 

Commission seeks responses to the following specific questions: 

A. Undue Discrimination Generally

 

11. In Order No. 888, the Commission adopted a functional unbundling approach as a 

remedy for undue discrimination. Since that time, the Commission has found that the 

incentive and opportunity for undue discrimination nonetheless continues to exist. The 

Commission therefore encouraged the structural separation of generation from 

transmission through RTOs, ISOs and similar organizations. The Commission is 

interested in receiving comments on whether there are remedies other than structural 

separation that would adequately address undue discrimination. 

1. Is undue discrimination difficult to detect? If it is, would greater transparency 

allow the Commission to better understand the scope of the problem as well as 

to provide a disincentive to discriminate? Would increased reporting 
Docket No. RM05-25-000 - 11 -

requirements (e.g., regarding denials of service, congestion management, and 

transmission expansion) be beneficial and cost effective? 

2. What are the particular circumstances under which undue discrimination is 

most likely to occur? For example, is discrimination most likely to occur in 

areas where the transmission provider retains discretion as to how to 

implement a particular OATT provision (e.g., ATC calculation)? If so, is 

standardization and specification of certain practices a potential remedy to 

undue discrimination? 

3. How should the Commission address the tension between a transmission 

provider’s obligation to serve bundled native load customers and its obligation 

to provide nondiscriminatory access under the OATT? Are there certain 

practices that transmission providers use to serve native load customers that are 

not available to non-affiliates under the OATT and, if so, should they be made 

available on an open access basis under the OATT? 

 B. Transmission Pricing

12. The Commission is interested in receiving comments on whether any reforms to 

the Commission’s transmission pricing policies should be considered as part of OATT 

reform. 

1. Are there changes to the Commission’s current pricing policies that could be 

made to increase the efficient use of the grid on systems that do not use 

locational marginal pricing? 

2. In Order No. 888, the Commission concluded that a public utility’s tariff must 
Docket No. RM05-25-000 - 12 -

explicitly permit the voluntary reassignment of all, or part of, a holder’s firm 

transmission capacity rights to any eligible customer. (Order No. 888 at 

31,696 and pro forma OATT section 23.) Does this approach to capacity 

reassignment remain reasonable today? If not, should greater capacity 

reassignment rights be encouraged by, for example, different pricing policies? 

Please provide specific suggestions. 

3. In Order No. 888, the Commission capped the price for reassigned capacity at 

the highest of: (1) the original transmission rate charged to the purchaser 

(assignor), (2) the transmission provider’s maximum stated firm transmission 

rate in effect at the time of the reassignment, or (3) the assignor’s own 

opportunity costs capped at the cost of expansion (Price Cap). (Order No. 888 

at 31,697). Does this pricing approach continue to be reasonable or should the 

price cap be modified or eliminated to further encourage capacity 

reassignment? 

4. Does capacity reassignment provide a competitive alternative to the primary 

capacity provided by the transmission provider? If not, how should capacity 

reassignments be changed to achieve this result? 

5. A secondary market for transportation capacity on natural gas pipelines helps 

to ensure that capacity is allocated to the highest valued use. Capacity resale 

of electric transmission is limited, however, because network service cannot be 

resold under Order No. 888. Should greater resale rights be permitted under 
Docket No. RM05-25-000 - 13 -

the OATT and can this be accomplished consistent with the network properties 

of electric transmission? 

6. Should the Commission allow deviations to its “higher of” policy to encourage 

greater incremental pricing of redispatch service or transmission upgrades? 

Should deviations be limited to cases where transmission providers hire an 

independent third party to administer such pricing reforms? 

7. In Order No. 888, the Commission stated that its use of the contract path model 

of power flows and embedded cost ratemaking was intended to initiate open 

access, but was not intended to signal a preference for contract path/embedded 

cost pricing for the future. The Commission further stated that it would 

entertain non-discriminatory tariff innovations to accommodate new pricing 

proposals in the future. Order No. 888 at 31,734-35. Should the Commission 

continue to use the contract path model in the future? 

8. How should any new services be priced in order to maximize their 

availability? 

 C. Network and Point-to-Point Transmission Service

13. In Order No. 888, the Commission required each public utility to offer 

transmission services that it is reasonably capable of providing, not just those services 

that it is currently providing to itself or others. It explained that because a public utility 

that is reasonably capable of providing transmission services may provide itself such 

services at any time it finds those services desirable, it is irrelevant that it may not be 

using or providing that service today. Thus, the Commission required all public utilities 
Docket No. RM05-25-000 - 14 -

to offer both firm and non-firm point-to-point transmission service and firm network 

transmission service on a non-discriminatory open access basis.13

1. Should changes be made to the different services required by Order No. 888? 

2. In Order No. 888, the Commission concluded that the load ratio allocation 

method of pricing network service continues to be reasonable for purposes of 

initiating open access transmission.14 We note that on June 14, 2005, the 

United States Court of Appeals for the District of Columbia Circuit remanded 

the issue of physical impossibility as it relates to load ratio pricing in Florida 

Municipal Power Agency v. FERC, 411 F.3d 287 (D.C. Cir. 2005). Does the 

approach established in Order No. 888 continue to be reasonable today? Are 

the pricing differences established by public utility transmission providers in 

their individual OATTs between network and point-to-point transmission 

services reasonable in light of the differences in the network and point-to-point 

transmission services? 

3. Should network service be converted to a contract demand service (i.e., similar 

to Florida Power Corp., 71 FERC ¶ 61,248 (1995); Wisconsin Electric Power 

Co., 72 FERC ¶ 61,033 (1995); and Florida Power Corp., 81 FERC ¶ 61,247 

(1997)) or should point-to-point transmission service and network service be 

merged into a contract demand service? 

 13 Order No. 888 at 31,690. 

14 Id. at 31,736. 
Docket No. RM05-25-000 - 15 -

4. Should new transmission services such as conditional firm, partial firm, and 

seasonal firm be required? Describe any such proposed service in detail, 

including necessary definitions. 

5. Are the firm services being offered under the pro forma OATT (network and 

point-to-point) being offered in a manner comparable to the services provided 

to the transmission owner’s unbundled retail customers? 

6. Are there pricing policies that can create an incentive to maximize the use of 

the transmission system? If so, please explain in detail. 

D. Untimely Processing of Requests for Transmission Service

14. The pro forma OATT provides deadlines for public utility transmission providers 

to complete system impact and other studies related to requests for transmission service. 

Sections 17.5 (Response to a Completed Application) and 18.4 (Determination of 

Available Transmission Capability) of the pro forma OATT provide that following 

receipt of a completed application for service the transmission provider must timely 

respond to transmission customer requests for determinations of firm and non-firm ATC. 

They then provide that the transmission provider must make the determination as soon as 

reasonably practicable after receipt but no later than certain specified time periods (or 

such time periods generally accepted in the region). 

1. Are there provisions of the pro forma OATT that need to be reformed to better 

define the obligations of public utility transmission providers in responding to 

requests for transmission service? 
Docket No. RM05-25-000 - 16 -

2. Are the allowable time frames for public utility transmission providers to 

respond to transmission customers manageable? 

3. Have transmission customers experienced delays by public utility transmission 

providers in responding to requests for transmission service? What delays 

have been experienced? 

4. Have the delays by public utility transmission providers been unduly 

discriminatory or preferential? 

5. What remedies can the Commission impose on public utility transmission 

providers for missing deadlines set forth in their OATTs? 

E. Remedies, Penalties and Enforcement

15. Order No. 888 allows public utility transmission providers to impose penalty 

charges on transmission customers for certain identified tariff violations, such as 

penalties for imbalances, penalties in the event a customer fails to curtail as required 

under the pro forma OATT, and penalties for failure to maintain specified power factors. 

The purpose of these charges is to discourage certain behavior. Order No. 888 makes no 

mention of adverse consequences if a public utility transmission provider violates its 

OATT. Since the adoption of Order No. 888, the Commission has, in individual cases, 

approved a variety of remedies (e.g., revoking market-based rate authority, providing 

refunds to customers, approving organizational changes in the transmission function). 

The EPAct 2005 gives the Commission civil penalty authority for violations of the FPA, 

including violations of the OATT. The Commission is interested in receiving comments 

on whether it should address the issue of remedies or penalties as part of OATT reform. 
Docket No. RM05-25-000 - 17 -

The EPAct 2005 strengthened the Commission’s civil penalty authority, and the 

Commission can now impose civil penalties for tariff violations, in addition to penalty 

charges. 

1. Should there be identified penalty charges in the tariff to address a 

transmission provider violating the tariff provisions? Should there be 

additional penalty charges in the pro forma OATT for tariff violations by 

transmission customers? 

2. Does the pro forma OATT need to be clarified so that transmission providers 

and customers are subject to the same penalty charges for the same violations? 

3. Should overrun penalty charges (penalties for taking transmission service in 

excess of what the entity is contractually entitled to take) apply if a 

transmission provider takes service inconsistent with its OATT? 

4. Should public utility transmission providers be subject to revocation of their 

market-based rate authority for certain OATT violations? Should certain 

violations (e.g., setting aside more transmission capacity than is needed to 

serve native load and using the capacity for third-party sales) be considered 

market manipulation under the Market Behavior Rules15 and section 1283 of 

the EPAct 2005 (which amends Part II of the FPA by adding a prohibition of 

energy market manipulation)? 

 15 Investigation of Terms and Conditions of Public Utility Market-Based Rate 

Authorizations, 105 FERC ¶ 61,218 (2003), order on reh’g, 107 FERC ¶ 61,175 (2004). 
Docket No. RM05-25-000 - 18 -

5. Should the Commission provide greater specificity as to which penalty charges 

will apply to particular violations? Would greater specificity provide a greater 

deterrent effect on undue discrimination? 

6. If the Commission provides greater specificity, which penalty charges should 

apply to which violations? For example, should penalty charges apply to 

failures to comply with OATT deadlines to encourage transmission providers 

to devote adequate resources to this area? Should a revocation of market-based 

rate authority be used to deter preferential treatment of an affiliate that is 

selling power at market-based rates? 

7. Should the issue of remedies and penalties be considered in reforming Order 

No. 888 or as part of a broader effort to develop a comprehensive enforcement 

policy that would apply to all areas of Commission regulation? 

F. Hourly Firm Transmission Service 

16. Section 13.1 of the pro forma OATT (Term) provides that the minimum term of 

firm point-to-point transmission service shall be one day. In Order No. 888, the 

Commission adopted a one-day minimum term, explaining that this would moot a 

number of reliability concerns and allegations about possible “cream-skimming.”16 

Entities had argued that comparability would not be achieved by permitting others to 

have service for one hour with equal priority to native load and other long-term 

customers that have to pay the fixed cost of the transmission system every hour of the 

 16 Order No. 888 at 31,751-53. 
Docket No. RM05-25-000 - 19 -

year. They also had expressed concern that a one-hour minimum term would promote 

selective use of the transmission system, impair the ability of a utility to plan its system, 

and adversely impact longer term transactions. Finally, some expressed concern that a 

one-hour firm service may encourage speculative advance requests for service during the 

system peak day (cream skimming). However, we note that several public utility 

transmission providers have individually filed for and received Commission authorization 

to modify their OATT to provide hourly firm point-to-point transmission service. See, 

e.g., El Paso Electric Company, (unpublished letter order dated April 9, 2004 in Docket 

No. ER04-567-000); Entergy Services, Inc., 85 FERC ¶ 61,163 (1998), order on reh’g, 

91 FERC ¶ 61,153 (2000). 

1. Are the concerns expressed in Order No. 888 regarding minimum terms no 

longer relevant? 

2. Should public utility transmission providers be required to offer hourly firm 

point-to-point transmission service? 

3. For reservation and scheduling purposes, should the Commission permit 

transmission customers to batch hourly firm transmission requests so that the 

public utility transmission provider can evaluate them as if they were a single 

request? 

4. Should the scheduling timelines for firm and non-firm hourly transmission 

service be the same or should they differ? Please explain. 
Docket No. RM05-25-000 - 20 -

G. Changes in Receipt and Delivery Points (Redirects)

17. Section 22.2 of the pro forma OATT (Modification on a Firm Basis) provides that 

any request by a transmission customer to modify receipt and delivery points on a firm 

basis shall be treated as a new request for service in accordance with section 17 of the pro 

forma OATT (Procedures for Arranging Firm Point-to-Point Transmission Service). 

While this new request is pending, the transmission customer retains its priority for 

service at the existing firm receipt and delivery points specified in the service agreement. 

1. Have transmission customers been unduly discriminated against in attempting 

to modify their receipt and delivery points? If so, provide specific examples. 

2. If there are problems associated with this section, what reforms are needed, or 

is this an enforcement matter? 

 H. Rollover Rights 

 

18. Section 2.2 of the pro forma OATT (Reservation Priority for Existing Firm 

Service Customers) provides that existing firm service customers (wholesale 

requirements and transmission-only, with a contract term of one-year or more) have the 

right to continue to take transmission service from the public utility transmission provider 

when the contract expires, rolls over or is renewed. It specifically provides that this 

transmission reservation priority is independent of whether the existing customer 

continues to purchase capacity and energy from the public utility transmission provider or 

elects to purchase capacity and energy from another supplier. 
Docket No. RM05-25-000 - 21 -

1. Have public utility transmission providers hindered customers under pre-Order 

No. 888 agreements from rolling over their contracts that allow purchase of 

capacity and energy from another supplier? 

2. Does the language in section 2.2 need to be reformed to ensure that rollover 

rights are provided when transmission customers are seeking access to 

alternative supply sources, or is this an enforcement matter? 

3. Should rollover right policy determinations made subsequent to Order No. 888 

be included in the pro forma OATT? 

4. Are there other problems with section 2.2, either as written or as implemented 

by public utility transmission providers, that need to be addressed? 

5. Are any potential transmission customers denied transmission access by the 

exercise of rollover rights? 

6. Should the concept of rollover rights be reconsidered? Is one-year service with 

rollover rights consistent with the need to create incentives for transmission 

investment or should a longer minimum term of service be adopted to qualify 

for rollover rights? If so, how can the terms and conditions of rollover rights 

be reformed to ensure proper incentives for transmission investment? 

I. Rules, Standards and Practices Governing the Provision of 

Transmission Service

19. Certain rules, standards and practices governing the provision of transmission 

service, such as public utilities’ business practices, are not reflected in the Commission’s 

pro forma OATT or in individual public utility tariffs. The Commission has previously 
Docket No. RM05-25-000 - 22 -

adopted certain uniform business practices and amended the Commission’s regulations to 

require compliance with such practices (see, e.g., Open Access Same-Time Information 

System and Standards of Conduct, Order No. 638, 65 Fed. Reg. 17,370 (February 25, 

2000), FERC Stats. & Regs. ¶ 31,093 (2000)). The Commission has also recently issued 

a Notice of Proposed Rulemaking proposing to amend its regulations to incorporate by 

reference standards promulgated by the North American Energy Standards Board's 

(NAESB) Wholesale Electric Quadrant (WEQ) dealing with OASIS business practice 

standards and proposing to require each electric utility to revise its OATT to include the 

applicable WEQ standards. (See Standards for Business Practices and Communication 

Protocols for Public Utilities, 111 FERC ¶ 61,204 (2005), 70 Fed. Reg. 28,222 (May 17, 

2005), FERC Stats. & Regs. ¶ 32,582 (2005)). 

1. Should such rules, standards and practices be required to be included in public 

utilities’ OATTs? 

2. If not all, which of such rules, standards and practices should be included in 

OATTs (with the exception of the NAESB standards subject to the proceeding 

discussed above)? 

3. Should rules, standards and practices not required to be included in OATTs be 

required to be posted on public utilities’ OASIS to increase transparency? 

 J. Joint Transmission Planning 

20. Currently, joint planning between a public utility transmission provider and 

transmission customer is not required by Order No. 888. However, section 30.9 of the 

pro forma OATT (Network Customer Owned Transmission Facilities) provides that for 
Docket No. RM05-25-000 - 23 -

facilities constructed by a network customer, the network customer must receive credit 

where such facilities are jointly planned and installed in coordination with the 

transmission provider. 

1. Does the requirement that a public utility transmission provider provide credits 

to new customer-owned transmission facilities have the effect of discouraging 

joint transmission planning? 

2. Should joint transmission planning be made mandatory, for example, when 

transmission requests affect adjacent transmission systems? If so, under what 

authority could the Commission impose such a requirement? 

3. Should public utility transmission providers be required to report to the 

Commission on an annual basis the joint planning that has occurred or been 

requested on their systems? Should the Commission conduct audits to 

determine the level of compliance with any joint planning requirement? 

4. Should the pro forma OATT be reformed to include a provision for credits for 

transmission facilities built by a point-to-point transmission customer? Should 

credits be provided only for point-to-point service of a longer term, e.g., five 

years? 

K. Obligation to Expand Capacity 

21. The pro forma OATT requires public utility transmission providers to expand 

capacity, if necessary, to satisfy the needs of network transmission customers (section 

28.2) and point-to-point transmission service customers (sections 13.5 and 15.4). The 
Docket No. RM05-25-000 - 24 -

transmission customer, however, must agree to compensate the transmission provider for 

any necessary transmission facility additions.

1. Has this provision met transmission customers’ needs? 

2. Have public utility transmission providers fulfilled these obligations? 

3. How can the pro forma OATT be reformed to ensure that public utility 

transmission providers’ obligations to expand are clarified or is this an 

enforcement matter only? 

4. Have transmission customers been unduly discriminated against by 

transmission providers failing to plan and construct their transmission systems 

to accommodate the needs of network customers? If so, please provide 

specific examples. Should the pro forma OATT be reformed? 

5. Are there other changes to the pro forma OATT that could achieve the goal of 

having transmission built? 

6. Are there transmission pricing policies, such as demand charges, that would 

eliminate any financial disincentive for the transmission provider not to build 

transmission upgrades? 

7. Does “lumpiness” act as a disincentive to expanding the transmission system, 

i.e., where the transmission requests received are not of a sufficient 

transmission capacity to cost justify a substantial system upgrade (only 100 

MW requested for a minimum 200 MW upgrade)? If so, what changes could 

be made to lessen this disincentive? 

8. Are there interconnection procedures established in Order No. 2003 et seq., 
Docket No. RM05-25-000 - 25 -

that may be considered as best practices that should be adopted or possibly 

expanded in the pro forma OATT for point-to-point or network integration 

transmission services? 

9. Should there be lower charges for longer-term transmission service that require 

transmission system upgrades, such as for five years rather than one year, 

because of the possibility of lower risk of revenue recovery for the 

transmission provider? If so, how would such a rate be designed? 

 

L. Joint Ownership 

22. In Order No. 888-A, the Commission required each public utility that owns 

interstate transmission facilities with a non-jurisdictional entity to offer open access 

transmission service over its share of the joint facilities.17 Some current jointly-owned 

transmission facilities are the Georgia Integrated Transmission System, owned by 

Southern Company subsidiary Georgia Power, the Municipal Electric Authority of 

Georgia (MEAG Power), the Georgia Transmission Corporation – a cooperative utility – 

and Dalton Utilities – a municipal system; the Pacific Intertie and Path 15. Order No. 

888 did not address the possibility of existing transmission customers participating with 

the transmission provider in the joint ownership of new transmission facilities. 

1. Should public utility transmission providers be required to offer their network 

service and point-to-point transmission customers the opportunity to participate 

in the joint ownership of new transmission facilities and network upgrades? If 

 17 Order No. 888-A at 30,218-19. 
Docket No. RM05-25-000 - 26 -

so, under what authority would the Commission impose such a requirement? 

2. Would joint ownership reduce disputes over cost allocation for new capacity 

and provide a source of additional capital? 

3. How would ownership rights affect the usage of the jointly owned facilities 

and how would this affect the rights of non-owners? 

4. Should a provision(s) be included in the pro forma OATT concerning joint 

ownership? If so, please describe in detail. 

M. Tariff Compliance Reviews

23. The Commission has relied primarily on transmission customer complaints and 

staff audits to identify OATT violations. 

1. Should the Commission establish a regime of systematic tariff compliance 

reviews in order to monitor transmission providers’ compliance with the terms 

and conditions of their OATTs? 

2. Should these reviews be the equivalent of audits and investigations with due 

process and remedies for any violations? 

3. Should the Commission require public utility transmission providers to hire 

independent reviewers to prepare reports for submission to the Commission 

and release to the public? If so, what role should the Commission play in such 

a process? 

N. Hoarding of Transmission Capacity

24. In Order No. 888, the Commission acknowledged that hoarding of transmission 

capacity was a possibility. For example, the Commission found that firm transmission 
Docket No. RM05-25-000 - 27 -

customers should not lose their rights to firm capacity simply because they do not use 

that capacity for certain periods of time. It explained that it would not limit the amount 

of transmission capacity that a customer may reserve, except in the face of evidence of 

hoarding or other anticompetitive practices. 

1. Is there evidence of hoarding or anticompetitive practices by public utility 

transmission providers or customers that warrants reforms to the pro forma 

OATT? If so, please provide specific examples. 

2. Are transmission providers adequately making non-firm transmission service 

available when it is not used by firm point-to-point and network service 

customers? Is the non-firm service made available in a non-discriminatory 

fashion? 

3. Are there pricing policies that would further encourage transmission providers 

to make additional non-firm transmission service available? 

O. Curtailments 

25. Section 1.7 of the pro forma OATT defines curtailment as “a reduction in firm or 

non-firm transmission service in response to a transmission capacity shortage as a result 

of system reliability conditions.” Curtailment provisions for point-to-point transmission 

service are established in sections 13.7 and 14.7 for firm and non-firm transmission 

services respectively and the curtailment provisions for network integration transmission 

service are contained in section 33. Complaints regarding improper curtailment of 
Docket No. RM05-25-000 - 28 -

service by transmission providers have been made in a variety of proceedings and the 

Commission has found cases of improper curtailment in the past.18 

1. Is there evidence of improper curtailment practices by public utility 

transmission providers or customers that warrants reforms to the pro forma 

OATT? If so, please provide specific examples. 

2. Should curtailments determined to be improper be subject to monetary 

penalties? 

3. Should curtailments of firm transmission service designed to permit wholesale 

power sales by the merchant function of the transmission provider, or an 

affiliate, be considered market manipulation? 

P. Reservation Priority

26. Section 13.2 of the pro forma OATT (Reservation Priority) provides that longterm firm point-to-point transmission service will be available on a first-come, firstserved basis. With regard to short-term point-to-point transmission service requests, this 

section establishes that reservations will be conditional based upon the length of the 

requested transaction. This section further provides, in the context of short-term firm 

point-to-point transmission service, that if ATC is insufficient for all service requests, 

customers with a reservation for shorter-term service will have a right of first refusal to 

match longer-term reservations before losing their reservation priority. 

 18 See, e.g., Consolidated Edison Company of New York, 108 FERC ¶ 61,120 

(2004). 
Docket No. RM05-25-000 - 29 -

1. Has the first-come, first-served approach to reservation priorities resulted in a 

fair and equitable means to allocate transmission capacity when the 

transmission system is oversubscribed? If not, what alternative approach 

should be implemented? 

2. Is the right of first refusal with respect to short-term point-to-point 

transmission service working fairly and effectively to provide ATC to those 

customers who request the longest duration of short-term firm point-to-point 

transmission service or does it provide an unfair competitive advantage or an 

opportunity for abuse? 

3. Should the right of first refusal in this context be eliminated? 

Q. Designation of Network Resources

27. Section 30.1 of the pro forma OATT (Designation of Network Resources) 

provides that network resources shall include all generation owned, purchased or leased 

by the network customer designated to serve network load under the Tariff. Section 30.2 

of the pro forma OATT (Designation of New Network Resources) provides that the 

network customer may designate a new network resource by providing the transmission 

provider with as much advance notice as practicable. Section 30.4 of the pro forma 

OATT (Operation of Network Resources) provides that network customers may not make 

firm off-system sales from designated network resources. Section 30.7 of the pro forma 

OATT (Limitation on Designation of Network Resources) provides that the network 

customer must demonstrate that it owns or has committed to purchase generation 
Docket No. RM05-25-000 - 30 -

pursuant to an executed contract in order to designate a generating resource as a network 

resource. 

1. Is there a problem with over-designation of network resources? 

2. If so, how can the pro forma OATT be reformed to eliminate the problem? 

3. Should network resource designations be limited to a specific ratio of the 

monthly peak load for the customer? 

4. Are network resources consisting of firm contracts that do not specify 

generation sources until the energy is scheduled (sometimes referred to as 

“seller’s choice”) a problem? If so, should these generation sources only be 

allowed to be designated as network resources after the seller has identified the 

specific generating sources? 

5. Have network customers been unduly discriminated against in attempting to 

modify their receipt and delivery points? 

6. What specific difficulties have been experienced with designation of network 

resources? 

7. If there are problems associated with this provision, what reforms to the 

provision are needed or is this an enforcement matter? 

8. Should customers be allowed to “undesignate” portions of their designated 

network resources on a short-term basis in order to make firm sales from these 

resources? 
Docket No. RM05-25-000 - 31 -

R. Queuing for Long-Term Transmission Service 

28. The pro forma OATT did not explicitly address queuing issues, but rather 

established provisions addressing the obligations and timeframes for a public utility 

transmission provider to address requests for transmission service that cannot be 

immediately granted due to a lack of ATC. The pro forma OATT also required public 

utility transmission providers to separately establish their “Methodology for Completing 

a System Impact Study” as Attachment D to the pro forma OATT. In Order No. 2003-A, 

the Commission found that although interconnection and delivery, and transmission 

service under the pro forma OATT, are separate services, it agreed that the queues for the 

two services must be closely coordinated.19 Thus, in general, interconnection customers 

and transmission delivery service customers should have equal access to ATC, with 

priority being established on a first come, first served basis according to the date on 

which service is requested. Furthermore, studies for interconnection services should be 

coordinated with the facilities studies performed for transmission delivery services. This 

ensures that all required upgrades are planned and designed in a least cost manner. 

1. What problems associated with the queuing process have been encountered? 

2. Should the pro forma OATT be reformed to establish more specific rules about 

how other transmission requests in the queue should be accounted for when 

conducting studies? 

3. Should clustering, i.e., the studying of transmission requests as a group, be 

 19 Order No. 2003-A at P 541. 
Docket No. RM05-25-000 - 32 -

required? The Commission has allowed this practice on a case-by-case basis, 

see, e.g., Southwest Power Pool, Inc., 110 FERC ¶ 61,028 (2005). 

4. Are there blocking issues where a customer submits multiple requests 

intending to proceed with a single request specifically to keep others out of the 

queue? If so, how would the Commission decide which requests are legitimate 

versus blocking in nature? Would charging a processing fee that would 

increase with the duration of service for requests reduce the incentive to submit 

multiple self competing requests? 

5. Should the public utility transmission provider’s planning process be required 

to reflect plans for all new generation sources in the interconnection and 

transmission queues to ensure that customers can request transmission as easily 

for power and energy from independent power producers’ generation as from 

the public utility transmission provider’s own generation? 

6. Should the duration of the long-term transmission request affect the 

transmission customer’s queue position, for example a request for a five-year 

firm service receive a higher queue position for study purposes than a one-year 

firm service request? 

S. Ancillary Services

29. In the pro forma OATT, the Commission established six ancillary services to be 

offered, including the following Schedules: (1) Scheduling, System Control and 

Dispatching services; (2) Reactive Supply and Voltage Control from Generation Sources 

Service; (3) Regulation and Frequency Response Service; (4) Energy Imbalance Service; 
Docket No. RM05-25-000 - 33 -

(5) Operating Reserve – Spinning Reserve Service; and (6) Operating Reserve – 

Supplemental Reserve Service. The Commission explained that it generally adopted the 

North American Electric Reliability Council’s recommendations for ancillary service 

definitions and descriptions. 

1. Have the correct ancillary services needed to provide open access transmission 

service been identified? 

2. Are there additional ancillary services that should be included in the pro forma 

OATT? If so, please identify such services and provide proposed definitions. 

3. Are there ancillary services identified in the pro forma OATT that should be 

treated separately as distinct services, such as regulation and frequency 

response service? 

4. Are the definitions for the ancillary services used in Order No. 888 still viable? 

If not, please provide proposed revised definitions. 

5. Should the Commission address ancillary service pricing issues in this 

proceeding? 

 i. Energy Imbalances 

30. In Order No. 888, the Commission explained that energy imbalance service “is 

provided when the transmission provider makes up for any difference that occurs over a 

single hour between the scheduled and the actual delivery of energy to a load located 

within its control area.”20 The Commission also explained: 

 20 Order No. 888 at 31,703; see also Schedule 4 of the pro forma OATT. 
Docket No. RM05-25-000 - 34 -

[f]or minor hourly differences between the scheduled and delivered energy, the 

transmission customer is allowed to make up the difference within 30 days (or 

other reasonable period generally accepted in the region) by adjusting its energy 

deliveries to eliminate the imbalance. A minor difference is one for which the 

actual energy delivery differs from the scheduled energy by less than 1.5 percent, 

except that any hourly difference less than one megawatt-hour is also considered 

minor. Thus, the Final Rule established an hourly energy deviation band of +/- 1.5 

percent (with a minimum of 1 MW) for energy imbalance. The transmission 

customer must compensate the transmission provider for an imbalance that falls 

outside the hourly deviation band and for accumulated minor imbalances that are 

not made up within 30 days. 

The Commission further explained that this bandwidth promotes good scheduling 

practices and that it is important that the implementation of each scheduled transaction 

not overly burden others.21 The pricing for energy within and outside of this bandwidth 

was left for public utility transmission providers to propose on a case-by-case basis. 

Since the issuance of Order No. 888, the Commission has approved energy imbalance 

service pricing provisions on a case-by-case basis. Generally, public utility transmission 

providers proposed energy imbalance charges, including penalty charges for scheduling 

deviations set at a percentage of the energy price, e.g., 90 percent for excess energy and 

110 percent for energy shortfalls. 

 21 Order No. 888-A at 30,232. 
Docket No. RM05-25-000 - 35 -

1. Does the deviation band of +/-1.5 percent continue to be appropriate? 

2. Should penalty charges be eliminated entirely for transmission customers 

and/or should they be charged no more than the control area’s cost of 

supplying energy to correct the imbalance? Should there be low or no penalty 

charges when reliability is not threatened and higher penalty charges only 

when reliability is threatened? Provide examples of threats to reliability in this 

context. 

3. Would increased scheduling flexibility help? 

4. Should transmission customers be allowed to aggregate energy imbalances 

over a greater time period than 30 days or be allowed to net energy 

imbalances? 

5. Is it unduly discriminatory or preferential for a transmission customer to be 

charged energy imbalance penalties when the public utility transmission 

provider does not have to pay a penalty and incurs only a cost no higher than 

its incremental cost of energy for imbalances occurring in its control area or 

between control areas (return in kind)? 

 ii. Generator Imbalances

31. In Order No. 888, the Commission defined generator imbalance as the difference 

between the scheduled and actual delivery of energy from the generator. The 

Commission did not adopt a pro forma generator imbalance schedule, explaining that a 

generator should be able to deliver its scheduled hourly energy with precision. It also 

expressed concern that if a generator was allowed to deviate from its schedule by 1.5 
Docket No. RM05-25-000 - 36 -

percent without penalty (as permitted for energy imbalances), it would discourage good 

generator operating practices.22 The Commission concluded that generator imbalances 

should be specified in each generator’s interconnection agreement with its transmission 

provider or control area operator. 

1. Should the Commission require that a generator imbalance schedule be 

included in the pro forma OATT? Is comparability in the treatment of 

generator imbalances needed? 

2. How should generator imbalances be priced? 

3. Should there be low or no penalty charges when reliability is not threatened 

and higher penalty charges only when reliability is threatened? 

T. Pro Forma OATT Definitions 

 

32. In order to promote consistency and clarity in the non-discriminatory provision of 

open access transmission service, the Commission included certain common service 

provisions in the pro forma OATT, including a definitions section to establish a common 

understanding of the terms used throughout the pro forma OATT. 

1. Are the existing pro forma OATT terms and their definitions sufficient to 

ensure not unduly discriminatory transmission? 

2. If not, what reforms or additional terms are needed? Please provide specific 

definitions. 

 22 Id. at 30,230. 
Docket No. RM05-25-000 - 37 -

3. The new FPA section 215(a)(4) established by EPAct 2005 defines reliable 

operation. Is there any reason that this definition of reliability should not be 

incorporated in the pro forma OATT? 

U. ISO,RTO, and ITC Tariffs

33. In Order No. 888, the Commission encouraged the voluntary formation of 

properly-structured ISOs and provided the industry guidance on ISO formation, in the 

form of ISO principles to be used to assess ISO proposals submitted to the Commission. 

In addition, in 1999, the Commission issued a Final Rule in Order No. 2000 to advance 

the voluntary formation of RTOs with the objective of having all transmission-owning 

entities place their transmission facilities under the control of appropriate RTOs. The 

Commission concluded that such regional institutions could address the operational and 

reliability issues confronting the industry, and eliminate undue discrimination in 

transmission services that can occur when the operation of the transmission system 

remains in the control of a vertically integrated utility. Subsequently, the electric 

industry has made significant progress in the development of voluntary RTOs/ISOs (e.g., 

Midwest Independent Transmission System Operator, Inc. and Southwest Power Pool, 

Inc.) and the Commission has accepted a wide range of ISO and RTO proposals. Further, 
Docket No. RM05-25-000 - 38 -

the Commission has also authorized the formation of independent transmission 

companies (ITC).23

1. Which of the matters discussed throughout this NOI, if any, need not be 

applied to ISO and RTO tariffs? Please provide specifics. 

2. Which of the matters discussed throughout this NOI, if any, need not be 

applied to ITCs? Please provide specifics. 

V. Open Access by Unregulated Transmitting Utilities (Section 1231 of the 

 Energy Policy Act of 2005) 

34. In Order No. 888, the Commission concluded that it was appropriate to require a 

reciprocity provision in the pro forma OATT, which applied to all customers, including 

non-public utility entities that own, control or operate transmission facilities and that take 

service under the open access tariff.24 The Commission did not require non-public 

utilities to provide transmission access; instead, the Commission conditioned the use of 

open access services on an agreement to offer open access services in return. The 

Commission found that while it did not have the authority to require non-public utilities 

to make their systems generally available, it did have the ability, and the obligation, to 

 23 See, e.g., Trans-Elect, Inc., 98 FERC ¶ 61,142 (2002), order on reh’g, 98 FERC 

¶ 61,368 (2002); ITC Holdings Corp., 102 FERC ¶ 61,182, order on reh’g, 104 FERC 

¶ 61,033 (2003); American Transmission Co., 103 FERC ¶ 61,388 (2003), order on reh’g, 

107 FERC ¶ 61,117 (2004); See also Policy Statement Regarding Evaluation of 

Independent Ownership and Operation of Transmission, 111 FERC ¶ 61,473 (2005) 

(stating that the Commission would entertain proposals for market participants to hold 

passive equity interests in ITCs). 

24 Order No. 888 at 31,760-63; Order No. 888-A at 30,281-90. 
Docket No. RM05-25-000 - 39 -

ensure that open access transmission is as widely available as possible and that Order No. 

888 did not result in a competitive disadvantage to public utilities. 

35. The Commission noted that while many non-public utilities were willing to offer 

reciprocal access, including through an open access tariff, these non-public utilities were 

fearful that a public utility may deny service based simply on a claim that the open access 

tariff offered by a non-public utility is not satisfactory. To assist these non-public 

utilities, the Commission developed a voluntary safe harbor procedure to alleviate those 

concerns. Under this procedure, non-public utilities could submit to the Commission a 

transmission tariff and a request for declaratory order that the tariff meets the 

Commission’s comparability (non-discrimination) standards.25 If the Commission found 

that a tariff contains terms and conditions that substantially conform or are superior to 

those in the pro forma tariff, the Commission deemed it an acceptable reciprocity tariff 

and required public utilities to provide open access service to that particular non-public 

utility. 

36. The EPAct 2005 now authorizes the Commission to require non-public utilities (or 

“unregulated transmitting utilities”) to provide open access transmission service. Section 

1231 of the EPAct 2005 establishes a new section 211A in Part II of the FPA, which 

states in part that the Commission “may, by rule or order, require an unregulated 

transmitting utility to provide transmission services” at rates that are comparable to those 

 25 The Commission explained that “a nonpublic utility seeking to take service 

under a transmission provider’s OATT must agree to offer to provide the transmission 

provider any service that the nonpublic utility provides or is capable of providing on its 

system in order to satisfy reciprocity.” Order No. 888-A at 30,286. 
Docket No. RM05-25-000 - 40 -

it charges itself and under terms and conditions (unrelated to rates) that are comparable to 

those it applies to itself and that are not unduly discriminatory or preferential. 

1. Should the Commission require unregulated transmission utilities to provide 

transmission service under rates that are comparable to those they charge 

themselves and under terms and conditions that are comparable to those they 

apply to themselves and that are not unduly discriminatory or preferential? 

2. If so, should the Commission impose this requirement on all unregulated 

transmission utilities through a rulemaking proceeding, or should the 

Commission apply this new law on a case-by-case basis, through complaints, 

motions seeking enforcement or sua sponte action by the Commission? 

3. Section 1231 of the EPAct 2005 authorizes the Commission to require 

unregulated transmitting utilities to provide transmission service on terms and 

conditions that are comparable to those under which the utility provides 

transmission service to itself and that are not unduly discriminatory or 

preferential. Can terms and conditions be both comparable and unduly 

discriminatory or preferential or are comparable terms and conditions 

necessarily not unduly discriminatory or preferential? 

Procedure for Comments 

37. The Commission invites interested persons to submit comments, and other 

information on the matters, issues and specific questions identified in this notice. 

Comments are due on or before [INSERT DATE 60 days after publication in the 

FEDERAL REGISTER]. Comments must refer to Docket No. RM05-25-000, and must 
Docket No. RM05-25-000 - 41 -

include the commenters’ name, the organization they represent, if applicable, and their 

address. 

38. To facilitate the Commission’s review of the comments, commenters are requested 

to provide an executive summary of their position, not to exceed ten pages. Commenters 

are requested to identify each specific question posed by the NOI that their discussion 

addresses and to use appropriate headings. Additional issues the commenters wish to 

raise should be identified separately. The commenters should double space their 

comments. 

39. Comments may be filed on paper or electronically via the eFiling link on the 

Commission's web site 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. Commenters that 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. 

40. 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 are not required to serve copies of their comments on other 

commenters. 

Document Availability 

41. 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 
Docket No. RM05-25-000 - 42 -

contents of this document via the Internet through the Commission's Home Page 

(http://www.ferc.gov) and in the Commission'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. 

42. From the Commission's Home Page on the Internet, this information is available in 

the Commission's document management system, 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) in the docket number field. 

43. User assistance is available for eLibrary and the Commission's website during 

normal business hours. For assistance, please contact the Commission’s Online Support 

at 1-866-208-3676 (toll free) or 202-502-6652 (e-mail at FERCOnlineSupport@ferc.gov) 

or the Public Reference Room at 202-502-8371, TTY 202-502-8659 (e-mail at 

public.referenceroom@ferc.gov). 

 By direction of the Commission. 

 Magalie R. Salas, 

 Secretary.