126 FERC ¶ 61,228 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 37 

(Docket Nos. RM05-17-004 and RM05-25-004; Order No. 890-C) 

Preventing Undue Discrimination and Preference in Transmission Service 

(March 19, 2009) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Order on Rehearing and Clarification. 

SUMMARY: The Federal Energy Regulatory Commission affirms its basic 

determinations in Order Nos. 890, 890-A and 890-B, granting rehearing and clarification 

regarding certain revisions to its regulations and the pro forma open-access transmission 

tariff, or OATT, adopted in Order Nos. 888 and 889 to ensure that transmission services 

are provided on a basis that is just, reasonable, and not unduly discriminatory. The 

Commission grants clarification of the degree of consistency required in the calculation 

of available transfer capability by transmission providers and denies rehearing regarding 

the requirement to undesignate network resources used to serve off-system sales 

EFFECTIVE DATE: This rule will become effective [insert date of publication in the 

Federal Register]. 

FOR FURTHER INFORMATION CONTACT: 

W. Mason Emnett 

Office of the General Counsel – Energy Markets 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6540 

SUPPLEMENTARY INFORMATION:
126 FERC ¶ 61,228 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Acting Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 and Philip D. Moeller. 

Preventing Undue Discrimination and Preference in 

Transmission Service 

RM05-17-004 

RM05-25-004 

ORDER NO. 890-C 

ORDER ON REHEARING AND CLARIFICATION 

(Issued March 19, 2009) 

1. On February 16, 2007, the Commission issued Order No. 890,1

 addressing and 

remedying opportunities for undue discrimination under the pro forma Open Access 

Transmission Tariff (OATT) adopted in Order No. 888.2

 The pro forma OATT was 

intended to foster greater competition in wholesale power markets by reducing barriers to 

entry in the provision of transmission service. In the ten years since Order No. 888, 

 1 Preventing Undue Discrimination and Preference in Transmission Service, Order 

No. 890, 72 Fed. Reg. 12,266 (March 15, 2007), FERC Stats. & Regs. ¶ 31,241, order on 

reh’g, Order No. 890-A, 73 Fed. Reg. 2984 (January 16, 2008), FERC Stats. & Regs. 

¶ 31,261 (2007), order on reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008). 

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 

(Mar. 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) (TAPS v. FERC), aff’d sub nom. New York v. FERC, 535 

U.S. 1 (2002). 
Docket Nos. RM05-17-004 and RM05-25-004 - 2 - 

however, flaws in the pro forma OATT undermined its ability to realize the core 

objective of remedying undue discrimination. The Commission acted in Order No. 890 

to correct these flaws by reforming the terms and conditions of the pro forma OATT in 

several critical areas, including the calculation of available transfer capability (ATC), the 

planning of transmission facilities, and the conditions of services offered by each 

transmission provider. 

2. In Order Nos. 890-A and 890-B, the Commission largely affirmed the reforms 

adopted in Order No. 890. The Commission concluded that, taken together, these 

reforms will better enable the pro forma OATT to achieve the core objective of 

remedying undue discrimination in the provision of transmission service. The 

Commission did, however, grant rehearing and clarification regarding certain revisions to 

its regulations and the pro forma OATT. NorthWestern Corporation (NorthWestern) and 

South Carolina Electric and Gas Co. (SCE&G) have requested further rehearing and 

clarification of Order No. 890-B on certain discrete issues, which we address below. 

I. Reforms of the OATT

A. Consistency and Transparency of ATC Calculations

3. In Order No. 890-B, the Commission among other things affirmed a clarification 

provided in Order No. 890-A that adjacent transmission providers must coordinate and 

exchange data and assumptions to achieve consistent available transfer capability (ATC) 

values on either side of a single interface.3

 The Commission stated that it disagreed with 

 3

 Order No. 890-B at P 15. 
Docket Nos. RM05-17-004 and RM05-25-004 - 3 - 

petitioners arguing that consistent ATC values should not be interpreted to mean identical 

ATC values, but acknowledged that factors such as timing of reservation requests, 

acceptances, and confirmations, and multiple interfaces between and among transmission 

providers, can make it difficult to achieve coincidental, identical postings of ATC values 

on both sides of an interface. The Commission reiterated that, if all of the ATC 

components and certain data inputs and assumptions are consistent, the ATC calculation 

methodologies being finalized by the North American Electric Reliability Corporation 

(NERC) through the reliability standards development process should produce 

predictable and sufficiently accurate, consistent, equivalent, and replicable results. 

Requests for Clarification and Rehearing

4. NorthWestern contends that, while requiring two adjacent transmission providers 

to post identical ATC at a single interface appears on its face to be reasonable, that 

requirement can have unintended and negative consequences. NorthWestern states the 

requirement may allow transmission customers to be able to block other market 

participants from requesting ATC without placing a transmission service request or 

following OATT requirements. NorthWestern offers an example of two transmission 

providers with a single interface and a customer that requests service on that interface 

from only one of the transmission providers. NorthWestern contends that the 

requirement to make ATC postings on either side of an interface identical would force the 

second transmission provider to reduce ATC on its side of the interface if the first 

transmission provider grants service to the customer, even though no request for service 
Docket Nos. RM05-17-004 and RM05-25-004 - 4 - 

was submitted on the second transmission system, circumventing the first-come, firstserved nature of transmission service under the pro forma OATT. 

5. NorthWestern contends that how transmission providers account for capacity 

benefit margin (CBM) and transmission reliability margin (TRM) on either side of an 

interface can have the same impact as a transmission service request. If one transmission 

provider sets aside capacity for CBM or TRM, NorthWestern contends that those set 

asides will force the transmission provider to decrement ATC on the other side of the 

interface. While NorthWestern understands the Commission’s desire to remove the 

potential for undue discrimination by requiring ATC calculations to be consistent and 

transparent, it contends that directing transmission providers to have identical ATC 

postings on either side of an interface will allow transmission providers and customers to 

block access to transmission service, either intentionally or not. 

6. NorthWestern therefore asks the Commission to grant rehearing to require that 

ATC on either side of an interface be consistent, rather than identical. NorthWestern 

suggests that a consistency requirement could be structured such that the transmission 

providers posting ATC for a single interface be able to transparently provide all 

necessary information that allows interested parties to determine why differences in ATC 

exist. 

Commission Determination

7. The Commission clarifies that it did not intend in Order No. 890-B to require 

transmission providers to post identical ATC values on either side of an interface in every 

instance and at all times. While ATC values on either side of an interface may be 
Docket Nos. RM05-17-004 and RM05-25-004 - 5 - 

identical in some instances, in others they may not. To the extent necessary, the 

Commission grants rehearing of Order No. 890-B to eliminate reference to the posting of 

identical ATC values on either side of an interface. 

8. In Order No. 890-A, the Commission clarified that adjacent transmission providers 

must coordinate and exchange data and assumptions to achieve consistent ATC values on 

either side of a single interface.4

 The Commission explained that this requirement is 

applicable to any neighboring transmission providers no matter whether they use the 

same or different ATC methodologies. Several petitioners requested rehearing and 

clarification of this requirement, generally raising two arguments. First, they suggested 

that it would be more appropriate to require consistency of total transfer capability (TTC) 

on either side of an interface instead of consistency of ATC values.5

 Second, they argued 

that any requirement to achieve consistent ATC values on either side of an interface 

should not be interpreted to mean identical ATC values.6

 In response, the Commission 

stated that it disagreed with petitioners arguing that consistent ATC values should not be 

interpreted as identical, but went on to acknowledge that various factors (such as timing 

of reservation requests, acceptances and confirmation, or multiple interfaces between 

transmission providers) could make it difficult for transmission providers to achieve 

 4

 Order No. 890-A at P 52. The Commission noted that the anticipated 

consistency is for available capability in the same direction across an interface. 

5 See Order No. 890-B at P 9. 

6 See id. P 9-10. 
Docket Nos. RM05-17-004 and RM05-25-004 - 6 - 

coincidental, identical postings of ATC values on either side of an interface.7

 The 

Commission therefore reiterated that the ATC calculation methodologies being finalized 

by NERC “should produce predictable and sufficiently accurate, consistent, equivalent, 

and replicable results.”8

 

9. The requirement, then, is not to achieve identical postings of ATC values on either 

side of an interface, as NorthWestern contends. The requirement is, instead, to achieve 

consistency in such values through the development of ATC calculation methodologies 

that produce sufficiently accurate, consistent, equivalent, and replicable results. In some 

instances, it may be possible for transmission providers under these methodologies to 

achieve identical ATC values on either side of an interface. In others, such as when there 

are differences in reservation status or when there are multiple interfaces between the 

transmission providers, it may not be possible or even practical to achieve identical 

values. 

10. Since the issuance of Order No. 890-B, NERC has submitted to the Commission 

six proposed Reliability Standards governing the calculation of ATC. In a companion 

order issued today, the Commission proposes to approve these Reliability Standards as 

just, reasonable, not unduly discriminatory or preferential, and in the public interest.9

 

 7 Id. P 15. 

8 Id.

9 Mandatory Reliability Standards for the Calculation of Available Transfer 

Capability, Capacity Benefit Margins, Transmission Reliability Margins, Total Transfer 

Capability, and Existing Transmission Commitments and Mandatory Reliability 

(continued) 
Docket Nos. RM05-17-004 and RM05-25-004 - 7 - 

The Commission will address in that proceeding whether the proposed Reliability 

Standards satisfy the requirements of Order No. 890, as clarified above. 

B. Designation of Network Resources

11. In Order No. 890-B, the Commission among other things clarified that the 

requirement for a network customer and the transmission provider’s merchant function to 

undesignate each portion of each resource used to support a sale of system power does 

not apply in the event the buyer and seller are located on the same transmission system 

and the buyer designates the system power as a network resource. The Commission 

explained that, when a seller’s network resources are used to support an on-system sale, 

the buyer meets the informational requirements of section 29.2(v) of the pro forma OATT 

simply by identifying the seller’s system as the resource. In comparison, when a buyer 

does not designate a system purchase as a network resource, the point-to-point 

transmission reservation for taking delivery of the purchase and the corresponding 

resource-specific undesignation by the seller provide the transmission provider with the 

information it needs to accurately model the effect of the transaction on its transmission 

system and set aside ATC accordingly. 

Requests for Clarification and Rehearing

12. SCE&G argues on rehearing that the Commission has unreasonably restricted the 

types of system sales that can be made from network resources without undesignation. 

 

Standards for the Bulk-Power System, Notice of Proposed Rulemaking, Docket 

No. RM08-19-000, et al. (March 19, 2009). 126 FERC ¶ 61,249 (2009). 
Docket Nos. RM05-17-004 and RM05-25-004 - 8 - 

SCE&G argues that, for purposes of performing transmission modeling and ATC 

calculations in conjunction with a given third-party sale, the transmission provider has all 

of the information that it needs regardless of whether the buyer is located on-system or 

off-system. According to SCE&G, transmission modeling relating to off-system sales is 

a routine matter in the industry and the practice of supporting such sales via slice-ofsystem undesignations has presented no obstacles to the execution of such modeling or 

any associated calculations. SCE&G contends that, when modeling transmission flows 

associated with an off-system sale, the neighboring systems (of the buyer and the seller) 

are evaluated on a system-wide basis and calculations reflecting the amount of the sale 

are properly performed in modeling the flow from the system of the seller to that of the 

buyer. 

13. SCE&G contends that modeling for slice-of-system sales, whether on-system or 

off-system, is designed to ensure not only accuracy, but also economic efficiency. 

SCE&G states that the modeling for such sales takes into account load forecasts for the 

relevant time period and, on the basis of such data, includes projections of which specific 

plants are likely to be involved in generating the incremental power that supports the sale, 

which in turn is reflected in the relevant economic dispatch plan. Because load forecasts 

invariably differ to at least some degree from the actual load that ultimately materializes, 

SCE&G contends that the modeling of any system sale includes appropriate alternate 

dispatch scenarios, to ensure that unit dispatch is performed in the correct economic order 

no matter what the actual load may eventually prove to be. For off-system sales, SCE&G 
Docket Nos. RM05-17-004 and RM05-25-004 - 9 - 

states, the transmission provider takes the additional steps of recalculating ATC for the 

relevant interface and ensuring proper adjustment to posted ATC values. 

14. If sellers are denied the ability to use a slice-of-system undesignation to support an 

off-system sale, SCE&G states that their only alternative is to make unit-by-unit 

undesignations, which SCE&G contends is unworkable and inaccurate and could result in 

units having to be dispatched out of economic order. SCE&G states that purchasers often 

use such off-system firm transactions as a tool for ensuring their compliance with NERC 

and regional reliability council reserve requirements and related reliability requirements 

and that these transactions garner greater reliability benefits by virtue of being based on a 

share of an entire portfolio of generating units, rather than a single unit. SCE&G 

therefore asks the Commission to revisit its determination in Order No. 890-B and 

safeguard the ability to access and rely on off-system system sales. 

15. SCE&G argues that it is particularly ironic that the Commission’s initial 

clarification regarding the use of network resources to supply system sales is the 

outgrowth of a clarification sought by SCE&G in comments on the NOPR in this 

proceeding. In those comments, SCE&G requested that the Commission clarify “exactly 

how to undesignate and redesignate [network resources] when the Transmission 

Provider/Network Customer is selling a block of firm power out of the system.”10 

SCE&G argues that, in responding to the request in Order No. 890, the Commission 

 10 Reply Comments of South Carolina Electric & Gas Co. at 15, Docket 

No. RM05-25-000, et al. (Sep. 20, 2006) (emphasis added). 
Docket Nos. RM05-17-004 and RM05-25-004 - 10 - 

expressly acknowledged the off-system nature of the sales at issue and, therefore, its 

statement that “firm third-party sales may be made from an undesignated portion of 

[network resources]” appeared to apply to off-system sales.11 SCE&G contends that the 

Commission’s determination in Order No. 890-B therefore cannot be squared with either 

the history of the Commission’s express treatment of the issue or standard industry 

practice. 

16. Should the Commission decline to grant rehearing as requested, SCE&G argues 

that the Commission at a minimum should grandfather long-term, still-continuing offsystem sales sourced from designated network resources that were entered into prior to 

Order No. 890-B in reliance of the Commission’s prior policy. 

Commission Determination

17. The Commission affirms the requirement that network resources used to supply 

sales of system power to off-system buyers must first be undesignated.12 As we 

explained in Order No. 890, transactions in which a buyer and seller are both network 

customers located on the same transmission system are distinct from transactions 

involving sales of energy from a network customer to an off-system buyer. In the latter 

circumstance, the off-system buyer will not be using network service to take delivery 

from the host transmission provider and, instead, must identify the points of receipt and 

delivery for the transaction on the host transmission provider’s system, i.e., the points 

 11 Citing Order No. 890 at PP 1567 and 1582. 

12 See Order No. 890-B at P 206. 
Docket Nos. RM05-17-004 and RM05-25-004 - 11 - 

where capacity and energy will be received from the seller and delivered to the buyer. 

The point-to-point transmission reservation and the corresponding resource-specific 

undesignation provide the transmission provider with the information it needs regarding 

the location of particular resources being used by the seller to source the transaction in 

order to model the effect of the transaction on its transmission system and set aside ATC 

accordingly. 

18. SCE&G contends that a resource-specific undesignation of resources is 

unnecessary for a transmission provider to model an economic dispatch of resources to 

determine which specific plants are likely to be involved in generating the incremental 

power to support an off-system sale. Even if that is true in some circumstances, whether 

or not the transmission provider is able to analytically determine the likely units used to 

support a power sale does not affect the need of the buyer to identify the points of receipt 

and delivery on the host transmission system where capacity and energy will be received 

from the seller and delivered to the buyer. Because the buyer is not a network customer 

of the host transmission provider, it cannot use network service to take delivery. In order 

for the buyer to schedule point-to-point service to take delivery, the transmission 

customer must identify the point of receipt and delivery for the transaction. Even if the 

transmission provider has accurately modeled the seller’s optimal use of resources to 

supply the transaction, it is unclear how the buyer and seller would reflect that dispatch in 

the point-to-point reservation used to deliver the energy other than by identifying the 

particular point(s) of receipt for the transaction, which is tantamount to a resourcespecific undesignation of associated network resources. 
Docket Nos. RM05-17-004 and RM05-25-004 - 12 - 

19. Transactions in which the buyer of system energy is a network customer located 

on-system are clearly distinguishable from those in which the buyer and seller are located 

on different systems. In the former circumstance, the host transmission provider knows 

the normal operating levels and variable energy costs for both network customers’ 

resources, the load forecasts for both network customers’ network loads, and any 

transmission constraints requiring redispatch. Section 29.2(v) of the pro forma OATT 

requires such information to be submitted for each of the two designations (the original 

designation of the capacity by the seller, and the subsequent designation of the capacity 

by the buyer) such that the local transmission provider is able to use such information to 

simultaneously determine the expected dispatches for each network customer. From 

these predictions, reasonable operating and contingency scenarios can be modeled in 

order to accurately determine what transmission capacity should be reasonably set aside 

to accommodate both network customers. That is not the case when one party to the 

transaction is located in another transmission system. 

20. As noted above, NERC recently submitted for Commission review proposed 

Reliability Standards to govern the calculation of ATC. One of the issues the 

Commission directed transmission providers to address in those Reliability Standards is 

the effect on ATC of designating and undesignating network resources.13 Although the 

Commission proposes in Docket Nos. RM08-19-000, et al., to approve the proposed 

 13 See Mandatory Reliability Standards for the Bulk-Power System, Order 

No. 693, FERC Stats. & Regs. ¶ 31,242, at P 1041, order on reh’g, Order No. 693-A, 

120 FERC ¶ 61,053 (2007). 
Docket Nos. RM05-17-004 and RM05-25-004 - 13 - 

Reliability Standards, the Commission notes that NERC failed to address the modeling of 

network resources and its impact on ATC calculations. The Commission proposes to 

direct NERC to develop a modification to the Reliability Standards to address this 

requirement. We encourage SCE&G and any other interested party to provide comments 

in that proceeding regarding the interaction of network resource designations and the 

calculation of ATC. Upon review of those comments and final action in that proceeding, 

the Commission may revisit its network resource policies as necessary to reflect the 

Reliability Standards implemented by NERC. 

21. In the meantime, we disagree with SCE&G that the Commission’s network 

resource policies unreasonably impair the ability of network customers to meet reserve 

requirements or related reliability requirements. In Order Nos. 890-A and 890-B, the 

Commission made clear that network customers could use designated resources to fulfill 

obligations under a reserve sharing program.14 In other proceedings, the Commission has 

permitted transmission providers to amend their OATTs to allow network customers to 

use designated resources to supply power to other control areas during system 

emergencies.15 Moreover, the Commission has stated repeatedly that transmission 

providers are free to propose additional variations to the pro forma OATT to 

 14 See Order No. 890-A at P 948; Order No. 890-B at P 215. 

15 See Arizona Public Service Co., 121 FERC ¶ 61,246 at P 42 (2007). 
Docket Nos. RM05-17-004 and RM05-25-004 - 14 - 

accommodate more flexible network resource policies if the particular ATC methodology 

used by a transmission provider allows for such flexibility.16 

22. We also disagree with SCE&G that it would be appropriate to grandfather all 

long-term, still-continuing off-system sales sourced from designated network resources 

that were entered into prior to Order No. 890-B. In response to SCE&G’s NOPR 

comments, the Commission clearly stated that firm third-party sales may be made only 

from an undesignated portion of network resources and that a network customer must 

submit undesignations for each portion of each resource supporting the third-party sale.17 

A number of petitioners sought rehearing and clarification of that statement, which led 

the Commission to conclude in Order No. 890-A that system sales could be supplied by 

network resources without undesignation if the system sale is itself designated as a 

network resource by the buyer.18 The Commission, however, did not specifically state 

that the buyer had to be a network customer on the same transmission system as the seller 

in order to qualify for this exception from the undesignation requirement. As a result, 

confusion arose regarding Order No. 890-A that was resolved in Order No. 890-B.19 

23. It would therefore only be appropriate to allow an exception to the undesignation 

requirement for off-system system sales that occurred after the issuance of Order 

 16 See Order No. 890-A at P 951; Order No. 890-B at P 210. 

17 See Order No. 890 at P 1582. 

18 See Order No. 890-A at P 947. 

19 See Order No. 890-B at P 205. 
Docket Nos. RM05-17-004 and RM05-25-004 - 15 - 

No. 890-A, but before the clarification in Order No. 890-B. During that six-month 

period, it may have been reasonable for a network customer to interpret the 

Commission’s statement in Order No. 890-A as allowing for off-system sales from 

network resource capacity undesignated on a general (as opposed to resource-specific) 

basis if the buyer designated the purchase as an external network resource with its own 

transmission provider. Prior to issuance of Order No. 890-A, however, there was no 

indication that such sales would be permitted without undesignation on a resourcespecific basis. 

24. As such, we agree that a power sale initiated on or after the issuance date of Order 

No. 890-A, but before the effective date of Order No. 890-B, may be accommodated with 

capacity undesignated on a general basis, as described in paragraph 947 of Order No. 

890-A. Any network customer making such power sales, and which submitted a general 

undesignation for such power sales between those dates, is not considered to be in 

violation of section 30.4 as a result of operation of such resources. Network customers 

may rely on such undesignation(s) until the redesignation date (for resources temporarily 

terminated) or the expiration of the current term of the power sales contract (for resources 

indefinitely terminated). 

II. Information Collection Statement

25. The Office of Management and Budget (OMB) regulations require that OMB 

approve certain information collection requirements imposed by an agency.20 The 

 20 5 CFR 1320 (2007). 
Docket Nos. RM05-17-004 and RM05-25-004 - 16 - 

revisions to the information collection requirements for transmission providers adopted in 

Order No. 890 were approved under OMB Control Nos. 1902-0233. This order does not 

substantively alter those requirements. OMB approval of this order is therefore 

unnecessary. However, the Commission will send a copy of this order to OMB for 

informational purposes only. 

III. Document Availability

26. 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. 

27. 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. 

28. User assistance is available for eLibrary and the FERC’s website during normal 

business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) 

or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-

8371, TTY (202)502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov. 
Docket Nos. RM05-17-004 and RM05-25-004 - 17 - 

IV. Effective Date and Congressional Notification

29. This order does not substantively alter the requirements of Order Nos. 890, 890-A 

or 890-B and, therefore, will become effective as of the date of publication in the Federal 

Register. 

By the Commission. 

( S E A L ) 

Kimberly D. Bose, 

Secretary.