Opinion ID: 185540
Heading Depth: 2
Heading Rank: 1

Heading: Current Regulations

Text: 5 By amending portions of the Federal Power Act of 1935, the Energy Policy Act of 1992 authorized FERC to order utilities to transmit other sellers' power over their transmission lines on a case-by-case basis. See Pub. L. No. 102-486, 106 Stat. 2776, 2915-16 (1992) (codified at 16 U.S.C. §§ 824jk); Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000) (hereinafter Transmission Access) (discussing history), cert. granted sub nom. New York v. FERC, 121 S. Ct. 1185 (2001). Finding that utilities would use their market power to deny transmission access to competing generation sources, FERC subsequently used its statutory authority, see 16 U.S.C. §§ 824d(b), 824e(a), to require utilities to provide open access to their transmission lines in a nondiscriminatory fashion. See Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), clarified, 76 F.E.R.C. p 61,009 (July 2, 1996) and 61 Fed. Reg. 51,696 (Oct. 3, 1996), on reh'g, Order No. 888-A, 62 Fed. Reg. 12,274 (Mar. 14, 1997), clarified, 79 F.E.R.C. p 61,182 (May 16, 1997), on reh'g, Order No. 888-B, 62 Fed. Reg. 64,688 (Dec. 9, 1997), on reh'g, Order No. 888-C, 82 F.E.R.C. p 61,046 (Jan. 20, 1998), aff'd, Transmission Access, 225 F.3d 667, cert. granted sub nom. New York, 121 S. Ct. 1185. Order No. 888, among other things, set forth the framework for creating Independent System Operators (ISOs), independent companies that manage transmission facilities owned by utilities. 61 Fed. Reg. at 21,596. ISOs have no financial stake in any power market participant, have the ability to halt generation causing transmission system constraints, and must provide real-time transmission information to market participants. Id. 6 At the same time, FERC also issued Order No. 889 which required all owners and operators of electricity transmission systems to participate in an Open Access Same-time Information System, or OASIS. Open Access Same-Time Information System and Standards of Conduct, Order No. 889, 61 Fed. Reg. 21,737 (May 10, 1996), on reh'g, Order No. 889-A, 62 Fed. Reg. 12,484 (Mar. 14, 1997), on reh'g, Order No. 889B, 62 Fed. Reg. 64,715 (Dec. 9, 1997), aff'd, Transmission Access, 225 F.3d 667, cert. granted sub nom. New York, 121 S. Ct. 1185. One of the main functions of an OASIS is to calculate Available Transmission Capacity (ATC), the difference between a transmission system's total capacity and already-committed capacity. Order No. 889, 61 Fed. Reg. at 21,749. Because ATC often limits where electricity can be sold, this information allows generators to determine additional potential markets. 7 In 1999, FERC found that the changes brought by Orders Nos. 888 and 889 had imposed significant strain on traditional means of grid management and that continued discrimination in the provision of transmission services by vertically integrated utilities may also be impeding fully competitive electricity markets. Regional Transmission Organizations; Notice of Proposed Rulemaking, 64 Fed. Reg. 31,390, at 31,391 (June 10, 1999). Although Orders Nos. 888 and 889 reduced overt discrimination, transmission-owning utilities resorted to more subtle means to frustrate their marketing competitors and favor their own marketing interests. Id. at 31,402. As a consequence, the Orders were ineffective in completely removing transmission discrimination. Functional limitations arising from the relatively small size of the ISOs also limited their ability to provide essential information accurately, such as ATC: it is not possible to calculate accurately the transmission capability of one system without knowing the flows scheduled by all other interconnected transmission providers in the region. Id. at 31,403. 8 In response to the shortcomings of Orders Nos. 888 and 889, FERC issued Order No. 2000, which established the framework for Regional Transmission Organizations, or RTOs. See Regional Transmission Organizations, Order No. 2000, 65 Fed. Reg. 810 (Jan. 6, 2000), on reh'g, Order No. 2000-A, 65 Fed. Reg. 12,088 (Mar. 8, 2000), petitions for review pending sub nom. Public Utility District No. 1 of Snohomish County, Washington v. FERC, No. 00-1174 (D.C. Cir. argued Oct. 17, 2001). RTOs build upon many ISO features and have four main characteristics: independence, sufficient size and regional scope, operational authority for all transmission facilities under their control, and exclusive authority for maintaining short term grid reliability. 65 Fed. Reg. 810, at 842-75. FERC requires RTOs to be larger, more independent, and exercise more sophisticated control over the transmission system than ISOs. In 2001, FERC further clarified the scope requirements of RTOs, forcing several parties into mediation with an ultimate goal of creating four RTOs one for the Northeast, Southeast, Midwest, and West. See, e.g., Order Provisionally Granting RTO Status, 96 F.E.R.C. p 61,061 (July 12, 2001).