[Federal Register Volume 63, Number 6 (Friday, January 9, 1998)]
[Notices]
[Pages 1453-1454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-529]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
[Docket No. PL98-3-000]


Process for Assuring Non-discriminatory Transmission Services as 
New Reliability Rules are Developed for Using the Transmission System; 
Notice of Conference

January 5, 1998.

I

    The Federal Energy Regulatory Commission (Commission) hereby 
announces its intention to convene a public conference to discuss what 
procedures it should follow, in the absence of federal legislation on 
reliability issues, to address the effect of new reliability standards 
on jurisdictional electric transmission

[[Page 1454]]

service. Specifically, the Commission wishes to examine how it should 
go about ensuring non-discriminatory open access service under Order 
No. 888 as the power industry adopts new methods of protecting system 
reliability. This conference, described below, is for the limited 
purpose of discussing the procedures necessary for the Commission to 
meet this goal.

II

    The Commission requires all public utilities that own, control or 
operate facilities used for transmitting electric energy in interstate 
commerce to provide non-discriminatory transmission service to eligible 
customers and to take transmission service for their own uses under the 
same rates, terms and conditions applied to others.
    Increased competition in wholesale electricity markets has resulted 
in many new market participants who do not own, control or operate 
transmission facilities, and has fostered a great increase in the 
number and variety of wholesale transmission and power sale 
arrangements, including ancillary services needed to accomplish 
transmission service. In addition, control over transmission facilities 
is shifting in some instances from traditional utility owners and 
operators to a regime of control that includes independent transmission 
system operators whose primary purpose is to ensure nondiscriminatory 
operation of transmission facilities.
    In light of the changes taking place in the electric industry, the 
North American Electric Reliability Council (NERC) and its regional 
reliability councils are implementing changes in their rules to 
maintain transmission system security. These rules apply both to 
transmission-owning utilities and to the transmission customers of 
those utilities. Historically, the Commission has followed a ``rule of 
reason'' approach and not required each contract or practice that 
affects a jurisdictional service to be on file, even though section 205 
of the Federal Power Act may lead to that result. If the new 
reliability rules become terms and conditions with which customers of 
Commission-jurisdictional utilities must comply as a predicate to 
obtaining transmission service, the Commission may need to reassess how 
it is applying the ``rule of reason.'' If jurisdictional services can 
be denied or compromised under the new reliability rules, then section 
205 appears to require that such rules be included in the transmission 
tariffs on file with the Commission.
    The Commission is not proposing in this notice to judge the 
technical adequacy or appropriateness of any reliability standard. Nor 
is it proposing in this notice to approve the structure of NERC or the 
appropriateness of any organization that establishes reliability 
standards under existing laws and circumstances. Indeed, the 
Commission's authority to act on such matters is at best unclear. As 
described in a recent position paper of the task force that is charged 
with advising the Secretary of Energy on electric system reliability:

    It is not clear whether the FERC has sufficient statutory 
authority to enforce NERC rules. The FERC has issued several orders 
requiring parties to abide by the NERC standards and parties have 
assented to the requirements. However, the use of FERC's 
conditioning authority to enforce NERC standards has not yet been 
challenged. Others question whether the FERC should enforce these 
rules in light of concerns over NERC's governance and decision-
making procedures.\1\
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    \1\ ``Maintaining Bull-Power Reliability Through Use of a Self-
Regulating Organization: Position Paper.'' Secretary of Energy 
Advisory Board, Task Force on Electric-System Reliability (November 
6, 1997).
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III

    The Commission is committed to ensuring that competitive 
developments in the industry take place in a manner that safeguards the 
reliability of the nation's electric transmission system. The 
Commission is equally committed to ensuring that the rules and 
practices for reliable operation of the grid are compatible with open, 
non-discriminatory use of transmission systems.
    The Commission believes that it would be beneficial at this 
juncture to further explore this matter with interested parties in an 
informal setting. To that end, we are announcing today our intention to 
convene a round-table discussion on developing an appropriate procedure 
or procedures for the Commission to address potentially service-
affecting reliability practices in the context of non-discriminatory 
transmission access. We emphasize that the purpose of the round-table 
is to discuss procedures and not to discuss the merits of any 
particular reliability rule, practice or organization. The round-table 
will take place on February 20, 1998, in Washington, DC.
    The Commission has identified certain possible procedures and 
expects that participants will be prepared to discuss these procedures 
as well as to identify others. One approach might be to prohibit any 
public utility from imposing new terms or conditions related to 
reliability on any customer unless and until that utility had first 
incorporated those terms and conditions into its transmission tariff 
under an appropriately noticed section 205 filing. An alternative might 
be to have the appropriate reliability organization (NERC or one of the 
regional reliability councils) file a request for a declaratory order 
setting forth proposed changes to its existing reliability rules, so 
that appropriate notice and opportunity for comment could be given. 
Once the Commission issued a declaratory order, utilities could then 
incorporate the results of the declaratory order proceeding in their 
tariffs through what would amount to a compliance filing. This process 
could apply to those changes in reliability rules that determine 
whether a transmission customer obtains or loses transmission service, 
or it could apply to a larger group of reliability rule changes.
    Staff will contact industry representatives to develop a broadly 
representative panel. We expect the panel to have no more than fifteen 
participants. Persons wishing to be considered for inclusion on the 
panel should contact: David N. Cook, Office of General Counsel, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426, 202-208-0955.
    Persons wishing to file written comments on possible procedural 
approaches to these issues should do so by January 30, 1998. The 
Commission will issue a notice identifying the panel members and giving 
further details on the round-table discussion in the near future.

    By direction of the Commission.
David P. Boergers,
Acting Secretary.
[FR Doc. 98-529 Filed 1-8-98; 8:45 am]
BILLING CODE 6717-01-M