[Federal Register Volume 64, Number 32 (Thursday, February 18, 1999)]
[Rules and Regulations]
[Pages 7995-7998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3952]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 37

[Docket No. RM95-9-006]


Open Access Same-Time Information System and Standards of Conduct

Issued February 10, 1999.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Order denying rehearing.

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SUMMARY: The Federal Energy Regulatory Commission (the Commission) 
denies two requests for rehearing of an order issued on June 19, 1998 
(Open Access Same-Time Information and Standards of Conduct) that, 
among other things, requires the unmasking of source and sink 
information and establishes an interim on-line discount policy.

ADDRESSES: Office of the Secretary, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:
Marvin Rosenberg (Technical Information), Office of Economic Policy, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-1283
Paul Robb (Technical Information), Office of Electric Power Regulation, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 219-2702
Gary D. Cohen (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888

[[Page 7996]]

First Street, NE., Washington, DC 20426, (202) 208-0321

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of 
this document in the Federal Register, the Commission also provides all 
interested persons an opportunity to inspect or copy the contents of 
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at 888 First Street, NE., Room 2A, Washington, DC 20426.
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using the CIPS Link or the Energy Information Online icon. The full 
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To access CIPS, set your communications software to 19200, 14400, 
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    Finally, the complete text on diskette in WordPerfect format may be 
purchased from the Commission's copy contractor, RVJ International, 
Inc. RVJ International, Inc. is located in the Public Reference Room at 
888 First Street, NE., Washington, DC 20426.

Order Denying Rehearing

Before Commissioners: James J. Hoecker, Chairman; Vicky A. Bailey, 
William L. Massey, Linda Breathitt, and Curt Hebert, Jr.

    In this order, we deny two requests for rehearing of an order that, 
among other things, requires the unmasking of source and sink 
information and establishes an interim on-line discount policy. Open 
Access Same-Time Information and Standards of Conduct, 83 FERC para. 
61,360 (1998) (June 18 Order) [63 FR 38884, July 20, 1998].

Background

    In the June 18 Order, the Commission: (1) required transmission 
providers to unmask the source and sink information reported on OASIS 
transmission service request templates at the time that the 
transmission provider updates the transmission reservation posting to 
show the customer's confirmation that it wishes to finalize the 
transaction; (2) established interim procedures for the on-line 
negotiation of transmission service price discounts; and (3) updated 
the OASIS Standards and Communications Protocols Document.1
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    \1\ 83 FERC at 62,453.
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    Timely requests for rehearing were filed by Electric Power Supply 
Association (EPSA) and by Enron Power Marketing, Inc. (EPMI). 
Collectively, the rehearing requests raise four issues, which we will 
address separately below.

Discussion

1. Information To Be Unmasked
    On rehearing, EPSA seeks clarification of whether the June 18 Order 
required disclosure of the identity of pertinent control areas only or 
of the respective bus bars of generators and loads. EPSA seeks 
rehearing of the June 18 Order to the extent that it compels the 
disclosure of specific information about generator or load bus bars, 
rather than simply the disclosure of information on control areas. EPSA 
also argues that the information to be disclosed on source and sink 
should be uniform and not vary from transmission provider to 
transmission provider.

    In the June 18 Order, we stated that, [s]ource and sink 
information for point-to-point transmission service describes the 
location of the generators and the ultimate load in an electric 
system sense, and does not necessarily identify sellers and buyers 
by name. In accordance with the convention of the transmission 
provider under its individual Open Access Tariff (the Pro Forma 
Tariff allowed each transmission provider to determine this for 
itself in its Open Access Tariff filing) this source and sink 
information may routinely include only the identities of the 
respective control areas (e.g., in the case of point-to-point 
transmission across a transmission provider's system, the point of 
receipt is identified as a control area and the point of delivery is 
similarly identified), or it may include the identities of the 
respective bus bars of the particular generators and loads (e.g., in 
the case of transmission within, out of or into a transmission 
provider's transmission system).2

    \2\ Id. at 62,453, n.14.
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    The June 18 Order made clear that a transmission provider's 
individual Open Access Tariff determines what source and sink 
information is to be disclosed by a customer as part of a completed 
request for transmission service. Depending on the terms of a 
transmission provider's individual Open Access Tariff, all of the 
transmission provider's customers may uniformly be required to provide 
source and sink information that includes the identities of the 
respective control areas only (e.g., in the case of point-to-point 
transmission across a transmission provider's system, both the point of 
delivery and point of receipt are identified as control areas). Another 
transmission provider's Open Access Tariff may uniformly require the 
customers to reveal the identities of the respective bus bars of the 
particular generators and loads. However, in either case, all of the 
transmission provider's customers are treated in a comparable manner. 
We expect that the tariff information requirements developed by the 
transmission provider are adequate to evaluate transmission service 
requests and facilitate service. A transmission provider may not 
require more detailed information from some customers, while requiring 
less specific information from other customers (including requests from 
its own wholesale merchant function or affiliates). Nothing EPSA has 
raised on rehearing has persuaded us to eliminate the discretion that 
transmission providers are afforded on this matter.
    Moreover, EPSA has not offered a compelling argument as to why a 
transmission provider should not be allowed to require the disclosure 
of specific bus bar information. The June 18 Order did not offer a 
definition of source and sink information applicable to all 
circumstances. This omission was not an oversight. In the Commission's 
view, it would be premature for the Commission to dictate such a 
definition at the present time for several reasons. First, this is 
still an evolving area and it would be premature to draft a definition 
that would restrict further developments in the industry. By having the 
Commission define ``source'' and ``sink,'' these developments may be 
impeded. Second, in any event, before drafting such a definition, we 
would invite input from all interested persons and this has not yet 
occurred. Third, while conceivably we could attempt to draft a 
definition of source and sink for purposes of OASIS unmasking, while

[[Page 7997]]

leaving the matter undefined for other purposes, this would be both 
cumbersome and confusing.
2. Impact of Unmasking on the Short-Term Market
    On rehearing, EPMI argues that the Commission failed to consider 
the harmful impact unmasking would have on the short-term market. 
Specifically, EPMI argues that the Commission failed to consider that 
power marketers would lose the benefits of follow-on short-term 
transactions and that this would drive them out of this market. EPMI 
also argues that the benefits of disclosure are minimal. Together, EPMI 
argues, these factors should lead the Commission to reverse the 
findings on unmasking of the June 18 Order.
    We disagree. As we noted in the June 18 Order,\3\ our decision to 
require that certain arguably sensitive business information be 
disclosed is consistent with judicial directives to focus on the needs 
of the overall market, rather than focusing on protecting the interests 
of individual competitors within the market.
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    \3\ 83 FERC at 62,456, n.48.
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    The June 18 Order contained an extensive discussion of Alabama 
Power Company v. Federal Power Commission, 511 F.2d 383, 390-91, D.C. 
Cir. (1974), a case where the court of appeals affirmed our refusal to 
amend a rule that required affected utilities to publicly disclose 
their monthly Form No. 423 reports of fuel purchases. The court in 
Alabama Power considered various arguments that, on the one hand, 
``disclosure of information would lead to bargaining disadvantages in 
future fuel contract negotiations,'' \4\ and that, on the other hand, 
any bargaining disadvantage as a result of disclosure would merely 
reflect the removal of information imperfections in an otherwise 
competitive market thereby facilitating efficient allocation of 
resources.\5\
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    \4\ 511 F.2d at 390.
    \5\ Id.
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    The court concluded that the dissemination of information in a 
competitive market tends to ``facilitate prompt adjustment to the 
market clearing price by all parties to transactions.'' \6\
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    \6\ Id. at 391, n.13.
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    Moreover, the court found that,

a sudden improvement in the availability of information may deprive 
a buyer of an advantage he enjoyed when, under more imperfect 
dissemination, he exploited a seller's ignorance of the market 
price. * * * Generally, however, laws and practices to safeguard 
competition assume that its prime benefits do not depend on secrecy 
of agreements reached in the market.\7\
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    \7\ Id.

    EPMI would have the Commission protect a market niche that some 
market participants may have enjoyed by virtue of possessing market-
related information that has not been available to others. As in 
Alabama Power, by requiring disclosure, the Commission is merely 
removing information imperfections in an otherwise competitive 
market,\8\ thereby facilitating the efficient allocation of 
resources.\9\
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    \8\ EPMI has not alleged on rehearing that the market for the 
sale of wholesale electric power is not a competitive market.
    \9\ 511 F.2d at 391, n.13.
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    While not specifically mentioning the Alabama Power case in its 
rehearing request, EPMI seeks to sidestep Alabama Power's precedent by 
characterizing the potential harm to itself and other power marketers 
(that it argues might result from unmasking source and sink 
information) as harmful to the short-term market as a whole. This 
characterization ignores that power marketers are only one category of 
participant in the short-term market, and that their interests may not 
be entirely consonant with those of the short-term market as a whole.
    The June 18 Order gave full consideration to the possible harmful 
competitive impact of unmasking on power marketers. These factors were 
carefully weighed against the expected benefits of unmasking to the 
market as a whole. These benefits included: (1) promoting competition 
in the overall market; (2) fostering greater public confidence in the 
integrity of OASIS postings; (3) improving the open access use of 
transmission systems comparable to that enjoyed by transmission 
providers; and (4) allowing better monitoring of discriminatory 
practices.\10\ In our view, EPMI underestimates the benefits of 
unmasking and overestimates the possible harmful impact of unmasking. 
Understandably, EPMI is concerned with protecting its own market 
position. However, by necessity, the Commission's responsibilities 
demand a broader perspective. We find that the overall benefits of 
unmasking outweigh the potential harm to power marketers. Accordingly, 
we will deny EPMI's rehearing request on this issue. However, EPMI or 
others may request that we revisit this issue in the future.
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    \10\ 83 FERC at 62,456 & n. 48.
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3. Time of Disclosure
    EPSA seeks rehearing of the June 18 Order's decision to require 
disclosure of source and sink information at the time that the 
transmission provider updates the transmission reservation posting to 
show confirmation of the transmission provider's acceptance of the 
transmission customer's request. EPSA argues that this would be 
premature and that disclosure should not be made until the underlying 
transmission and power sale components of the transaction are 
completed.
    While EPSA's proposal would not have a large impact on short-term 
transactions, under EPSA's proposed timetable, in the case of a longer-
term transaction, e.g., a request for monthly service, information 
about the transaction would not be disclosed until more than a month 
after the OASIS negotiations had been completed. Likewise, under EPSA's 
proposed timetable, requests for yearly service would not be unmasked 
until more than a year after they are negotiated. We find these results 
undesirable and contrary to our goal of promoting competition through 
the timely disclosure of market information. Our action would allow the 
Commission and customers to detect discriminatory practices in a more 
timely manner. Accordingly, we will deny EPSA's request for rehearing 
on this issue.
4. Feasibility of On-Line Negotiation of Discounts
    On rehearing, EPMI also argues that requiring the on-line 
negotiation of discounts is not feasible, and will result in discounts 
no longer being offered. At this time, we will not modify our 
requirement that discounts be negotiated on the OASIS by an unproven 
prediction that this might diminish the availability of negotiated 
discounts. At this stage in the process, there is no evidence available 
(nor could there be) that would either validate or contradict EPMI's 
assertion. No such evidence would be available until the requirement 
for on-line discounting is implemented and we are able to assess 
whether discounts continue to be negotiated or not. However, EPMI or 
others may request that we revisit this issue in the future.
    The Commission orders:
    The requests for rehearing of EPSA and EPMI are hereby denied, as 
discussed in the body of this order.

    By the Commission. Commissioner Bailey dissented with a separate 
statement attached.
Linwood A. Watson, Jr.,
Acting Secretary.

BAILEY, Commissioner, dissenting

    I continue to dissent from the majority's decision to require 
public disclosure of source and sink information on the OASIS at

[[Page 7998]]

the time of customer confirmation of service. I continue to adhere 
to my rationale for dissenting as articulated in the June 18, 1998 
order in this proceeding. See Open Access Same-Time Information 
System and Standards of Conduct, 83 FERC para. 61,360 at 62,467-69 
(1998) (Bailey, Commn'r, dissenting in part). I continue to believe 
that the public's and the Commission's need for source and sink 
information, at the time of customer confirmation, for the purpose 
of detecting possible undue discrimination or preference in the 
provision of transmission service does not outweigh the Commission's 
interest in promoting competitive markets by protecting against the 
disclosure of commercially sensitive information.
    I add only two points to my earlier dissent on the subject. 
First, I fail to see any reason why another balance cannot be struck 
that provides information necessary for market monitoring and 
enforcement while maintaining respect for (what we are informed is) 
commercially sensitive information. Specifically, I do not 
understand how the Commission's very legitimate interest in 
monitoring markets and protecting against the abuse of monopoly 
power by transmission providers would be jeopardized by further 
delaying the public disclosure of source and sink information for 30 
additional days after finalization of the transaction and the 
transmission provider's update of its transmission reservation 
posting. (I agree with the majority that EPSA's request to delay 
disclosure until after completion of the power sale and accompanying 
transmission service might not allow for timely disclosure of 
information concerning longer-term transactions; I would shorten the 
requested delay to 30 days to avoid this problem.) Nor do I 
understand why the Commission should not require transmission 
providers uniformly to provide source and sink information on a 
control area basis, as requested on rehearing by EPSA. Such a 
requirement would have the dual benefit of better protecting 
commercially sensitive information while promoting uniformity among 
OASIS sites, to the benefit of all transmission customers.
    Second, I view the majority's disposition as overly dismissive 
of the role of power marketers and intermediaries in competitive 
markets. I am not prepared to decide, as does the majority (slip op. 
at 3-5), that the competitive interest of marketers is or may be 
inconsistent with the competitive interest of the power market as a 
whole. I am not willing to dismiss cavalierly the objections of 
Enron and EPSA that marketers may be driven out of short-term 
markets if forced to disclose immediately the details of the 
transactions they arrange. Neither I nor any of my colleagues can be 
entirely sure whether immediate disclosure of this type of sensitive 
information will drive market participants out of certain markets, 
or whether the ``overall market'' is improved or degraded with the 
combination of more market information and fewer market 
participants.
    In these circumstances, I would strike another balance between 
information disclosure and concern for the commercial sensitivity 
that is more respectful of the important arguments presented on 
rehearing. As I recently explained in a slightly different context:

    The Commission must have considerable information from the 
companies it regulates to continue to ensure that they operate in a 
manner consistent with their statutory responsibilities; however, it 
remains crucial for the Commission to consider at what point the 
usefulness of information becomes outweighed by the competitive 
implications of disclosure.

    American Electric Power Company and Central and South West 
Corporation, Docket Nos. EC98-40-000, et al., slip op. at 3-4 
(Bailey, Commn'r, dissenting in part). I believe that point has been 
crossed in the present circumstances.
Vicky A. Bailey,
Commissioner.
[FR Doc. 99-3952 Filed 2-17-99; 8:45 am]
BILLING CODE 6717-01-P