[Federal Register Volume 67, Number 238 (Wednesday, December 11, 2002)]
[Proposed Rules]
[Pages 76122-76123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31145]



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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM01-12-000]


Remedying Undue Discrimination Through Open Access Transmission 
Service and Standard Electricity Market Design

November 26, 2002.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Request for comments.

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SUMMARY: In the Standard Market Design Notice of Proposed Rulemaking, 
(67 FR 55452, Aug. 29, 2002), the proposed open access transmission 
tariff imposes an obligation on an Independent Transmission Provider, 
if a request for transmission service cannot be accommodated, to use 
due diligence to expand or modify its transmission system. The 
Commission invites all interested persons to file comments with respect 
to whether a merchant transmission provider should have an obligation 
to expand its merchant transmission facilities.

Comments Due: Initial comments are due on or before January 10, 2003. 
Reply comments are due on or before February 17, 2003. (Comments on 
this issue should be filed in conjunction with any January 10, 2002 
comments on transmission planning and pricing, including participant 
funding).

ADDRESSES: Comments may be filed in paper format or electronically. 
Address comments to: Office of the Secretary, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT: Lodi D. White, (202) 502-6193.

SUPPLEMENTARY INFORMATION: In the Standard Market Design (SMD) Notice 
of Proposed Rulemaking, the proposed open access transmission tariff 
imposes an obligation on an Independent Transmission Provider, if a 
request for transmission service cannot be accommodated, to use due 
diligence to expand or modify its transmission system.\1\ The 
Commission invites all interested persons to file comments with respect 
to whether a merchant transmission provider should have an obligation 
to expand its merchant transmission facilities (MTF).
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    \1\ See Remedying Undue Discrimination through Open Access 
Transmission Service and Standard Electricity Market Design, Notice 
of Proposed Rulemaking, 67 FR 55452 (Aug. 29, 2002), FERC Stats. & 
Regs. 32563 (2002).
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    In the September 6, 2002 NEPOOL Order,\2\ the Commission approved a 
tariff provision (Section 7 of Schedule 18) dealing with the 
TransEnergie U.S. Ltd. (TransEnergie) Cross Sound Cable (CSC) which 
states:
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    \2\ NEPOOL, 100 FERC ] 61,259 (2002).

    7. No obligation to build. MTF Provider status under the Tariff 
shall not impose an obligation to build transmission facilities on 
the MTF Provider [TransEnergie U.S. Ltd.'s CSC MTF]. The offering of 
MTF Service under the Tariff shall not impose an obligation to build 
transmission facilities on the Participants [NEPOOL], [New England] 
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Transmission Owners or System Operator [ISO-New England].

    The Commission stated in NEPOOL that, while it accepted Section 7 
as exempting the CSC MTF in NEPOOL from the obligation to build and as 
not expanding NEPOOL's obligation to build, NEPOOL's tariff will be 
subject to change, pursuant to section 206 of the Federal Power Act, if 
the Commission's policy changes in the future. In light of the NEPOOL 
order, we seek comment on the following issues:
    1. For independent merchant transmission companies would there be 
any concerns regarding comparability or undue discrimination that would 
merit an expansion obligation for merchant transmission providers?
    2. Are there non-competitive structural conditions that apply to 
independent merchant transmission companies such as barriers to entry 
or economies of scale which would justify an obligation to expand? For 
example, could the control of certain rights of way, such as underwater 
trenches, be a barrier to entry in some circumstances? Could the 
control of certain equipment, such as strategically placed 
interconnection facilities, be a barrier to entry? If so, is an 
obligation to expand the appropriate regulatory requirement?
    3. If an expansion obligation is extended to merchant transmission 
providers, is it appropriate to limit it to an obligation to allow or 
facilitate other parties to use the critical entry barrier facilities 
to expand transmission capability?
    4. Should merchant transmission providers that acquire land rights 
through the use of eminent domain be subject to different obligations 
than those that do not?
    5. How would an expansion obligation impact new investment in 
transmission infrastructure? How would an expansion obligation impact a 
merchant transmission provider's business strategy and financing needs?
    6. Are there bases other than market power that are relevant to 
extending an expansion obligation to merchant transmission providers?
    7. How should merchant transmission projects be treated in the SMD 
rule? If the Commission retains the obligation to expand in the SMD 
rule, should it nevertheless exempt already-approved merchant projects? 
Should such projects be ``grandfathered'' in order to minimize the 
financial consequences of regulatory risk?
    8. The Commission has approved negotiated rates for merchant 
transmission facilities based on the premise that the negotiated rates 
would be capped at the cost of transmission expansion. If there is no 
obligation to build, should the Commission reconsider whether the 
negotiated rates remain just and reasonable?
    All comments are due no later than January 10, 2003, and reply 
comments are due on February 17, 2003. Comments on this issue should be 
filed in conjunction with any January 10, 2002 comments on transmission 
planning and pricing (including participant funding).
    Comments may be filed in paper format or electronically. Those 
making paper filings should submit the original and 14 copies of their 
comments to the Office of the Secretary, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426.
    The Commission strongly encourages electronic filings. Commenters 
filing their comments via the Internet must prepare their comments in 
WordPerfect, MS Word, Portable Document Format, or ASCII format (see 
http://www.ferc.gov/documents/electronicfilinginitiative/efi/efi.htm, 
in particular ``User Guide''). To file the document, access the 
Commission's Web site at www.ferc.gov and click on ``e-Filing'' and 
then follow the instructions for each screen. First time users will 
have to establish a user name and password. The Commission will send an 
automatic acknowledgment to the sender's E-Mail address upon receipt of 
comments. User assistance for electronic filing is available at (202) 
502-8258 or by E-mail to [email protected]. Do not submit comments to 
the E-mail address.
    The Commission will place all comments in the Commission's public 
files and they will be available for inspection in the Commission's 
Public Reference Room at 888 First Street, NE., Washington, DC 20426, 
during regular business hours. Additionally, all comments may be 
viewed, printed, or downloaded remotely via the Internet

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through FERC's Home page using the FERRIS link.

Linwood A. Watson, Jr.,
Deputy Secretary.
[FR Doc. 02-31145 Filed 12-10-02; 8:45 am]
BILLING CODE 6717-01-P