[Federal Register Volume 69, Number 55 (Monday, March 22, 2004)]
[Notices]
[Pages 13294-13296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6288]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket No. EL04-87-000]
Southern Company Services, Inc.; Order Proposing to Find
Agreements Unjust and Unreasonable Pursuant to Section 206 of the
Federal Power Act
March 16, 2004.
Before Commissioners: Pat Wood, III, Chairman; Nora Mead Brownell,
Joseph T. Kelliher, and Suedeen G. Kelly.
1. On February 27, 2004, the Commission inadvertently failed to act
on two rollover agreements filed by Southern Company Services, Inc.
(Southern),\1\ which resulted in their becoming effective by operation
of law. This order provides Southern an opportunity to argue to the
Commission in a paper hearing why these agreements should not be found
to be unjust and unreasonable because certain provisions in the
agreements limit the transmission customers' rollover rights in a
manner contrary to Commission policy. Pursuant to section 206 of the
Federal Power Act,\2\ the Commission initiates this proceeding in which
this filing may be made. This action benefits customers by allowing the
Commission to consider whether these limitations on transmission
customers' rollover rights are consistent with Commission policy.
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\1\ Southern Company Services, Inc. acts as agent for Alabama
Power Company, Georgia Power Company, Gulf Power Company,
Mississippi Power Company, and Savannah Electric and Power Company
(collectively ``Southern Companies'').
\2\ 16 U.S.C. 824e (2000).
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Background \3\
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\3\ To the extent necessary, the various filings and submittals
in Docket No. ER04-353-000 are made part of the record in Docket No.
EL04-87-000.
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2. On December 30, 2003, in Docket No. ER04-353-000, Southern filed
two executed rollover service agreements for continued firm point-to-
point transmission service under the Southern Companies Open Access
Transmission Tariff (OATT). The service agreement between Southern
Companies and Oglethorpe Power Corporation (Oglethorpe) was to become
effective on December 1, 2003 with service continuing until November
30, 2004. The service agreement between Southern Companies and Calpine
Energy Services, LP (Calpine) was to become effective on January 1,
2004 with service continuing until December 31, 2004.
3. Notice of Southern's filing was published in the Federal
Register, 69 FR 2346 (2004), with protests and interventions due on or
before January 20, 2004. On January 20, 2004, Calpine filed a motion to
intervene and protest. On February 4, 2004, Southern filed an answer to
Calpine's protest.
4. In its protest, Calpine argues that Southern is attempting to
restrict improperly Calpine's rights to renew or rollover its
transmission rights. Section 2.2 of the pro forma OATT, Calpine states,
provides that an existing long-term (one year or longer) firm
transmission customer has the right to continue to take transmission
service when the contract expires, rolls over, or is renewed. The
Commission has concluded, Calpine adds, that once a transmission
provider evaluates the impact on its system of providing transmission
service to a customer and decides to grant that customer's request for
transmission service, the transmission provider must plan and operate
its system with the expectation that it will continue to provide
transmission service should the customer request rollover in a timely
manner.
5. The Commission did not act on the filing by February 27, 2004,
and the two rollover agreements accordingly became effective by
operation of law.\4\
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\4\ 16 U.S.C. 842d (2000).
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Discussion
6. When the Commission inadvertently failed to act by February 27,
2004, Southern's two rollover transmission service agreements became
[[Page 13295]]
effective by operation of law. Both of these agreements are rollovers
of previous agreements. In previous cases, the Commission directed
Southern to remove added restrictions on the right of the transmission
customer to roll over its service.\5\ In both of the proposed
agreements here, however, Southern has again included provisions that
would limit the rollover rights of the transmission customers,
Oglethorpe and Calpine, to continue to receive firm point-to-point
transmission service.
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\5\ See Southern Company Services, Inc., 103 FERC ] 61,117 at P
6-5 (2003); Southern Company Services, Inc., 102 FERC ] 61,319 at P
10 (2003).
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7. Section 5.0 of the agreement for continued firm point-to-point
transmission service between Southern Companies and Oglethorpe at issue
here and section 5.0 of the agreement for continued firm point-to-point
transmission service between Southern Companies and Calpine at issue
here are identical except for certain dates. Section 5.0 states:
The Transmission Provider has determined that after [December 1,
2004 for Oglethorpe and December 31, 2004 for Calpine] insufficient
capacity exists to accommodate both the future rollover by the
Transmission Customer of this Rollover Service Agreement and to provide
service to Transmission Customers having an earlier priority for
transmission service. Therefore, the Transmission Customer's right to
continue to take transmission service hereunder (in whole or in part)
after [December 1, 2004 for Oglethorpe and December 31, 2004 for
Calpine] is expressly conditioned on the availability of sufficient
transmission capacity after the following Transmission Customers
exercise their rights to transmission service or to roll over their
respective service agreements: * * *
Additionally, the Transmission Provider has determined that 7500 MW
of transmission capacity are needed to meet its forecasted native load
growth for 2003 to 2011. The reservations for transmission capacity
necessary to meet this native load growth forecast are identified on
OASIS, and the reservations most likely to be used to schedule
deliveries are modeled in the Base Case Load Flows used to conduct
studies under the Tariff. In accordance with Order No. 888-A, the
Transmission Customer's right to continue to take transmission service
(in whole or in part) under this Rollover Service Agreement is
expressly conditioned upon the availability of sufficient transmission
capacity after the allocation of capacity to meet the Transmission
Provider's native load needs. The Transmission Customer's right to
continue to take transmission service (in whole or in part) under this
Rollover Service Agreement is also expressly conditioned upon the
availability of sufficient transmission capacity after the requests for
transmission service on the Georgia Integrated Transmission System
having an earlier priority than the Transmission Customer (if any) have
been accommodated.
Upon receipt of a request by the Transmission Customer to rollover
service under this Rollover Service Agreement, the Transmission
Provider will, within a reasonable amount of time, notify the
Transmission Customer which (if any) of the above Transmission
Customers have exercised their rights to transmission service or to
rollover their respective service agreements and will also notify the
Transmission Customer of the amount (if any) of transmission capacity
that the Transmission Customer may rollover for purposes of section 2.2
for continued transmission service hereunder after [December 1, 2004
for Oglethorpe and December 31, 2004 for Calpine]. Such analysis may or
may not be feasible until the expiration of the last deadline for the
above Transmission Customers to exercise their respective rights to
transmission service or to rollover their respective transmission
service agreements. If the Transmission Customer notifies the
Transmission Provider of the Transmission Customer's intent to rollover
this service agreement but it remains unclear whether sufficient
capacity will be available to accommodate the rollover request because
not all of the above-described deadlines have passed, the Transmission
Provider will endeavor to offer the Transmission Customer conditional
service for the affected amount of transmission capacity.
8. Since issuing Order Nos. 888 and 888-A,\6\ the Commission has
consistently reaffirmed its policy in orders directed to Southern and
other parties that a transmission provider can deny a customer the
ability to roll over a long-term (one year or longer) firm point-to-
point transmission service agreement only if the provider includes in
the original service agreement a specific limitation based on
reasonably forecasted native load needs for the transmission capacity
provided under the contract. In short, any limitations to rollover
rights must be stated clearly in the original transmission service
agreement and the transmission provider must plan and operate its
transmission system with the expectation that it will continue to
provide service to the customer should the customer request
rollover.\7\
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\6\ See Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities, Order No.
888, FERC Stats. & Regs. ] 31,036 (1996), order on reh'g, Order No.
888-A, FERC Stats. & Regs. ] 31,048, 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, 225 F.3d 667 (DC Cir.
2000), aff'd, 535 U.S. 1 (2002).
\7\ E.g., Southern Company Services, Inc., 103 FERC ] 61,370 at
P 5 & n. 6 (2002); accord Constellation Power Source v. American
Electric Power Service Corporation and Southwest Power Pool, 100
FERC ] 61,157 at P 25-28 (2002), reh'g denied, 102 FERC ] 61,142 at
P 8-41(2003); see Tenaska Power Services Company v. Southwest Power
Pool, 99 FERC ] 61,344 at P 15-18 (2002), reh'g denied, 102 FERC ]
61,140 at P 14-47 (2003); Order No. 888, FERC Stats. & Regs. ]
31,036 at 31,665; Order No. 888-A, FERC Stats. & Regs. ] 31,048 at
30,197-98.
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9. In sum, the Commission has determined that once a transmission
provider commits to provide long-term firm transmission service to a
customer without including any restrictions on that customer's rollover
rights in the original agreement, that provider is required to allow
rollover of the agreement. To include provisions to the contrary would
be unjust and unreasonable; a just and reasonable agreement would be
one that does not include rollover restrictions like those found in
section 5.0 of each of the agreements that are at issue here.
Therefore, pursuant to section 206 of the Federal Power Act, the
Commission will provide Southern an opportunity to argue in a paper
hearing why the agreements should not be found to be unjust and
unreasonable and institutes this proceeding in which the filing may be
made.
10. In cases where, as here, the Commission institutes a section
206 proceeding on its own motion, Section 206(b) requires that the
Commission establish a refund effective date that is no earlier than 60
days after publication of notice of the Commission's investigation in
the Federal Register, and no later than five months subsequent to
expiration of the 60-day period. In order to give maximum protection to
customers, we will establish the statutorily-directed refund effective
date, in this context the date that we revise the two rollover
transmission service agreements, at the earliest date allowed,\8\ 60
days after publication of the order initiating the Commission's
investigation in Docket No. EL04-87-000 in the Federal Register. In
addition, section 206
[[Page 13296]]
requires that, if no final decision has been rendered by that date, the
Commission must provide its estimate as to when it reasonably expects
to make such a decision. Given the times for filing identified in this
order, and the nature and complexity of the matters to be resolved, the
Commission estimates that it will be able to reach a final decision by
June 30, 2004.
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\8\ See, e.g., Canal Electric Company, 46 FERC ] 61,153, reh'g
denied, 47 FERC ] 61,275 (1989).
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The Commission Orders
(A) Pursuant to the authority contained in and subject to the
jurisdiction conferred upon the Federal Energy Regulatory Commission by
section 402(a) of the Department of Energy Organization Act and the
Federal Power Act, particularly section 206 thereof, and pursuant to
the Commission's Rules of Practice and Procedure and the regulations
under the Federal Power Act (18 CFR Chapter I), the Commission hereby
institutes an investigation of Southern's rollover transmission service
agreements with Calpine and Oglethorpe and why these agreements should
not be found to be unjust and unreasonable because the agreements limit
the transmission customers' rollover rights in a manner contrary to
Commission policy.
(B) Southern is hereby given the opportunity, within 21 days of the
date of this order, to argue to the Commission in a paper hearing in
Docket No. EL04-87-000 why the two rollover transmission service
agreements should not be found to be unjust and unreasonable because
the agreements limit the transmission customers' rollover rights in a
manner contrary to Commission policy.
(C) The refund effective date in Docket No. EL04-87-000 will be 60
days following publication of this order in the Federal Register.
(D) Any interested person desiring to be heard in these proceedings
should file notices of intervention or motions to intervene with the
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, in accordance with Rule 214 of the Commission's
Rules of Practice and Procedure (18 CFR Sec. 385.214) within 21 days
of the date of this order.
(E) Responses to the show cause submissions filed pursuant to
Ordering Paragraphs (B) and (D) above may be submitted by the parties
to the proceeding within 15 days of the date of filing of the
submissions.
(F) The Secretary shall promptly publish a copy of this order in
the Federal Register.
By the Commission.
Linda Mitry,
Acting Secretary.
[FR Doc. 04-6288 Filed 3-19-04; 8:45 am]
BILLING CODE 6717-01-P