[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