[Federal Register Volume 69, Number 78 (Thursday, April 22, 2004)]
[Proposed Rules]
[Pages 21777-21778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9099]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 1

[Docket No. RM04-7-000]


Notice of Technical Conference and Initiation of Rulemaking 
Proceeding

April 14, 2004.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Initiation of rulemaking proceeding and notice of technical 
conference.

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SUMMARY: The Federal Energy Regulatory Commission is establishing a 
rulemaking proceeding with respect to the adequacy of the current four-
prong analysis and whether and how it should be modified to assure that 
electric market-based rates are just and reasonable under the Federal 
Power Act. The Commission will convene a series of technical 
conferences that will be open to the public. The first such technical 
conference will be June 9, 2004, at the Commission's headquarters. The 
purpose of this conference will be to frame the issues that will 
comprise the rulemaking proceeding, including a discussion on how all 
four parts of the current test interrelate, as well as what other 
factors the Commission should consider in granting market-based rate 
authorizations.

FOR FURTHER INFORMATION CONTACT: Michelle Barnaby, Office of Markets, 
Tariffs, and Rates, Federal Energy Regulatory Commission, 888 First 
Street, NE., Washington, DC 20426, (202) 502-8407.

SUPPLEMENTARY INFORMATION:

107 FERC ] 61,019

Federal Energy Regulatory Commission

[Docket No. RM04-7-000]

Market-Based Rates For Public Utilities; Initiation of Rulemaking 
Proceeding on Market-Based Rates and Notice of Technical Conference

April 14, 2004.
    1. In a companion order we are issuing today in AEP Power 
Marketing, Inc., Docket No. ER96-2495-016, et al.

[[Page 21778]]

(AEP Order),\1\ the Commission adopts new interim generation market 
power screens to identify those applicants for electric market-based 
rate authority that may possess generation market power. An analysis of 
whether an applicant possesses generation market power has for many 
years been one of the four prongs of analysis the Commission has used 
to assess whether an applicant should be granted market-based rate 
authority. The other three prongs that the Commission has considered 
are (1) whether the applicant has transmission market power, (2) 
whether the applicant can erect barriers to entry, and (3) whether 
there are concerns involving the applicant that relate to affiliate 
abuse and/or reciprocal dealing. In today's AEP Order and in prior 
orders in the same dockets, the Commission stated that the generation 
market power screen it was adopting in that proceeding was only an 
interim screen, and that the Commission intended to initiate a generic 
rulemaking proceeding on potential new analytical methods for assessing 
markets and market power. The Commission has also stated that as part 
of this process it intended to hold a series of outreach meetings with 
industry experts on these matters.\2\ The purpose of this notice is to 
initiate a rulemaking proceeding with respect to the adequacy of the 
current four-prong analysis and whether and how it should be modified 
to assure that electric market-based rates are just and reasonable 
under the Federal Power Act.
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    \1\ 107 FERC ] 61,018 (2004) (AEP Order).
    \2\ See, e.g., AEP Order, 107 FERC ] 61,018 at P1-2; AEP Power 
Marketing, Inc, et al., 97 FERC ] 61,219 at 61,967 & n.2 (2001); 
Notice Delaying Effective Date of Mitigation and Announcing 
Technical Conference, December 20, 2001 at 1; Notice of Technical 
Conference on Supply Margin Assessment Screen and Alternatives, 
December 19, 2003, at 1, 3, and attached Staff Paper at 1.
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    2. The Commission's four-prong market-based rate test was developed 
nearly 15 years ago, in the context of specific market-based rate 
proposals filed with the Commission, and currently there are no 
comprehensive codified regulations governing what applicants must 
demonstrate in order to obtain market-based rate authorization from the 
Commission. Much has changed in the industry since the Commission began 
using the four-prong test in the 1980s, and we believe it is important 
not only to ensure that our test is sufficient to support market-based 
rates in today's energy markets, but also to provide clarity, by way of 
codified regulations, as to what applicants must demonstrate in order 
to obtain (and retain) authority to sell at market-based rates.
    3. This generic proceeding will address, but not be limited to, 
whether the Commission should retain or modify its existing four-prong 
test (e.g., whether the analysis should explicitly address vertical 
market power issues); whether the factors the Commission considers 
under the existing prongs should be revised; whether the interim 
generation market power screens that are adopted today in the AEP Order 
should be retained over the long-term; whether the Commission should 
adopt different approaches to affiliate transactions than it currently 
does; and whether there should be new Commission regulations 
promulgated expressly for electric market-based rate filings. The 
Commission intends the scope of this rulemaking proceeding to be broad, 
and to include market-based rate authorizations associated with 
ancillary services.
    4. In order to have a better understanding of the issues that need 
to be considered, as well as the procedural direction the rulemaking 
should take, as a first step the Commission intends to convene a series 
of technical conferences that will be open to the public. The 
Commission will hold the first such technical conference on June 9, 
2004, at the Commission's headquarters. The purpose of this conference 
will be to frame the issues that will comprise the rulemaking 
proceeding, including a discussion of how all four parts of the current 
test interrelate, as well as what other factors the Commission should 
consider in granting market-based rate authorizations.
    5. The conference will be transcribed. Those interested in 
acquiring the transcript should contact Ace Reporters at 202-347-3700 
or 800-336-6646. Transcripts will be placed in the public record 10 
days after the Commission receives the transcripts. Additionally, 
Capitol Connection offers the opportunity for remote listening and 
viewing of the conference. It is available for a fee, live over the 
Internet, by phone or via satellite. Persons interested in receiving 
the broadcast, or who need information on making arrangements, should 
contact David Reininger or Julia Morelli at Capitol Connection (703-
993-3100) as soon as possible or visit the Capitol Connection Web site 
at http://www.capitolconnection.org and click on ``FERC.''
    6. For more information about the conference, please contact 
Michelle Barnaby at 202-502-8407 or [email protected].
    7. A supplemental notice of this conference will be issued later 
that will provide details of the conference, including the panelists.

    By direction of the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. 04-9099 Filed 4-21-04; 8:45 am]
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