[Federal Register Volume 70, Number 113 (Tuesday, June 14, 2005)]
[Proposed Rules]
[Pages 34417-34421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-11530]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 37

[Docket No. RM05-17-000]


Information Requirements for Available Transfer Capability

May 27, 2005.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Inquiry.

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SUMMARY: The Federal Energy Regulatory Commission seeks comments on: 
(a) The North American Electric Reliability Council's recent Long-Term 
AFC/ATC Task Force Report; (b) the advisability of revising and 
standardizing available transfer capability calculations; and (c) the 
most expeditious way to obtain an industry-wide standard for available 
transfer capabilitycalculations. This Notice of Inquiry is the result 
of a review conducted by the Commission's Information Assessment Team 
(FIAT), to propose: (a) new information the Commission needs to promote 
greater market transparency in electricity markets; and (b) ways to 
reduce the reporting burden on industry through the elimination, 
reduction, streamlining or reformatting of current information 
collections.

DATES: Comments on this Notice of Inquiry are due on August 15, 2005.

ADDRESSES: Comments may be filed electronically via the eFiling link on 
the

[[Page 34418]]

Commission's web site at http://www.ferc.gov. Commenters unable to file 
comments electronically must send an original and 14 copies of their 
comments to: Federal Energy Regulatory Commission, Office of the 
Secretary, 888 First Street NE., Washington, DC, 20426. Refer to the 
Comment Procedures section of the preamble for additional information 
on how to file comments.

FOR FURTHER INFORMATION CONTACT:
Michelle Veloso (Technical Information), Office of Markets, Tariffs and 
Rates, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. [email protected].
Edward Fowlkes (Technical Information), Office of Energy Projects, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. [email protected].
Joseph C. Lynch (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. [email protected].

SUPPLEMENTARY INFORMATION:

Notice of Inquiry

    1. In Order No. 889,\1\ the Commission required transmission 
providers \2\ to offer unused transmission capacity to the market by 
posting available transfer capability (ATC) on their Open Access Same-
Time Information Systems (OASIS).\3\ In the years since the Commission 
issued Order No. 889, market participants have complained that 
variations in the way ATC is calculated provide opportunities for undue 
discrimination and create obstacles to doing business. The Commission 
believes that standardizing the way ATC is calculated will alleviate 
these obstacles. This Notice of Inquiry is the result of a review 
conducted by the Commission's Information Assessment Team (FIAT), to 
propose: (1) New information the Commission needs to promote greater 
market transparency in electricity markets; and (2) ways to reduce the 
reporting burden on industry through the elimination, reduction, 
streamlining or reformatting of current information collections.
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    \1\ Open Access Same-Time Information System and Standards of 
Conduct, Order No. 889, 61 FR 21,737 (1996), FERC Stats. & Regs., 
Regulations Preambles July 1996-December 2000 ] 31,035 (1996), order 
on reh'g, Order No. 889-A, 62 FR 12,484 (1997), FERC Stats. & Regs., 
Regulations Preambles July 1996-December 2000 ] 31,049 (1997), reh'g 
denied, Order No. 889-B, 81 FERC ] 61,253 (1997).
    \2\ A transmission provider is the public utility (or its 
Designated Agent) that owns, controls, or operates facilities used 
for the transmission of electric energy in interstate commerce and 
provides transmission service under the Tariff. See Promoting 
Wholesale Competition Through Open Access Non-Discriminatory 
Transmission Services by Public Utilities; Recovery of Stranded 
Costs by Public Utilities and Transmitting Utilities, Order No. 888, 
61 FR 21,540 (May 10, 1996), FERC Stats. & Regs., Regulations 
Preambles January 1991-June 1996 ] 31,036 Appendix D (Pro Forma 
Tariff) at 1.46 (1996), order on reh'g, Order No. 888-A, 62 FR 
12,274 (March 4, 1997), FERC Stats. & Regs., Regulations Preambles 
July 1996-December 2001 ] 31,048 (1997), 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 sub nom. Transmission 
Access Policy Study Group v. FERC, 225 F.3d 667 (DC Cir. 2000), 
aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002) (Order No. 888).
    \3\ 18 CFR Part 37.
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    2. The Commission has reviewed the final report of the North 
American Electric Reliability Council (NERC) on long-term available 
flowgate capability (AFC) and ATC,\4\ which addresses the calculation 
and coordination of AFC/ATC to increase market liquidity and enhance 
reliability. As discussed more fully below, NERC's LTATF Report 
provides useful guidance on how to achieve an industry-wide methodology 
for calculating ATC. The Commission encourages the electricity industry 
to work toward standardization and coordination of ATC and related 
terms, and requests comments on the recommendations put forth in the 
LTATF Report.\5\
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    \4\ North American Electric Reliability Council, Long-Term AFC/
ATC Task Force Final Report (2005) (LTATF Report).
    \5\ The Commission recognizes the common interest of the United 
States, Canada and Mexico in maintaining a safe and reliable 
interconnected North American bulk power system. Any standards 
promulgated by the Commission would apply only to jurisdictional 
entities.
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Background

A. Definitions

    3. The calculation of ATC involves a number of variables that 
require definition. The Commission will use the LTATF Report 
definitions for purposes of the discussion in this Notice of Inquiry. 
The Commission requests, however, that the industry comment on these 
definitions, as these variables determine the calculation of ATC.
    4. For market participants, ATC is essentially a measure of unused 
transmission that a transmission provider can offer for sale pursuant 
to Order Nos. 888 and 889. Transmission providers sell transmission 
service to customers in the form of transfer capability. Transfer 
capability is the measure of the ability of the interconnected 
electrical system to move electric energy reliably from one point to 
another and is limited by, among other things, the capacity either of 
equipment (such as transformers or transmission circuits) or interfaces 
(one or more circuits). ATC is the amount of transfer capability still 
available for sale after all existing uses are accounted for.\6\ 
Transmission providers calculate ATC by subtracting existing 
transmission commitments, transmission reserve margin, and capacity 
benefit margin from total transfer capability.\7\
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    \6\ LTATF Report, Appendix A, page 4.
    \7\ ATC equals Total Transfer Capability (TTC) minus Existing 
Transmission Commitments (ETC) minus Transmission Reserve Margin 
(TRM) minus Capacity Benefit Margin (CBM), or ATC=TTC-ETC-TRM-CBM.
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    5. A flowgate is the name given to a transmission element(s) and 
associated contingencies that may limit ATC. AFC is a measure of the 
capability remaining on a flowgate for future uses, after considering 
the effect of prior sales. AFC is measured as a flow limit on a 
flowgate, while ATC is measured as a transaction limit from a source to 
a sink.\8\
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    \8\ ``Source'' and ``sink'' are points at which the transmission 
of electric energy begins (source) and ends (sink).
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    6. There may be multiple flowgates between source and sink that can 
limit a transaction. If the assumptions that underlie AFC and ATC do 
not reasonably conform to real-time operations, the transmission system 
will either be artificially constrained, or it will be underused, 
leading to lost transmission opportunities.
    7. Transmission providers use CBM and TRM in their ATC and AFC 
calculations to account for uncertainties or contingencies that are not 
explicitly modeled in the calculations. CBM is the amount of firm 
transmission transfer capability reserved by the transmission provider 
so that load serving entities, whose loads are located on that 
transmission provider's system, can access remote reserve generation 
from interconnected systems.\9\ TRM is the amount of transmission 
transfer capability necessary to ensure that the interconnected 
transmission network will be secure under a reasonable range of 
uncertainties in system conditions. The criteria used to determine TRM 
and CBM should be consistent with the transmission operator's planning 
and operating criteria.\10\
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    \9\ LTATF Report, Appendix F, page 2.
    \10\ Id. at Appendix A, page 5.
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B. Evolution of Electricity Markets Since Order Nos. 888 and 889

    8. In Order Nos. 888 and 889, the Commission required transmission 
providers to sell unused transmission capacity and post their ATC on 
OASIS. Market transactions depend on this

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critical transmission information. As the electric industry has 
evolved, the nature of the calculations of ATC, TTC, TRM and CBM and 
the interaction between neighboring transmission providers has changed 
substantially. In the years since the Commission established OASIS, 
independent system operators (ISOs) and regional transmission 
organizations (RTOs) have developed organized markets. Agreements among 
neighboring ISOs/RTOs and transmission service providers have led to 
increased coordination of operation and requests for transmission 
service, and have resulted in fewer variations in the calculation of 
ATC for those regions. In regions without an ISO/RTO, however, this may 
not be the case.
    9. While the electric industry uses OASIS for posting ATC, there is 
as yet no industry-wide standard for calculating ATC. The Commission's 
OASIS II Advanced Notice of Proposed Rulemaking, issued in July 2000, 
contemplated detailed, standard communication protocols and associated 
business practices for ATC, TTC, and CBM \11\ but these standards and 
protocols are not yet in place.
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    \11\ Open Access Same-Time Information System Phase II, 92 FERC 
] 61,047 at 61,126-27 (2000).
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C. Problems With ATC Calculations

    10. Transmission providers have incentives to understate ATC on 
those paths valuable to power sellers that are competitors to a 
transmission provider's own (or its affiliate's) power sales. The lack 
of clear and consistent methodologies for calculating ATC can allow 
transmission providers the discretion to control the transmission 
system to favor their own power sales or those of their affiliates. ATC 
can vary considerably depending on the criteria they use to calculate 
it and the order in which the calculations are made. Although the 
Commission has required transmission providers to post the formula for 
calculating ATC,\12\ the transmission provider has sole responsibility 
for, and a great deal of discretion in, its calculation. More rigorous 
and consistent standards and procedures for ATC calculations would help 
ensure that transmission providers' exercise of discretion in their 
calculation of ATC does not result in undue discrimination with respect 
to interstate transmission.
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    \12\ 18 CFR 37.6.
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    11. Complainants have alleged that transmission providers 
misrepresent ATC, often using ATC calculations to inflate transmission 
needed to serve native load or to set aside capacity for their 
affiliates. In one instance, a transmission provider reserved capacity 
on behalf of native load but failed to designate network resources as 
required by the open access transmission tariff. The company thus 
improperly increased the existing transmission commitment component of 
the ATC calculation, artificially reducing posted ATC.\13\ It is thus 
important that the ATC component (TRM and CBM) assumptions are stated 
and posted so that recalculated ATC values are transparent and not 
devised to produce an unduly discriminatory result.
    12. The lack of standardization and coordination of ATC can not 
only result in unduly discriminatory behavior, but can also on occasion 
affect reliability. As the LTATF recognized, inaccurate ATC values can 
lead to Transmission Loading Relief actions [or curtailments in the 
Western Electricity Coordinating Council (WECC)] if they result in 
transmission flows that exceed line limits.\14\ In this regard, 
preceding the August 14, 2003 blackout, transmission operators 
calculated ATC values approximately seven days ahead using forecasted 
system conditions. This lag in real-time ATC values contributed to the 
blackout. The Final Blackout Report indicated that transmission 
operators should update ATC/TTC values as the forecast of system 
conditions changes.\15\
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    \13\ See Aquila Power Corporation v. Entergy Services, Inc., 90 
FERC ] 61,260 at 61,859-60 (2000).
    \14\ LTATF Report, page 1.
    \15\ U.S.-Canada Power System Outage Task Force, Final Report on 
the August 14th Blackout in the United States and Canada: Causes and 
Recommendations 31 (April 2004) (Final Blackout Report).
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D. The LTATF Report

    13. NERC created the LTATF to develop a report and specific 
recommendations for the calculation and coordination of AFC/ATC to 
increase market liquidity and enhance reliability. NERC's Market 
Committee directed the LTATF efforts and the LTATF also coordinated its 
efforts with representatives from the North American Energy Standards 
Board (NAESB). The LTATF Report builds upon NERC's ``Version 0'' 
reliability standards, which the Commission incorporated into its 
Policy Statement on Matters Related to Bulk Power System Reliability in 
February 2005.\16\ The Version 0 reliability standards attempt to state 
reliability goals clearly and provide a means by which to measure the 
progress toward their attainment. The Commission's Supplement to the 
Policy Statement makes clear that the term Good Utility Practice as 
used in the open access transmission tariff (OATT) includes compliance 
with NERC's Version 0 reliability standards.\17\
    14. The LTATF Report outlines existing ATC practices in the Eastern 
Interconnection and the WECC. It also proposes a method of exchanging 
AFC/ATC data between entities and summarizes the minimum requirements 
of modeling techniques to facilitate proper calculation and 
coordination of AFC/ATC.
    15. The LTATF Report details three groups of issues: (1) 
Communication and coordination of AFC/ATC; (2) calculation process for 
AFC/ATC; and (3) consistency between planning criteria and the 
attributes of AFC/ATC calculations (over both planning and operating 
horizons).
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    \16\ Supplement to Policy Statement on Matters Related to Bulk 
Power System Reliability, 110 FERC ] 61,096 (2005) (Supplement); see 
Policy Statement on Matters Related to Bulk Power System 
Reliability, 107 FERC & 61,052 (Policy Statement), clarified, 108 
FERC ] 61,288 (2004).
    \17\ Supplement at P 23. Version 0 Standards MOD 001-0 through 
009-0 are specifically relevant here.
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Communication and Coordination of AFC/ATC--Respecting Third Party 
Constraints

    16. The objective of AFC/ATC coordination is to ensure that 
neighboring entities exchange relevant information to facilitate: (a) A 
reasonable representation of external entities for modeling purposes; 
(b) the ability of each calculator \18\ to adequately represent the 
values of flowgates on third party transmission systems; and (c) the 
ability of each calculator to translate data from neighboring entities 
and make meaningful use of the data in its calculations.
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    \18\ The calculator prepares and updates ATC values for the 
transmission provider.
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    17. The LTATF documented the existing coordination processes for 
the major regions in the Eastern Interconnection and the WECC. The 
report proposes a method of exchanging AFC/ATC data between entities 
and provides the minimum requirements for flowgate exchange and 
modeling techniques needed to ensure proper calculation and 
coordination of transfer capability.

Calculation Process for AFC/ATC

    18. The LTATF agreed that transmission service providers need to 
provide better documentation and greater transparency for their AFC/ATC 
calculation processes. The LTATF Report contains a number of 
recommendations to achieve more consistency among AFC/ATC calculations.

[[Page 34420]]

    19. The LTATF proposed a Standard Authorization Request (SAR) that 
contains recommendations to achieve more consistency among AFC/ATC 
calculations. The SAR would change the existing modeling standard(s) by 
adding a requirement for transmission providers to coordinate the 
calculation of ATC and incorporate specific reliability practices into 
the ATC calculation and coordination methodologies.\19\
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    \19\ LTATF Report, Attachment A, SAR-1.
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    20. The LTATF found that the way in which various regions calculate 
and use ATC, TTC, TRM and CBM varies widely.\20\ As the LTATF Report 
explains, some transmission providers first calculate TTC, and then 
derive ATC. Others first calculate ATC, and then derive TTC. Some 
transmission providers first calculate AFC, and then derive ATC. Some 
only calculate TTC. Some transmission providers use CBM; some do not 
use CBM. The scope of CBM varies by footprint. Nearly all transmission 
providers use TRM.\21\
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    \20\ LTATF Report at page 3.
    \21\ Id. at page 2. The LTATF reviewed ATC methodologies and 
found that the numerous ATC calculators in the Midwest have been 
replaced by the Midwest Independent Transmission System Operator and 
the PJM Interconnection, LLC. The LTATF found 50 to 60 ATC 
calculators nationwide, with most of those in the West (30 to 40). 
Id. at page 3.
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    21. The LTATF noted that consistency is important in the 
calculation of CBM and TRM and recommended revising applicable 
standards. The LTATF proposed a SAR to modify the current methodology 
for calculating CBM and TRM.\22\
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    \22\ Id. at Attachment B, SAR-1.
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    22. The LTATF also used the LTATF Report and recommendations to 
develop a proposed NAESB business practice standard. The LTATF Report 
proposes that a single business practice standard be developed related 
to both: (a) The processing and evaluation of transmission service 
requests which use TTC/ATC/AFC and CBM/TRM; and (b) the processing and 
evaluation of requests to schedule against approved transmission 
service reservations.\23\
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    \23\ Id. at Attachment C, page 2.
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Consistency Between Planning Criteria and the Attributes of the AFC/ATC 
Calculations (Over Both Planning and Operating Horizons)

    23. The LTATF emphasized that the assumptions used in the 
calculation of AFC/ATC and CBM/TRM should be consistent with those used 
in the planning and operating horizons. The LTATF noted that 
transmission service providers should document these calculations and 
make them transparent to all who use the transmission network.\24\
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    \24\ Id. at page 3.
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    24. The LTATF suggested that transmission providers ensure 
consistency between their ATC calculations and their internal planning 
processes. For example, the LTATF recommended that both the internal 
planning processes and the ATC calculations reflect the same 
counterflows and the same components of TRM. Discrepancies between the 
internal planning processes and ATC calculations can result in 
inaccurate calculations of transmission available to the market.\25\
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    \25\ Id. at, Appendix E, page 2.
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Discussion

    25. As noted above, problems in the way AFC and ATC are calculated 
can create and have created obstacles to ensuring that the provision of 
interstate transmission service is not unduly discriminatory or 
preferential. The Commission believes that standardizing the way AFC 
and ATC are calculated will help mitigate this potential, and enhance 
system performance.
    26. The LTATF Report contains proposals that appear to go a long 
way toward refining and standardizing these calculations. By developing 
a business practice standard and revisions related to reliability 
standards, the LTATF Report would also take such calculations beyond 
NERC's Version 0 reliability standards.
    27. NERC also has long encouraged regions to promote a common 
methodology for determining TRM and CBM.\26\ Appendix C to the LTATF 
Report \27\ recommends that the regions adopt written regional 
methodologies for calculating CBM and TRM. The LTATF Report also sets 
forth areas in which CBM and TRM standards could be more specific. The 
Commission requests comments on these recommendations and whether they 
go far enough in promoting a common TRM and CBM methodology within each 
region. The Commission also invites comments on whether there should be 
common TRM and CBM methodologies among regions.
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    \26\ See North American Electric Reliability Council, 
Transmission Capability Margins and Their Use in ATC Determination 3 
(1999).
    \27\ Appendix C is entitled: Review of Current NERC Standards on 
CBM and TRM.
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    28. More specifically, the Commission seeks industry comment on: 
(a) The definitions of AFC, ATC, CBM and TRM used in this order; (b) 
the advisability of revising and standardizing AFC, ATC, TRM and CBM 
values; (c) the advisability of developing interconnection-wide 
standards for the Eastern Interconnection and the WECC; (d) the 
contents of the LTATF Report; and (e) the most expeditious way to 
obtain industry-wide standards for ATC calculations.
    29. While the LTATF Report is a start, the Commission recognizes 
that more work is needed before there can be industry-standard AFC and 
ATC calculations.
    The Commission notes that the LTATF coordinated its efforts with 
NAESB and applauds NERC's efforts to work with NAESB in developing 
comprehensive business practice and reliability standards. The 
Commission urges that these efforts continue.

Comment Procedures

    30. The Commission invites interested persons to submit comments on 
these matters and any related matters or alternative proposals that 
commenters may wish to discuss. Comments are due August 15, 2005. 
Comments must refer to Docket No. RM05-17-000, and must include the 
commenter's name, the organization they represent, if applicable, and 
their address.
    31. Comments may be filed electronically via the eFiling link on 
the Commission's Web site at http://www.ferc.gov. The Commission 
accepts most standard word processing formats and commenters may attach 
additional files with supporting information in certain other file 
formats. Commenters filing electronically do not need to make a paper 
filing. Commenters that are not able to file comments electronically 
must send an original and 14 copies of their comments to: The Federal 
Energy Regulatory Commission, Office of the Secretary, 888 First Street 
NE., Washington, DC, 20426.
    32. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters commenting on this 
proposal are not required to serve copies of their comments on other 
commenters.

Document Availability

    33. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through Commission's Home Page (http://www.ferc.gov) and in 
the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5 p.m. eastern time) at 888 First Street, NE., Room 2A, 
Washington DC 20426.

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    34. From the Commission's Home Page on the Internet, this 
information is available in its eLibrary. The full text of this 
document is available in the eLibrary both in PDF and Microsoft Word 
format for viewing, printing, and/or downloading. To access this 
document in eLibrary, type the docket number of this document, 
excluding the last three digits, in the docket number field.
    35. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours. For assistance contact FERC 
Online Support at [email protected] or toll-free at (866)208-
3676, or for TTY, contact (202) 502-8659. E-Mail the Public Reference 
Room at [email protected] or (202) 502-8371.

    By direction of the Commission.
Linda Mitry,
Deputy Secretary.
[FR Doc. 05-11530 Filed 6-13-05; 8:45 am]
BILLING CODE 6717-01-J