[Federal Register Volume 70, Number 142 (Tuesday, July 26, 2005)]
[Notices]
[Pages 43140-43141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14710]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM01-12-000]


Order Terminating Proceeding

Issued July 19, 2005.
Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead 
Brownell, and Suedeen G. Kelly. Remedying Undue Discrimination 
through Open Access Transmission Service and Standard Electricity 
Market Design; Order Terminating Proceeding.

    1. In 2002, the Commission issued the Standard Market Design (SMD) 
Notice of Proposed Rulemaking (NOPR) in this proceeding.\1\ For the 
reasons given below, we are exercising our discretion to terminate this 
proceeding.
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    \1\ Remedying Undue Discrimination through Open Access 
Transmission Service and Standard Electricity Market Design, Notice 
of Proposed Rulemaking, 67 Fed. Reg. 55,452 (Aug. 29, 2002), FERC 
Stats. & Regs. ] 32,563 (2002).
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Background

    2. On July 31, 2002, the Commission issued a NOPR proposing to 
remedy remaining undue discrimination and establish a standardized 
transmission service and wholesale electric market design to provide a 
level playing field for all entities seeking to participate in 
wholesale electric markets, while recognizing certain regional 
variations. The Commission explained that it was proposing to provide 
new choices through a flexible transmission service and an open and 
transparent spot market design that would provide the right pricing 
signals for investment in transmission and generation facilities. The 
Commission also explained that it was proposing regulatory backstops to 
protect customers against the exercise of market power when structures 
do not support a competitive market, i.e., market monitoring and market 
power mitigation. The Commission further proposed to exercise 
jurisdiction over the transmission component of bundled retail 
transactions and to require all transmission owners and operators that 
had not yet joined a regional transmission organization (RTO) to 
contract with an independent entity to operate their transmission 
facilities.

[[Page 43141]]

    3. The Commission received extensive comments on its proposed rule 
raising a variety of concerns, including the following: (1) The 
Commission's proposed assertion of jurisdiction over transmission used 
to provide retail service to native load customers infringed on state 
jurisdiction; (2) other specific features of the proposed rule also 
would infringe on state jurisdiction; (3) the transition process to the 
new proposed transmission service would not provide sufficient 
protection for existing customers; (4) the proposed rule was too 
prescriptive in substance and implementation and did not sufficiently 
accommodate regional differences; and (5) the proposed rule did not 
provide sufficient clarity on cost recovery for investment in new 
transmission facilities.
    4. On April 28, 2003, in response to the comments it received on 
its proposed rule, the Commission issued a Wholesale Power Market 
Platform White Paper laying out a revised proposal for building a 
wholesale electric market. The Commission reiterated its overall goals, 
proposed a more flexible approach to regional needs and expressed an 
intent to focus on the formation of RTOs. The Commission recognized the 
need for additional changes to its proposed rule and indicated that: 
(1) It would not assert jurisdiction over the transmission rate 
component of bundled retail service; (2) nothing in the Final Rule 
would change state authority over resource adequacy requirements and 
regional transmission planning requirements; (3) regional state 
committees would determine how firm transmission rights should be 
allocated to current customers; (4) implementation would be tailored to 
each region and modifications would be allowed to benefit customers in 
each region; (5) each RTO would be required to have a clear 
transmission cost recovery policy outlined in its tariff; and (6) it 
would eliminate the proposed requirement that public utilities create 
or join an independent entity, but would require them to join an RTO or 
independent system operator (ISO).
    5. While a number of entities expressed support for certain of the 
changes proposed by the Commission in its White Paper, many entities 
continued to oppose the Commission's fundamental goals. For example, 
several entities spoke out against any national one size fits all 
approach, even with the modifications set forth in the White Paper, 
while others expressed concern with the ever-escalating costs of RTOs. 
Still others preferred that the Commission take a more regional 
approach that would allow markets to develop on a voluntary basis, 
instead of the mandatory approach to RTOs proposed by the Commission. A 
number of entities also expressed concern about the proposed regional 
state committees, including their concern that they would have to 
spread their scarce resources over a multitude of forums.

Discussion

    6. Since issuance of the SMD NOPR, the electric industry has made 
significant progress in the development of voluntary RTOs/ISOs (e.g., 
Midwest Independent Transmission System Operator, Inc. and Southwest 
Power Pool, Inc.). This has allowed interested parties, through region-
specific proceedings, to shape the development of independent entities 
to reflect the needs of each particular region. The Commission has also 
indicated that it intends to consider revisions to the Order No. 888 
pro forma Open Access Transmission Tariff to reflect the electric 
utility industry's and the Commission's experience with open access 
transmission over the last decade.
    7. Given the continuing development of voluntary RTOs and ISOs and 
the Commission's expressed intent to look into revisions to the Order 
No. 888 pro forma tariff in a separate proceeding, we have concluded 
that the SMD NOPR has been overtaken by events. Accordingly, we will 
exercise our discretion to terminate this proceeding.
    The Commission orders:
    Docket No. RM01-12-000 is hereby terminated.

    By the Commission.
Linda Mitry,
Deputy Secretary.
[FR Doc. 05-14710 Filed 7-25-05; 8:45 am]
BILLING CODE 6717-01-P