[Federal Register Volume 71, Number 84 (Tuesday, May 2, 2006)]
[Notices]
[Pages 25828-25829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-6557]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. ER03-775-004; ER00-136-003]


FortisOntario, Inc. and FortisUS Energy Corporation; Order 
Accepting Notice of Change in Status and Tariff Revision and Providing 
Guidance

Issued April 25, 2006.

Before Commissioners: Joseph T. Kelliher, Chairman; Nora Mead 
Brownell, and Suedeen G. Kelly.

    1. On July 7, 2005, as amended on March 7, 2006, FortisOntario, 
Inc. (FortisOntario) and FortisUS Energy Corporation (FortisUS) 
(collectively, Petitioners) filed a notice of change in status, a 
request for clarification of the Commission's reporting requirement for 
changes in status for public utilities with market-based rate 
authority,\1\ and a tariff revision \2\ incorporating the Commission's 
change in status reporting requirement.\3\ In this order, the 
Commission will accept Petitioners' notice of change in status and will 
accept Petitioners' revised tariff sheets. The Commission also provides 
guidance concerning foreign sellers with market-based rate 
authorization.
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    \1\ Reporting Requirement for Changes in Status For Public 
Utilities With Market-Based Rate Authority, Order No. 652, 70 FR 
8,253 (February 18, 2005), FERC Stats. & Regs. ] 31, 175, order on 
reh'g, 111 FERC ] 61,413 (2005) (Order No. 652).
    \2\ FERC Electric Tariff, Second Revised Volume No. 1, 
Substitute Second Revised Sheet No. 1-1A, First Revised Sheet No. 2-
5.
    \3\ This revision is made in compliance with the Commission's 
order accepting Petitioners' updated market power analysis. 
FortisOntario, Inc. 110 FERC ] 61,119 (2005).
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Background

    2. Petitioners state that they are notifying the Commission of a 
non-material change in status regarding the purchase by their parent, 
Fortis Inc. (Fortis Parent), of Princeton Light and Power Company, 
Limited (Princeton), a Canadian utility. Petitioners state that this 
change in status does not reflect a departure from the characteristics 
the Commission relied upon in granting market-based rate authority to 
either FortisOntario or FortisUS. Petitioners state that they believe 
that this notice is not required but are submitting it ``out of an 
abundance of caution because Order No. 652 does not, by its express 
terms, exclude changes in status resulting from the acquisition of 
electric generation and transmission facilities located wholly outside 
of the United States.'' \4\
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    \4\ Request for Clarification at 1.
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    3. Petitioners state that, as more fully explained in their updated 
market power analysis accepted by the Commission,\5\ FortisOntario has 
no generating capacity in the United States and that its only 
jurisdictional facility is its market-based rate tariff on file with 
the Commission. Petitioners explain that FortisOntario is a corporation 
organized under the laws of the province of Ontario, Canada, having its 
principal place of business in Ontario, Canada. Petitioners state that 
FortisOntario is a wholly-owned subsidiary of Fortis Parent, a 
publicly-traded holding company existing under the laws of Newfoundland 
and Labrador, Canada.\6\
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    \5\ FortisOntario, Inc., 110 FERC 61,119 (2005).
    \6\ On January 31, 2003, the Commission authorized the 
intracorporate transfer of the jurisdictional assets of Canadian 
Niagara Power Company to a newly formed entity, FortisOntario, 
pursuant to an amalgamation under Canadian law. Canadian Niagara 
Power Co., 102 FERC ] 62,068 (2003).
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    4. FortisUS states that it directly owns a total of approximately 
22.5 MW of qualifying small power production facilities (QFs), located 
in New York. Petitioners explain that FortisUS is wholly-owned by a 
subsidiary of Fortis Parent, and is a corporation organized under the 
laws of the State of New York, having its principal place of business 
in the Canadian city of Charlottetown, Prince Edward Island.
    5. Petitioners state that other generation owned by affiliates is 
located exclusively within Canada, and that none of these affiliates 
have tariffs or rate schedules on file with the Commission for power 
sales or transmission of electric energy in the United States. 
Petitioners explain that they do not possess any transmission 
facilities in the United States other than step-up transformers and 
other interconnecting transmission facilities needed to effect sales 
from the QFs, and that none of these interconnection facilities could 
be used by any other party to effectuate sales of electric energy, 
capacity, or ancillary services at wholesale.
    6. Petitioners state that Fortis Parent has acquired Princeton, a 
utility serving 3,200 customers in British Columbia. Petitioners state 
that Princeton does not own generation or transmission facilities and 
is exclusively engaged in the business of distributing electric energy 
to its customers. Petitioners also state that Princeton's distribution 
operations are located exclusively within Canada and are not directly 
interconnected with the United States, and that none of Princeton's 
facilities could be used by any other party to effectuate sales of 
electric energy, capacity or ancillary services at wholesale in the 
United States or the transmission of electric energy, capacity, or 
ancillary services in the United States.
    7. Petitioners further state that Princeton is solely 
interconnected with and solely obtains its power from FortisBC Inc. 
(FortisBC), another affiliate, which provides distribution service in 
surrounding areas of British Columbia, Canada. Petitioners state that 
FortisBC is primarily a distribution facility and is not directly 
interconnected to the United States. FortisBC is interconnected with 
British Columbia Transmission Corporation (BCTC), which is not 
affiliated with Petitioners or Princeton. BCTC is a corporation owned 
by the province of British Columbia and is an independent transmission 
system operator which is interconnected to the United States. 
Petitioners state that BCTC offers wholesale transmission service under 
its open access transmission tariff (OATT) that is based on the 
Commission's Order No. 888 pro forma tariff and is regulated by the 
British Columbia Utilities Commission.\7\
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    \7\ BCTC operates the British Columbia Hydro and Power 
Authority's transmission system (BC Hydro). BC Hydro's OATT was 
reviewed by the Commission in 1997, in British Columbia Power 
Exchange Corp., 80 FERC ] 61,343 (1997). The Commission found that 
the tariff's terms and conditions were identical to the Commission's 
pro forma tariff in all material respects.
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    8. Petitioners assert that Fortis Parent's acquisition of Princeton 
does not and cannot raise any generation or transmission market power 
concerns with respect to Petitioners. Petitioners request clarification 
from the Commission as to whether notification of a change in status is 
required where generation and/or transmission assets acquired by a 
jurisdictional facility or its affiliates are located exclusively 
within Canada and are not and cannot be used to make sales of electric 
energy

[[Page 25829]]

at wholesale into the United States or for the transmission of electric 
energy in interstate commerce in the United States.

Procedural Matters

    9. Notice of Petitioners' July 7, 2005, filing was published in the 
Federal Register, 70 FR 41,698 (2005), with interventions and protests 
due on or before July 28, 2005. None was filed. Notice of Petitioners' 
March 7, 2006, filing was published in the Federal Register, 71 FR 
14,195 (2006), with interventions and protests due on or before March 
28, 2006. None was filed.

Discussion

    10. As discussed below, the Commission accepts Petitioners' notice 
of change in status and provides guidance concerning foreign sellers 
with market-based rate authorization.
    11. The Commission requires that market-based rate sellers report 
any changes in status that would reflect a departure from the 
characteristics the Commission relied upon in its existing grant of 
market-based rate authority.\8\ The baseline determination of whether a 
change in status filing is required is whether the change in status in 
question would have been reportable in an initial application for 
market-based rate authority under the Commission's four-part 
analysis.\9\
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    \8\ See Order No. 652 at P 5.
    \9\ See Id. at P 8, 51.
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    12. Petitioners in this case have market-based rate tariffs on file 
with the Commission. The change in status, described by Petitioners as 
``non-material,'' involves the acquisition of a Canadian utility 
characterized as distant and small that has no generation, and whose 
transmission and distribution is limited to Canada. Petitioners state 
that this change in status does not reflect a departure from the 
characteristics the Commission relied upon in granting market-based 
rate authority. Petitioners state their belief that notice of the 
change in status is not required, but that they filed the instant 
request for clarification ``out of an abundance of caution'', arguing 
that Order No. 652 does not expressly preclude change in status filings 
arising from ``the acquisition of electric generation and transmission 
facilities located wholly outside of the United States.''
    13. The Commission has clarified that its concerns are more limited 
for foreign transmission-owning entities than for transmission-owning 
entities in the United States. The Commission has further stated that 
its concern is transmission to serve United States load \10\ as well as 
access for United States competitors into Canadian markets on a 
reciprocal basis.\11\ Thus, the Commission seeks to assure reciprocal 
service into and out of Canada when Canadian entities seek access to 
United States markets, but the Commission is not seeking to open intra-
Canada electric markets through the imposition of open access tariffs 
for transactions wholly within Canada.\12\ Therefore, the Commission 
requires a Canadian entity seeking market-based rate authority to 
demonstrate that its transmission-owning affiliate offers non-
discriminatory access to its transmission system that can be used by 
competitors of the Canadian seller to reach United States markets.\13\
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    \10\ Energy Alliance Partnership, 73 FERC  61,019 at 
61,031 (1995) (Energy Alliance).
    \11\ TransAlta Enterprises Corp., 75 FERC ] 61,268 at 61,875 
(1996) (TransAlta).
    \12\ See British Columbia Power Exchange Corp., 78 FERC ] 61,024 
at 61,100 (1997).
    \13\ See TransAlta, 75 FERC ] 61,268 at 61,875; Energy Alliance, 
73 FERC ] 61,019 at 61,030-31.
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    14. Fortis Parent has acquired Princeton, whose transmission and 
distribution facilities are located exclusively within Canada and are 
not directly interconnected with the United States. Princeton is 
interconnected to its affiliate, FortisBC, whose facilities are 
entirely in Canada, and the transactions between Princeton and FortisBC 
are wholly within Canada. FortisBC is not directly interconnected to 
the United States but is interconnected with BCTC, a non-affiliate that 
offers non-discriminatory access under its OATT to reach United States 
markets.
    15. The Commission clarifies herein that, with regard to market-
based rate authorization, the Commission does not consider transmission 
and generation facilities that are located exclusively outside of the 
United States and that are not directly interconnected to the United 
States. However, the Commission would consider transmission facilities 
that are exclusively outside the United States but nevertheless 
interconnected to an affiliate's transmission system that is directly 
interconnected to the United States.
    The Commission orders:
    (A) Petitioners' notice of change in status and tariff sheets are 
accepted for filing.
    (B) The Secretary is directed to publish a copy of this order in 
the Federal Register.

    By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. E6-6557 Filed 5-1-06; 8:45 am]
BILLING CODE 6717-01-P