Docket No. ER00-3577-000
UNITED STATES OF AMERICA93 FERC ¶61,195
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: James J. Hoecker, Chairman;
William L. Massey, Linda Breathitt,
and Curt Hébert, Jr.
New England Power Pool Docket No. ER00-3577-000
ORDER ACCEPTING AMENDMENTS FOR FILING
WITH MODIFICATION
(Issued November 22, 2000)
On August 31, 2000, as supplemented on November 2, 2000, New England Power Pool (NEPOOL) filed proposed amendments to eliminate "In-Service", a method of allocating capacity for importing firm power into the NEPOOL control area from the adjoining control areas through transmission ties between the NEPOOL control area and New York and New Brunswick (the Ties), [1] and to institute a market-based mechanism for determining the priority of transactions over the ties. In this order, we accept NEPOOL's amendments for filing, as modified, as discussed below.
Background
In New England Power Pool et al., 83 FERC ¶ 61,045 at 61,245-46 (1998), NEPOOL proposed to add a new section entitled "In-Service." NEPOOL proposed an interim Tie Owners' Priority for import capacity which provided that during certain interim periods, NEPOOL would allocate Tie import capacity in the following order: Owner Priority Capacity, Grandfathered In-Service Transactions, and Open Access Capacity. NEPOOL also established an open season, ending February 1, 1998, during which applications for service involving imports over the Ties would be treated as filed simultaneously. NEPOOL also proposed a Non-Use Charge. The Non-Use Charge applied when a transmission customer did not schedule energy consistent with its reservations and only applied to transactions relating to Open Access Capacity. It did not apply to Tie Owner transactions.
The Commission accepted NEPOOL's In-Service proposal, but rejected NEPOOL's request to establish the Non-Use Charge. The Commission concluded that since the cost of the Ties was already fully recovered in basic transmission rate, the charge was not based on the cost of providing transmission under the NEPOOL Tariff. [2]
In addition, the Commission determined that requests for tie capacity will be granted on the same terms as requests to use any other part of the transmission grid--only if there is sufficient capacity after meeting existing commitments including the transmission provider's native load requirements. If any Excepted Transactions [3] involved Tie import capacity, that portion of the Tie capacity would not be available to meet new requests for the duration of the Excepted Transaction. Finally, with regard to access priorities the Commission found that while NEPOOL cannot provide service over import capacity that has been reserved for a specific transaction, all Tie import available transmission capacity not reserved for an existing transaction must be made available for other requests. [4]
In New England Power Pool, 85 FERC ¶ 61,141 at 61,553-54 (1998), NEPOOL proposed that network customers make specific reservations to use firm import capacity and pay an additional charge to the extent they do not fully utilize their reservation. NEPOOL asserted that the proposed In-Service charge would discourage hoarding. The Commission rejected NEPOOL's proposal because it found no evidence of hoarding and because NEPOOL failed to justify the In-Service charge.
In New England Power Pool, 87 FERC ¶ 61,347 at 62,341-42 (1999), NEPOOL eliminated the separate charge for In-Service. There, we accepted NEPOOL's proposed In-Service application and determined that application procedures were necessary because an eligible customer would be unable to reserve capacity over these interconnections without such procedures.
In ISO New England, Inc., etal., 91 FERC ¶ 61,311 at 62,061, 62,069-74 (2000), the Commission generally approved, with modifications, NEPOOL's congestion management system and NEPOOL's multi-settlement system (CMS/MSS) proposal. In that proceeding, NEPOOL stated in its transmittal letter that the NEPOOL Participants Committee approved the elimination of In-Service as of the CMS/MSS effective date.
Current Proposal
In this proceeding, NEPOOL submits for filing its Sixty-Fourth Agreement to eliminate the In-Service and to provide a substitute mechanism for prioritizing transactions across the Ties that would replace the current mechanism of In Service reservations. [5] NEPOOL states that the existing In-Service provisions are an inefficient mechanism for allocating the capacity of the Ties. Since there is no charge for In Service, NEPOOL asserts that transmission customers reserved and held Tie capacity for long-term use through In Service even when they did not use the Tie at all or did not use the full extent of the reservation. NEPOOL states that the available capacity that was freed up was non-firm for short durations and required an administratively cumbersome process.
NEPOOL states that under the new proposal, prior to the CMS/MSS effective date, the import transaction rules will prioritize import transactions in the following order to the extent there is available capability over the Ties. First, excepted transactions and certain imports by NEPOOL Participants from the New York Power Authority will be scheduled first and curtailed last. Next, self-scheduled generation will be treated by ISO New England as having submitted a contract price of 0 for the external energy resources into NEPOOL and will be fully scheduled. Next, dispatchable contracts will be scheduled and curtailed on the basis of price (the external contract price submitted by the NEPOOL participant) with the lowest price first scheduled and last curtailed. [6] To the extent that there is not enough available transfer capability to accommodate import transactions under the above rules, such transactions will be scheduled in order of submittal time (first submitted, first scheduled, last curtailed).
NEPOOL proposes amendments to the NEPOOL Tariff, the Restated NEPOOL Agreement and Market Rule No. 4, to reflect the removal of In-Service and to institute its proposal for prioritizing import transactions. In addition, NEPOOL requests that the Commission not consider to be part of the rate schedule NEPOOL's business process document, which explains the technical and administrative details of the elimination of In-Service. NEPOOL explains that the business process document is subject to ongoing changes and is posted on the ISO New England website. NEPOOL requests that the amendments become effective December 1, 2000.
Notice of Filing
Notices of the filing and the supplement to the filing were published in the Federal Register, 65 Fed. Reg. 55,521 and Fed. Reg. (2000), respectively, with comments, protests, and interventions due on or before November 14, 2000. A notice of intervention was filed by the Maine Public Utilities Commission. Timely motions to intervene were filed by Enron Power Marketing, Inc., New England Conference of Public Utility Commissioners, NRG Power Marketing, Inc., Connecticut Jet Power LLC, Devon Power LLC, Middletown Power LLC, Montville Power LLC, Norwalk Power LLC and Somerset Power LLC, TransCanada Power Marketing Ltd., Southern Energy New England, L.L.C., Southern Energy Kendall, L.L.C., and Southern Energy Canal, L.L.C., and the Vermont Department of Public Service. Timely motions to intervene and comments in support of NEPOOL's proposal were filed by Bangor Hydro-Electric Company, ISO New England, Inc. (ISO New England), PG&E National Energy Group, PG&E Generating, USGen New England, Inc., and PG&E Energy Trading-Power, L.P. Morgan Stanley Capital Group Inc., (Morgan Stanley) filed a motion to intervene and a limited protest.
Morgan Stanley supports NEPOOL’s proposal to eliminate In-Service. However, Morgan Stanley requests that the Commission require NEPOOL to honor its two existing In-Service Agreements with Morgan Stanley for the term of the contracts, January 31, 2001 and June 30, 2001, respectively. Morgan Stanley adds that NEPOOL should not be allowed to change its existing In-Service Agreements since Morgan Stanley bargained for and continues to rely on these agreements.
Discussion
Our review of NEPOOL's proposal indicates that the proposed rules for scheduling and curtailing transmission service are reasonable, with the modification discussed below. To the extent there is available transfer capability over the Ties, Excepted Transactions and certain imports from the NYPA will be scheduled first and curtailed last. These Excepted Transactions are transmission arrangements that were in place when the NEPOOL Tariff went into effect and have been given priority as part of the negotiated arrangements among the NEPOOL Participants.
If there is any remaining import capacity, NEPOOL proposes that self-scheduled generation be treated by ISO New England as having submitted a contract price of 0 and be fully scheduled on a first-come, first served basis. Therefore, we find that these self-scheduled transactions will adhere to the pro forma terms and conditions (first-come, first-served) and have the higher priority over dispatchable contracts (bids made into the energy market) to import power. Self-schedule customers do not have to disclose the terms of their energy transactions nor risk curtailment. Accordingly, under NEPOOL's procedures, any transmission customer can obtain transmission service under first-come, first-serve criteria as long as it is self-scheduling a bilateral transaction.
The new criteria for obtaining import capacity will apply only if, after the self-scheduled transactions are met, there is insufficient capacity to meet the requests for transmission by those seeking to bid into the markets. When there is insufficient capacity to bring in all the market bidders, transmission requesters that bring in the cheapest energy product will be awarded transmission. Therefore, the new procedures will tie the assignment of import capacity to the energy bids that will be accepted for sales into the market based on bid prices.
Based on these factors, and the fact that NEPOOL's proposal has the broad support of the market participants, we will accept NEPOOL's proposal, effective December 1, 2000, without suspension or hearing, with the modification discussed below. We also find that NEPOOL is not required to file the business process document, because the relevant changes are incorporated in the NEPOOL Tariff, Restated NEPOOL Agreement, and Market Rule No. 4, and the business process document is posted on ISO New England's website.
Morgan Stanley contends that NEPOOL's proposal maintains the priority status of certain Excepted Transactions, but not other existing In-Service Agreements which were executed after November 1, 1996. [7] Morgan Stanley's In-Service Agreements were executed in June,1999 and became effective on June 1, 1999 and March 1, 2000, respectively. We agree with Morgan Stanley, that existing In-Service Agreements should not be terminated unilaterally by NEPOOL. Although NEPOOL provided that a transmission customer with a position in the System Impact Study queue existing as of November 1, 2000 may elect to retain that position by giving written notice, NEPOOL failed to specify that the terms and conditions of the existing In-Service contracts executed after November 1, 1996, will continue to apply. NEPOOL must honor the terms and conditions of its existing In-Service Agreements with Morgan Stanley and other affected customers that have In-Service Agreements in effect, that wish to continue those agreements, until their contracts expire.
With the modification noted above, we will accept NEPOOL's proposed amendments for filing, without suspension or hearing, effective December 1, 2000.
Other Matters
In Order No. 614, we amended our regulations to require the inclusion of a proposed designation for all rate schedule sheets filed with the Commission by public utilities. [8] NEPOOL submitted for filing the Sixty-Fourth Agreement Amending the NEPOOL Agreement (Elimination Of In-Service), but failed to designate this proposed amendment. We will require NEPOOL to file a designation within 30 days from the date of this order.
The Commission orders:
(A) NEPOOL is hereby directed to submit a compliance filing reflecting the modification discussed in the body of this order, within 30 days of the date of this order.
(B) NEPOOL's proposed amendments are hereby accepted for filing, without suspension or hearing, to become effective on December 1, 2000, as requested, as modified pursuant to Ordering Paragraph (A) above.
(C) NEPOOL is hereby informed of the rate schedule designations set forth in the Attachment.
By the Commission.
( S E A L )
David P. Boergers,
Secretary.
ATTACHMENT
New England Power Pool
Docket No. ER00-3577-000
Rate Schedule Designations
DesignationDescription
(1)Original Sheet Nos. 64A and 64BRevised Restated Open Access
under FERC Electric Tariff FourthTransmission Tariff To Eliminate
Revised Volume No. 1In-Service And Institute New Rules
Governing Certain Import Transactions
Into The New England Power Pool
Transmission System
(2)First Revised Sheet No. 66, 78Revised Restated Open Access
174A and 175 under FERC ElectricTransmission Tariff To Eliminate
Tariff Fourth Revised Volume No. 1In-Service And Institute New Rules
Governing Certain Import Transactions
Into The New England Power Pool
Transmission System
(3)Second Revised Sheet Nos. 1 thruRevised Restated Open Access
8, 34, 35, 45, 64, 67, 68, 73, 74, 75Transmission Tariff To Eliminate
76, 92, 108, 109, 110, 173and 174In-Service And Institute New Rules
under FERC Electric Tariff FourthGoverning Certain Import Transactions
Revised Volume No. 1Into The New England Power Pool
Transmission System
(4)Third Revised Sheet No. 77Revised Restated Open Access
under FERC Electric TariffTransmission Tariff To Eliminate
Fourth Revised Volume No. 1In-Service And Institute New Rules
Governing Certain Import Transactions
Into The New England Power Pool
Transmission System
ATTACHMENT
New England Power Pool
Docket No. ER00-3577-000
Rate Schedule Designations
DesignationDescription
(5)First Revised Sheet No. 480Revised Market Rules & Procedures
under FERC Electric Rate Appendix 4-0 Emergency Energy
Schedule No. 6Transactions To Remove In-Service
Provisions
(6)Second Revised Sheet No. 482Revised Market Rules & Procedures
under FERC Electric RateAppendix 4-0 Emergency Energy
Schedule No. 6Transactions To Remove In-Service
Provisions
[1]The owners of the Ties to New York are : (1) subsidiaries of Northeast Utilities; (2) subsidiaries of New England Electric System; and (3) Vermont Electric Power Company, Inc. On the eastern side of the NEPOOL control area, the direct transmission link is owned by Maine Electric Power Company (MEPCO). The Ties to New Brunswick are the lines and facilities owned by Central Maine Power Company and Bangor Hydro-Electric Company that connect the NEPOOL transmission system to the MEPCO line.
[2]83 FERC at 61,248.
[3]The NEPOOL Tariff defines Excepted Transactions as power transfers and other uses of the NEPOOL Transmission System under transmission agreements in effect on November 1, 1996. Excepted Transactions are grandfathered agreements not under the NEPOOL tariff.
[4]83 FERC at 61,248-49.
[5]Section 1 of the Sixty-Fourth Agreement specifies that In-Service transmission reservations that would otherwise exist on and after November 1, 2000 shall automatically terminate on November 1, 2000 or such other date as the Commission may order; and that a Transmission Customer with a position in the System Impact Study queue existing as of November 1, 2000 may elect to retain that position (by giving written notice to the System Operator by November 1, 2000) despite the elimination of In-Service and the automatic termination of that customer's In-Service reservation(s).
[6]When transactions have the same price, the submittal time would be used as a tie-breaker (first submitted, first scheduled, last curtailed). NEPOOL states that Short Notice External Transactions are excepted from the prioritization of other dispatchable external contracts and will be scheduled and curtailed according to the Market Rules already approved for such transactions.
[7]Other In-Service Agreements on file executed after November 1, 1996, include Trans Canada Power Marketing Ltd., Engage Energy US, L.P., Northeast Utilities Service Company on behalf of Select Energy, Inc., Northeast Utilities Service Company, and PG&E Energy Trading Power - LP.
[8]Designation of Electric Rate Schedule Sheets, Order No 614, FERC Stats. & Regs. ¶31,096 (2000).