Announced Action for August 23, 2005

Commission approval of comments to the Federal Energy Regulatory Commission: The Commission has approved the filing of two comments with the Federal Energy Regulatory Commission (FERC) concerning: 1) FERC’s initiatives to reduce entry impediments in wholesale electricity markets that may stem from long-term risk in obtaining transmission services, and 2) the need to standardize the way in which transmission owners calculate the amount of capacity available for unaffiliated users of the transmission grid.

The first comment, approved on August 8, 2005, concerns long-term transmission rights in markets operated by regional transmission organizations (RTOs) and independent system operators (ISOs). According to the staff comment, wholesale electricity customers and their generation suppliers currently face substantial risk in the acquisition of long-term transmission access in markets operated by FERC-approved RTOs and ISOs. The risks relate both to the price and availability of long-term transmission. The staff comment provides three insights and suggestions on why FERC’s initiatives to address long-term transmission risks are important.

First, the staff comment states that FERC could make efficient generation entry more probable by reducing long-term transmission risk. Next, reduction of this long-term transmission risk is even more important in areas outside of those operated by RTOs or ISOs because of the risk of transmission discrimination. Finally, the comment suggests that FERC coordinate its policies to reduce transmission risk with its policies to promote efficient transmission investment projects, including those whose primary benefits are in the form of enhanced reliability of the transmission system.

In the second comment, approved on August 22, 2005, the FTC states that standardization of the way in which transmission owners calculate the amount of available capacity may help prevent transmission discrimination within the electricity industry and ensure the reliability and security of the transmission grid. Specifically, the comment states that updating behavioral rules against undue transmission discrimination are likely to be helpful in the short-term while the FERC continues to implement structural remedies to remove the ability and incentive for transmission owners to engage in such conduct. The staff urges the FERC not to relax its efforts to implement RTOs and Transcos – independent, for-profit transmission companies – while improving its open access regulations. Further, transmission reliability and security concerns also may warrant updates of these regulations.

The Commission vote approving the filing of each comment was 4-0. The comments can be found as a link to this press release on the FTC’s Web site. (FTC File Nos. V050016 and V050017, Docket Nos. AD05-7-000 and RM05-17-000; the staff contact is Michael Wroblewski, Office of General Counsel, 202-326-2155; see related press releases dated July 11, 2003 and September 24, 2004.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.