[Federal Register Volume 60, Number 137 (Tuesday, July 18, 1995)]
[Proposed Rules]
[Pages 36752-36755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17523]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 35
[Docket Nos. RM95-8-000 and RM94-7-001]
Promoting Wholesale Competition Through Open Access Non-
discriminatory Transmission Services by Public Utilities; Recovery of
Stranded Costs by Public Utilities and Transmitting Utilities; Notice
of Intent to Prepare an Environmental Impact Statement for the Notice
of Proposed Rulemaking and Request for Comments on Environmental Issues
July 12, 1995.
AGENCY: Federal Energy Regulatory Commission, DOE.
[[Page 36753]]
ACTION: Notice of intent to prepare an environmental impact statement
for the notice of proposed rulemaking and request for comments on
environmental issues.
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SUMMARY: The Federal Energy Regulatory Commission (Commission) has
directed staff to prepare an environmental impact statement to assess
the environmental impacts of the proposed rule ``Promoting Wholesale
Competition Through Open Access Non-discriminatory Transmission
Services by Public Utilities/Recovery of Stranded Costs by Public
Utilities and Transmitting Utilities''.1 The notice requests
commenters to send relevant information that will assist the Commission
in conducting an accurate and thorough analysis of the potential
impacts of the proposed rule. The notice also provides for a public
scoping meeting.
\1\ 60 FR 17662, Apr. 7, 1995.
DATES: Scoping comments are due on or before August 11, 1995; the
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public scoping meeting will be held on September 8, 1995.
FOR FURTHER INFORMATION CONTACT:
Willam Meroney, Office of Economic Policy, Federal Energy Regulatory
Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426,
Telephone: (202) 208-1069, Fax: (202) 208-1010
Leon Lowry, Office of Electric Power Regulation, Federal Energy
Regulatory Commission, 825 North Capitol Street, N.E., Washington, D.C.
20426, Telephone: (202) 208-0919, Fax: (202) 208-0180
ADDRESSES: Comments should be filed with the Office of the Secretary,
Federal Energy Regulatory Commission, 825 North Capitol Street, N.E.,
Washington, D.C. 20426; the scoping meeting will be held in Hearing
Room 1, 810 First St., N.E., Washington, D. C.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 3401, at 941 North
Capitol Street, N.E., Washington, D.C. 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397. To access CIPS, set your communications
software to 19200, 14400, 12000, 9600, 7200, 4800, 2400, or 1200, full
duplex, no parity, 8 data bits and 1 stop bit. The full text of this
document will be available on CIPS for 60 days from the date of
issuance in ASCII and WordPerfect 5.1 format. After 60 days the
document will be archived, but still accessible. The complete text on
diskette in WordPerfect format may also be purchased from the
Commission's copy contractor, La Dorn Systems Corporation, also located
in Room 3104, 941 North Capitol Street, N.E., Washington, D.C. 20426.
SUPPLEMENTARY INFORMATION: The Commission has directed staff to prepare
an environmental impact statement (EIS) to assess the environmental
impacts of the proposed rule ``Promoting Wholesale Competition Through
Open Access Non-discriminatory Transmission Services by Public
Utilities/Recovery of Stranded Costs by Public Utilities and
Transmitting Utilities''. In general, the proposed rule would require
all public utilities owning or controlling facilities used for
transmitting electric energy in interstate commerce to file non-
discriminatory, open access wholesale transmission tariffs and to take
transmission service (including ancillary services) for their own
wholesale sales and purchases of electric energy under the open access
tariffs. In addition, the proposed rule would allow public utilities to
recover legitimate and verifiable stranded costs associated with
transmission access. The EIS will satisfy the requirements of the
National Environmental Policy Act of 1969 (NEPA).
Introduction
The Commission's goal in the proposed rule is to encourage lower
electricity rates by reducing impediments to wholesale transmission
access and to promote the development of competitive bulk power
markets. A key to competitive bulk power markets is the availability of
transmission services on an open and non-discriminatory basis.
Transmission is the vital link between buyers and sellers of
electricity. All traders of bulk power must have equal access to the
transmission grid if the Nation is to achieve the benefits of robust,
competitive power markets. Market power over transmission service is
the single greatest impediment to such competition. Limitations on
transmission access by transmission owners is preventing efficient
trading from taking place, resulting in consumers paying unnecessarily
high electricity prices.
The Commission intends to manage the transition to competition in
an orderly fashion. Moving to competitive power markets will change
long-standing commercial and regulatory relationships. Utilities have
invested billions of dollars to meet their existing obligations. These
investments have been made under a regulatory compact whereby utility
shareholders expect to recover prudently incurred costs. Competition
may render some of these prudent investments uneconomic. The Commission
believes that past contractual and regulatory practices must be
recognized and past investment decisions made under a regulatory
compact should be honored in the interim during the transition to
competition.
Proposed Action and Principal Alternative
Two cases are proposed to be examined. The proposed rule includes a
generic requirement for public utilities to provide open access non-
discriminatory transmission service, and a framework to govern recovery
of stranded costs. The alternative case involves the Commission
pursuing similar policies on transmission access and stranded cost
recovery, but through a case-by-case approach. The discussion below
will serve as the basis for preparing the EIS. Comments are solicited
on specific analytic elements of the outlined study. The proposed rule
is described below along with the principal alternative to the rule.
This is followed by a discussion of a study to assess the environmental
impacts of the proposed rule and the alternative.
Proposed Rule
The Commission seeks to achieve increased economic efficiency in
wholesale power markets through competition and to allow recovery of
prudently incurred costs stranded by the use of transmission access.
Increased efficiency is promoted through the requirement that all
public utilities file non-discriminatory, open access transmission
tariffs to make transmission service available to all wholesale market
participants. The Commission intends to require all public utilities to
take transmission service for their own wholesale power transactions
under this tariff. Recovery of transition costs is addressed by
proposing that public utilities be allowed to recover prudent,
legitimate, and verifiable stranded costs and to assign directly such
costs to certain departing wholesale customers.
[[Page 36754]]
Through the combination of open access and stranded cost policies,
the Commission intends to provide a smooth transition period that takes
the electricity industry from traditional regulation of localized
wholesale power transactions to competitive power markets that have a
regional, or perhaps national, scope. The Commission does not expect
that power markets will become competitive overnight. How rapidly
competition evolves will be determined, in part, by the markets
themselves. The Commission cannot dictate such progress--it can only
accommodate the needed changes. Consequently, the Commission believes
that progress toward efficient power trading will not happen all at
once and that any environmental consequences of changed trading
patterns will occur at a corresponding pace.
The Commission's proposed rule will not unilaterally bring
competition to an industry where it otherwise would be absent. Rather,
the proposed rule will hasten and rationalize the progress toward
competitive power markets already under way. Congress endorsed
competition in wholesale power markets in the Energy Policy Act of 1992
(EPAct). To some extent, evolving competition is being accommodated
under the Commission's authority to order transmission service under
Section 211 of the Federal Power Act as modified by EPAct, and under
case-by-case exercise of the Commission's authority under section 205
of the FPA to ensure that rates, terms and conditions of service are
not unduly discriminatory. The proposed rule is intended to make this
transition in a more consistent and non-discriminatory manner than
would be possible under a case-by-case application of our authority
under Section 211 or other provisions of the Federal Power Act. In
addition, power markets are becoming more competitive through actions
of customers desiring cheaper power. These factors must be considered
when examining the environmental consequences of the proposed rule.
The proposed rule has the potential to increase the availability,
diversity, and competitiveness of power. The potential benefits
include:
Reducing the cost of electricity to consumers by promoting
access of buyers and sellers to one another;
Promoting the efficient use of facilities and resources by
electric utilities;
Avoiding wasteful investments under the current system of
regulation of generation; and
Providing a number of indirect benefits, such as reducing
administrative burdens and costly litigation.
Principal Alternative
The principal alternative to the proposed rule is that of no-
action, i.e., case-by-case implementation by the Commission. That is,
the Commission could choose not to address generically the issues
raised in the proposed rule. Under this alternative, transmission users
would seek transmission access under section 211 or through open access
tariffs filed under Section 205. The resulting patchwork of
transmission service conditions could inhibit the development of
regional bulk power markets. And under this alternative, the Commission
would consider whether to allow public utilities to recover stranded
costs on a case-by-case basis, should they seek such recovery. Compared
to a generic rule on stranded cost recovery, this could increase
uncertainty for market participants.
Proposed Study and Analytic Issues
The basic approach of the analysis will be to postulate likely
market responses to the proposed rule and then to analyze the resulting
effects on utility decisionmaking, institutions, and the environment.
The results of the analysis will be used to assess the economic and
environmental impacts of the proposed rule. The analysis will have a
national scope--but with significant regional detail--to assess
potential environmental impacts of the proposed rule.
The principal effect of the proposed rule could be to change
historical patterns of wholesale electricity trade in the United
States. Buyers and sellers of bulk power will have expanded
opportunities to trade with market participants that were previously
not available because of a lack of transmission access. In the near
term, the proposed rule may cause changes in the dispatch and operation
of generators. Some regions may experience changes in fuel use. This
would have certain economic consequences, as well as certain
environmental consequences. In the long term, a different pattern of
newly constructed generation plants and transmission lines may emerge
as a result of the proposed rule.
The analysis will assess the consequences of the proposed rule in
two main areas:
Socioeconomic impacts.
Environmental impacts of changes in fuel mix of power
generation (coal, oil, gas, nuclear, wind, solar, etc.).
Potentially, the most significant of the impacts will be the level,
type, and location of air emissions. Selected regions will be
identified to indicate the types of changes in environmental risks
attributable to the proposed rule. The analysis would be designed to
assess the environmental impacts of the kinds of fuel mix changes that
might result from more open generating markets.
Limits on the Analysis
We do not plan to address site-specific impacts such as cultural
resources, noise levels, geology and soils, EMF effects or specific
terrestrial or aesthetic resource issues. It is impossible to identify
the location of individual powerplants or transmission lines that might
be built as a consequence of the proposed rule. Moreover, any site-
specific issues associated with siting such facilities will be subject
to required environmental reviews by state and local agencies. The
siting issues are not within the Commission's jurisdiction and thus are
excluded from the analysis. However, if commenters believe that such
impacts are identifiable and significant, the Commission requests
specific information that would aid in the evaluation of such impacts.
The EIS Scoping Process
NEPA requires the Commission to review and address concerns the
public may have about proposals that could result from a major Federal
action having a potential for significant impact on the quality of the
human environment. The main goal of issuing this ``scoping'' document
is to focus the analysis in the EIS on the important issues, and to
separate those issues that are insignificant and do not require
detailed study.
The EIS will discuss impacts that could occur as a result of
implementing the proposed rule. The Commission requests comments on the
environmental impacts that may result from implementing the proposed
rule. If commenters believe mitigation is necessary, commenters should
recommend specific mitigation to lessen or avoid impacts.
Preparation of the EIS
Our independent analysis of the issues will result in the
publication of a Draft EIS which will be mailed to federal, state and
local resource agencies, industry, other interested groups and
individuals, and the Commission's official service list for these
proceedings.
A 45-day comment period will be provided for reviewing the Draft
EIS. We will consider all comments on the Draft EIS and revise the
document, as
[[Page 36755]]
necessary, before issuing a Final EIS. The Final EIS will include our
response to each comment received. We expect the Final EIS to be
completed by March 1996.
Public Participation and Scoping Meeting
All commenters should send relevant information that will assist us
in conducting an accurate and thorough analysis of the potential
environmental impacts of the proposed rule. You should comment on the
identified environmental issues, the potential environmental effects
and alternatives of the proposed rule, and measures to avoid or lessen
environmental impact. The more specific your comments, the more useful
they will be.
Please file your comment letter and only relevant studies or
reports as noted below. In addition, commenters are requested to submit
a copy of their comments on a 3\1/2\ inch diskette formatted for MS-DOS
based computers. In light of our ability to translate MS-DOS based
materials, the text need only be submitted in the format and version
that it was generated (i.e., MS Word, WordPerfect, ASCII, etc.). It is
not necessary to reformat word processor generated text to ASCII. For
Macintosh users, it would be helpful to save the documents in Macintosh
word processor format and then write them to files on a diskette
formatted for MS-DOS machines. All comments should be submitted to the
Office of the Secretary, Federal Energy Regulatory Commission, 825
North Capitol Street, N.E., Washington, D.C. 20426, and should refer to
Docket Nos. RM95-8-000 and RM94-7-001.
Send a copy of the letter to the following individuals:
William Meroney, Office of Economic Policy, Federal Energy Regulatory
Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426,
Telephone: (202) 208-1069, Fax: (202) 208-1010
Leon Lowery, Office of Electric Power Regulation, Federal Energy
Regulatory Commission, 825 North Capitol Street, N.E., Washington, D.C.
20426, Telephone: (202) 208-0919, Fax: (202) 208-0180
Scoping comments must be received no later than August 11,
1995.
In addition to asking for written comments, we invite you to attend
our public scoping meeting. This meeting will be held at 10:00 am,
Friday, September 8, 1995 in Hearing Room 1, 810 First Street, N.E.,
Washington, D.C.
The public meeting will provide another opportunity to offer
scoping comments. Those wanting to speak at the meeting can call the
EIS Project Manager, William Meroney, to pre-register their names on
the speaker list. Only those people on the speaker list prior to the
date of the meeting will speak. Priority will be given to people
representing groups. A transcript of the meeting will be made to
accurately record your comments.
Environmental Mailing List
If you do not want to send comments at this time but still want to
receive copies of the Draft and Final EIS, please return the
Information Request (see appendix 1 2) to either William Meroney
or Leon Lowery by mail or fax. If you do not return the Information
Request, you will be taken off the mailing list.
\2\ This appendix is not being published in the Federal
Register, but is available from the Commission's Public Reference
Room.
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Lois D. Cashell,
Secretary.
[FR Doc. 95-17523 Filed 7-17-95; 8:45 am]
BILLING CODE 6717-01-P
