03-365. Order Establishing Procedures Before Commissioners: Pat Wood, III, Chairman; William L. Massey, and Nora Mead Brownell

Issued December 30, 2002.

1. On December 6, 2002, the United States Department of Energy (DOE) referred to the Commission (Referral) the matter of compensation for costs incurred pursuant to an emergency order issued under section 202(c) of the Federal Power Act (FPA). DOE requests that the Commission “conduct such proceedings as it determines to be appropriate and issue a final order resolving these matters.” In this order the Commission initiates procedures as requested. This order establishes procedures which will enable the Commission to resolve the issues in a timely manner.

2. In order to provide notice to interested parties, this order will be published in the Federal Register. Motions to intervene are due on or before 10 days after the date of publication.

3. On August 26, 2002, pursuant to section 202(c) of the FPA ^[1] and section 301 of the DOE Organization Act,^[2] the Secretary of Energy issued Order No. 202-02-1 (Emergency Order). In the Emergency Order, the Secretary determined that an emergency existed on Long Island “due to a shortage of electric energy, a shortage of facilities for the generation of electric energy, a shortage of facilities for the transmission of electric energy and other causes.” Further, the Secretary determined that the issuance of the Emergency Order would alleviate the emergency and serve the public interest. Therefore, the Secretary directed Cross-Sound Cable Company, LLC (CSC) “to operate the Cross-Sound Cable and related facilities in order to transmit and deliver electric capacity and/or energy when, as and in such amounts as may be scheduled and purchased by the Long Island Power Authority (LIPA).” The Emergency Order further directed CSC “to take such actions as are necessary in order to energize the [CSC] facilities.”

4. As noted in the Referral, CSC and LIPA have not been able to reach agreement on appropriate compensation relating to the Emergency Order. Therefore, pursuant to 10 CFR 205.376 (2002), DOE requests that the Commission apply such standards and procedures as it considers appropriate to resolve this matter.

5. In order to ascertain the positions of CSC, LIPA and any other interested party regarding the appropriate compensation for the emergency period, the Commission orders the filing of Initial Briefs on or before January 31, 2003 explaining the party's position and providing evidentiary support for that position. Parties may rebut each other's positions in Reply Briefs, which are due on or before February 28, 2003. Parties do not need to file Initial Briefs in order to file Reply Briefs.

6. In authorizing the emergency transmission and delivery of electric capacity and energy, the Emergency Order limited the service provided by CSC for LIPA as follows:

[T]his order * * * shall be limited to requiring the transmission and delivery of such electric capacity and/or energy as is necessary in the judgment of the New York Independent System Operator to meet the supply and essential reserve margin needs of LIPA * * * and * * * prior to exercising its judgment as required by this order, the New York Independent System Operator must consult with ISO-New England, Inc. to ensure that the scheduling of such electric capacity and/or energy will not violate system operating criteria * * * (Emphasis added.)

7. The documents in the Referral indicate that “the day that DOE issued the [Emergency] Order, LIPA contacted the NYISO and remained in almost daily telephone and e-mail communication with NYISO to determine what those emergency operating and scheduling protocols would be.” The documents further indicate that the “Implementation Protocol for Emergency Operation of the Cross Sound Cable” (Protocol for Emergency CSC Operation) was not made available to LIPA until NYISO sent a facsimile transmission to LIPA on September 23, 2002, one week before the Emergency Order expired.

8. To help the Commission understand the reasons for the delay in establishing the Protocol for Emergency CSC Operation as ordered by the Secretary, and to help the Commission ensure that such a delay does not occur again, NYISO and ISO-New England are hereby directed to answer the following questions on or before January 31, 2003:

A. Explain in detail why NYISO and ISO-New England did not establish the Protocol for Emergency CSC Operation within a week or less of the issuance of the Secretary's Emergency Order.

B. Explain in detail the processes followed and the reasons why it took 38 days to issue the Protocol for Emergency CSC Operation.

C. Explain whether the same processes would be used if the Secretary issued another emergency order. If not, what changes would be made?

D. The fourth paragraph of the Protocol for Emergency CSC Operation states:

All costs associated with energy provided pursuant to the [Emergency] Order and this Protocol shall be governed by the Emergency Transactions Agreement entered into between the NYISO and the New England Power Pool on August 14, 2000.

(1) Identify and support all costs associated with providing energy under the Emergency Order including expenses associated with establishing the Protocol for Emergency CSC Operation.

(2) Provide a copy of the August 14 Emergency Transactions Agreement and the protocols used to support such agreement.

E. Is there a scheduling and operating protocol which will be used if another emergency order is issued or when the CSC is fully operational?

9. Any comments parties have with respect to the answers provided by the ISOs may be included in separate sections of the Initial or Reply Briefs.

The Commission Orders

(A) Procedures for Commission action on the Referral are hereby established as discussed in the body of this order.

(B) The NYISO and ISO-NE are hereby directed to submit responses, as discussed in the body of this order.

By the Commission.

Magalie R. Salas,

Secretary.

Footnotes

1.  16 U.S.C. 824a(c) (2000).

2.  42 U.S.C. 7151(b) (2001).