On December 28, 2007, the Federal Energy Regulatory Commission ("FERC") issued Order No. 890-A in which it largely affirmed its findings in Order No. 890 and clarified several points in response to the numerous requests for rehearing and clarifications.

Order No. 890 revised the open access transmission requirements established by Order Nos. 888 and 889 a decade earlier. Order No. 890 further defined and refined the scope of required transmission services and the overall environment in which transmission service must be provided on a nondiscriminatory basis, while improving transparency in the operation of the transmission grid. In Order No. 890-A, FERC clarifies some of the transmission provider obligations identified under Order 890.

Compliance filings are due within 60/90 days from publication of Order No. 890-A in the Federal Register

Non-regional transmission organization ("RTO") and non-independent system operator ("ISO") transmission providers and transmission providers whose facilities are not within an RTO/ISO footprint must submit the non-rate terms and conditions of their revised pro forma Open Access Transmission Tariff ("OATT") pursuant to the requirements of Order No. 890-A ("Compliance Filings") within 60 days of publication of the order in the Federal Register. RTO and ISO transmission providers, transmission providers whose facilities are within the footprint of an RTO/ISO and the Western System Power Pool, must submit their Compliance Filings within 90 days of publication. The revised pro forma OATT is attached to Order No. 890-A as Appendix C.

Among the more significant clarifications and modifications FERC provided are the following:

  • Generator imbalance service and penalties. Each transmission provider must offer generator imbalance service to any generator in its control area and may charge hourly generator imbalance penalties under OATT Schedule 9 or hourly energy imbalances under OATT Schedule 4, but not both during the same hour, unless the imbalances aggravate rather than offset each other. Newly completed generating units producing test energy are not excluded from the generator imbalance provisions/penalties, however, the following types of imbalances are exempt from such penalties: (i) generators responding to correct frequency decay; (ii) generators deviating from schedules as a result of directives from reliability coordinators, balancing authorities or transmission operators; and (iii) generators responding to a reserve sharing event with structured arrangements with the transmission provider. The definition of incremental cost for a determination of generator imbalance charges was revised such that the imbalance charge must be based on the last 10 MW dispatched by the transmission provider for any purpose rather than the last 10 MW dispatched to serve native load.
  • Initial 2+ year limit imposed on lifting the price cap on reassignments of transmission capacity. In Order No. 890, FERC lifted the price cap on reassignments of transmission capacity for an indefinite period of time subject to the results of a mandatory FERC Staff report on the development of the secondary market after monitoring two years of transaction data regarding reassignments. In Order No. 890-A, FERC limited the duration of eliminating this price cap until October 1, 2010, however, FERC will determine whether to extend lifting the price cap beyond October 1, 2010 upon consideration of a FERC Staff report due May 1, 2010.
  • Rollover Rights. Within the context of extending the minimum transmission service contract term from one to five years to be eligible for rollover rights, FERC clarified that it did not intend to restrict the rollover right to exactly the same points of receipt and delivery as the terminating service. Order No. 890-A clarified that (i) a transmission provider must allow a rollover, even where a transmission customer changes power suppliers, so long as there is no substantial change in the location or direction of the power flows imposed on the transmission provider's system, and (ii) both network customers and point-to-point customers may roll over a portion of their service if they agree to another five-year term or match any longer-term competing request for that portion of capacity. FERC also clarified the implementation of the new five-year term requirement with respect to new and existing contracts and the applicable pre-termination rollover notice requirements.
  • Network Resources Designation. FERC clarified, among other things, that Order No. 890 did not disturb the pre-existing requirements for the designation of on-system and off-system network resources, but rather focused on the specific information to be provided for off-system resources (i.e., source of supply, control area location, transmission arrangements and delivery point(s) to the transmission provider's system). FERC deferred ruling on the minimum lead-time for designating network resources.

Transmission providers which have legitimate bases for objecting to requirements imposed under Order Nos. 890 and 890-A may seek to amend their OATTs pursuant to Federal Power Act Section 205. For example, Puget Sound Energy, Inc. ("Puget Sound") and Arizona Public Service Company ("APS") made Section 205 filings to eliminate the requirement that transmission customers identify all control area(s) from which power will originate for off-system network resources. FERC granted both authorizations. See Puget Sound Energy, Inc., 120 FERC ¶ 61,232 (2007) and Arizona Public Service Company, 121 FERC ¶ 61, 246 (2007). The deadline for requests for rehearing of Order No. 890-A is January 28, 2008.

For More Information

Follow these links for additional reports on actions taken by the Federal Energy Regulatory Commission at its December 20, 2007 meeting: