5.1. ERMUSR 06-14-2016 - Laserfiche WebLink

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which, in effect, would permit jurisdictional utilities to recover under certain conditions so-called "stranded costs" for generating and other facilities from wholesale customers of a utility which use open access transmission service to purchase from other power suppliers. The other final rule, Order No. 889, (i) implements standards of conduct for jurisdictional utilities that offer open access transmission services to ensure that transmission owners and their affiliates do not have an unfair competitive advantage in using transmission to sell power, and (ii)requires those jurisdictional utilities to establish or use an electronic "Open Access Same-time Information System" ("OASIS") to share transmission-related information (including information about available capacity) on the Internet, and to require that those jurisdictional utilities also obtain information about their transmission systems for their own wholesale power transactions, such as available capacity, in the same way that their competitors do through the OASIS. In 2007, the FERC issued Order No. 890 which, as modified and clarified on rehearing, updated Order Nos. 888 and 889. Order 890 did not substantially change the requirements or jurisdictional reach of those orders with respect to the Utility. The Utility, as a non jurisdictional utility, is not directly subject to Order No. 888, 889 and 890. Therefore at this time, the Utility is unable to predict what effect, if any these rules will have on the Utility. Energy Policy Act of 2005 The Energy Policy Act of 2005 (the"2005 Act") made additional changes to the federal regulation of the electric utility industry,some of which affect the Utility. The 2005 Act required the creation of an electric reliability organization that has authority to establish and enforce mandatory reliability standards on a nation-wide basis. The electric reliability organization is subject to FERC's oversight. FERC approved the North American Electric Reliability Council("NERC") as the electric reliability organization and has approved nation-wide reliability standards. FERC has also approved NERC's delegation of certain functions to regional reliability organizations, including the Midwest Reliability Organization("MRO"). The standards that are administered by NERC and the MRO apply to all users,owners,and operators of the bulk power system including the Utility. The 2005 Act requires the Department of Energy to designate national interest electric transmission corridors,where constraints or congestion adversely affect consumers. FERC may authorize the siting of transmission facilities within those corridors if the states have failed to act. The courts held that FERC may act when a state, rather than failing to act, has denied an application for siting. It is anticipated that FERC will continue to assert broad authority to authorize the siting of transmission facilities and that Congress might act expressly to expend FERC's authority. The 2005 Act requires price transparency and prohibits market manipulation for all wholesale markets. The requirements apply to all entities that participate in those markets, including the Utility. Retail Electric Service Territories The State of Minnesota(the"State")presently prohibits other electric utilities from serving areas within a municipality which are presently receiving retail electric service from a municipal utility. The State permits municipal utilities to expand their retail electric services to additional areas located within the municipalities' boundaries,including areas added by way of annexation. When municipal utilities expand their retail electric service territory, they are required to pay compensation to any other displaced electric utility. The compensation due to such displaced utilities is determined by the courts, utility regulatory commissions,or by mutual agreement between the two parties. -7 - 125