5.4. ERMUSR 03-20-2007 - Laserfiche WebLink

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to the bulk transmission grid is fair to all ~a~holesale market participant_ti. In initial comments on Lhe NOPR Filed in August 2006, APPA told FERC that discrete changes are needed to the OP:I"T, especially in the areas of transmission planning and joint transmission Facilities ownership, along with vigorous enforcement of the tariff's provisions. APPA said that afull-scale overhaul, however, is not neededIn September of 2006, APPA filed reply comments on the NOPR in which it urged the Commission to "not excuse RTOs from ih~e requirement to demonstrate that their non-OA'IT transmission regimes are consistent with or superior to OA'1 T ser~~ce," among other things. Finally, in llecember 2006, APP: filed supplemental comments on the issue of whether GATT transmission providers should be required to administer generation redispatcll markets. APPA argued that such markets ^~ i would be complex, difficult for transmission providers owning generation to administer, and would not yield substantial improvements in OAT"T transmission service. FERC is expected to issue a final rule on OATT reform in the first part of 2007. PUHCA and the Energy Policy Act of 2005 EPAct05 repealed the Public Utility Holding Company Act of 1935 (PUI-ICr1). At the same time, Congress enhanced FERC and state utility commission access to holding company books and records. In addition, Congress expressly ensured that, with the repeal of FUIICA, FERC would retain its authority to require just and reasonable rates, prevent cross- subsidization, and issue such rules as are necessary to protect consumers with regard to ® holding company affiliates. On llecember 8, 2005, FERC issued a Final Rule to implement these new authorities (now known as PUHCA 2005). APPA believed that FERC made agood-faith effort in crafting this Final Rule. Nonetheless, inJanuary 2006 APPA joined the National Rural F,lectric Cooperative Association (NRECA) in . seeking rehearing on certain aspects of the Final Rule, including FERC's decision not to include concrete measures to avoid cross-subsidization of unregulated business activities by regulated public utilities and to forego the requirement that public utilities file all relevant cost allocation agreements. In April of 2006, FERC made some limited changes in its rehearing order, but it did not grant the substantive relief APPA and NRECA had sought. In . response to further rehearings filed by organizations on the opposite side of the issues from APPA and NRECA, FERC issued another order in July of 2006, in which FERC ruled that a ^ holding company may exclude the revenue of out-of-state exempt wholesale generators, foreign utility companies, and qualifying facilities when determining whether the holding company qualifies as a "single-state holding company system." APPA and NRECA sought rehearing of this nrling, arguing that it creates a loophole that allows large interstate holding companies to avoid regulatory scrutiny as long as their regulated public affiliates operate . primarily in one state. This rehearing application is still pending as of this writing. Market Manipulation Authority under the Energy Policy Act of 2005 EPAct05 substantially expanded FERC authority to prohibit and to impose penalties for market manipulation. The statute prohibits the submission of false information to a federal . agency regarding the price of electricity or availability of transmission capacity with the intent to fraudulently affect the data being compiled by that agency. There is a blanket prohibition on deliberately using a manipulative contrivance or device in connection with the purchase or sale of electric energy or transmission service subject to FERC's jurisdictionThe FPA now permits substantial civil and criminal penalties of up to $1,000,000 per occurrence and five . years in prison if these prohibitions are violated. The market manipulation provisions contained in EPAct05 are applicable to all wholesale market participants, including public r www.APPAnet.org continued