Negotiations Continue on BPA's Role in Pacific Northwest RTO

Following the Transmission Improvements Group's ("TIG") regional transmission proposal, made public earlier this month, BPA solicited public comments on whether it should support and join the opposing Grid West proposal, adopt the TIG alternative, push for a combination of the two, or choose to remain separate from the formation of a Pacific Northwest RTO altogether. TIG comprises several northwestern electric utilities. In order to be considered, comments are due to BPA by September 9, 2005. Grid West's proposal focuses on the creation of an independent entity that would manage and control...

Energy Policy Act of 2005 Hands FERC a Long To-Do List

The Domenici-Barton Energy Policy Act of 2005 , signed into law on August 8, mandates that FERC issue several new rules and engage in other new initiatives over the next few months. Milestones of particular significance to the power and natural gas industries are: Within 60 days: Issue regulations on the National Environmental Policy Act pre-filing process for liquefied natural gas (LNG) projects. Within 90 days: Consult with Departments of Interior, Commerce, and Agriculture, to establish procedures for trial-type expedited proceedings for mandatory conditions and fishways on hydropower...

Reliant Settles Litigation over Energy Crisis

Houston-based Reliant Energy announced August 15, 2005, that it has entered into a comprehensive settlement agreement with many of the parties to the ongoing litigation over the 2000-2001 California energy crisis, including FERC staff, the states of California, Oregon and Washington, California's three largest investor-owned utilities, and various private class-action plaintiffs. The settlement will end much of Reliant's liability exposure from sales made during the crisis. Pursuant to a Memorandum of Understanding ("MOU") executed by the settling parties, Reliant will make a $150 million...

Xcel Joins Industry Retreat from Market to Cost-Based Pricing of Wholesales

Xcel Energy Services recently became the latest integrated utility to abandon efforts to convince FERC that it lacks generation market power in its control area and thereby surrender its authorization to make control-area power wholesales at market rather than cost-based prices. Entergy made the same decision in July, as did AEP earlier this year. (See Entergy Will Not Renew Market-Based Rate Authority, August 2, 2005). Motivating this retreat is recognition that these large regional utilities are unlikely ever to convince regulators that they have adequately mitigated their generation market...

Court Vacates Erratic FERC Orders on Congestion Pricing

A federal appeals court recently reversed a FERC order on pricing arrangements in a congested area of ISO-NE region because of the agency's failure to respond to reasonable objections to its mercurial policies on pricing. The opinion demonstrates that the agency's abrupt policy changes will not withstand appellate scrutiny where FERC fails to resolve reasonable objections by appellants. FERC's order concerned the ongoing attempts to devise an appropriate mechanism for compensating generators in a congested area of southwest Connecticut in which there is a risk of generator market power. As...

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