Subject: Aquila v. Entergy
From: [email-masked]
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Date: Wed, 15 Mar 2000 07:37:00 -0800 (PST)

On 3/30/98, Aquila filed a complaint at FERC against Entergy that Entergy 
reserved all of the firm import capacity (2000 MW) at four key interfaces, 
even though Entergy did not designate any off-system network resources to 
cover these reservations.  Aquila's transmission requests were denied or 
curtailed causing it to suffer financial losses.  Entergy responded that 
Aquila had a "fundamental misunderstanding" of Order No. 888 et seq. and that 
a transmission provider may deny tariff requests, if that transmission 
provider's own reservations "are based on the legitimate reliability needs" 
of its bundled retail customers.

Reservation facts:  Entergy posted on its OASIS site that it reserved 2000 MW 
of capacity at its interfaces with TVA (1100 MW), Southern (400 MW), Arkansas 
Electric Coop (250 MW), and Union Electric (250 MW) under the label "Firm 
Import for Native Load."  Entergy did not designate network resources in the 
same manner that it required from Aquila and other network customers.  
Entergy explained that its reservations were needed "to meet the immediate 
reliability needs of the Entergy System and to accommodate native load growth 
over the next few years."  (Entergy later told FERC that this was needed for 
"current loads" only--not future growth.)

Entergy argued to FERC that it is able to satisfy its generation reserve 
requirements, while maintaining lower amounts of generating capacity within 
its control area, only because it can rely on the 2000 MWs at issue to reach 
neighboring control areas, therefore this is "a legitimate reliability 
need."  Entergy then claimed that Sec. 28.2 of the pro forma tariff (that 
requires a transmission provider, on behalf of its Native Load Customers, to 
designate its network resources in the same manner as any Network Customer) 
does not apply to a utility's uses of its transmission system to serve 
bundled retail customers. 

In a draft order issued today, FERC disagreed with Entergy and found that 
Entergy reserved virtually all of the firm capacity on four key interfaces, 
even though it had no off-system network resources.  Instead, Entergy used 
its firm transmission reservation to purchase power whenever it was 
economical.  Entergy denied all other firm transmission requests and 
entertained non-firm transmission requests only when it was unable to make an 
economic deal for itself.  Even though Entergy is not required to take 
transmission under its tariff for retail load, it is required to designate 
network resources and loads.  The off-system resource must be generation 
owned by the transmission provider or under contract.  

Although FERC found that Entergy violated the OATT and normally the 
transmission should be released, Entergy has now begun to designate network 
resources (these new procedures are pending at FERC).  Aquila also asked FERC 
for its financial losses of $281,000, but FERC said it lacked authority to 
order money damages.  FERC would order refunds of the transmission rate, but 
Aquila did not allege that it paid for services it did not receive.

Interestingly, FERC told Aquila that it could bring this matter up in Entergy 
Power Marketing's currently pending 3 year update of its market-based rates 
stating that  use of the transmission system on a non-preferential basis is a 
fundamental condition for market-based rates.  (Entergy argued against this 
saying that there was no allegation that it had profited.  FERC rejected this 
argument.)  Dynegy has already protested Entergy's 3 year update stating that 
Entergy is exercising market power by limiting new generation through poor 
interconnection procedures and agreements.  Enron filed one sentence support 
of Dynegy's protest.  I think this is why Entergy recently filed its 
interconnection agreement and procedures at FERC.

Comm. Herbert dissented saying that this was a "technically" from several 
years ago.

Watch for this type of activity from other providers.