Message-ID: <8263837.1075846372188.JavaMail.evans@thyme> Date: Wed, 23 Feb 2000 09:58:00 -0800 (PST) From: linda.lawrence@enron.com To: daniel.allegretti@enron.com, roy.boston@enron.com, jeff.brown@enron.com, susan.covino@enron.com, paul.kaufman@enron.com, steven.kean@enron.com, robin.kittel@enron.com, leslie.lawner@enron.com, susan.landwehr@enron.com, richard.shapiro@enron.com, james.steffes@enron.com, lisa.yoho@enron.com, elizabeth.linnell@enron.com, janine.migden@enron.com, christi.nicolay@enron.com, susan.mara@enron.com, joe.hartsoe@enron.com, robert.hemstock@enron.com, mary.hain@enron.com, jeff.dasovich@enron.com, tom.delaney@enron.com, patrick.keene@enron.com, harry.kingerski@enron.com, sarah.novosel@enron.com Subject: Commission Meeting - February 23, 2000 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Linda L Lawrence X-To: Daniel Allegretti, Roy Boston, Jeff Brown, Susan T Covino, Paul Kaufman, Steven J Kean, Robin Kittel, Leslie Lawner, Susan M Landwehr, Richard Shapiro, James D Steffes, Lisa Yoho, Elizabeth Linnell, Janine Migden, Christi L Nicolay, Susan J Mara, Joe Hartsoe, Robert Hemstock, Mary Hain, Jeff Dasovich, Tom Delaney, Patrick Keene, Harry Kingerski, Sarah Novosel X-cc: X-bcc: X-Folder: \Steven_Kean_Dec2000_1\Notes Folders\Reports X-Origin: KEAN-S X-FileName: skean.nsf John & Hengerer's summary of today's Commission meeting. February 23, 2000 MEMORANDUM TO: Interested Clients FROM: John & Hengerer RE: Commission Meeting -- February 23, 2000 At today's meeting, the Commissioners approved the consent agenda and discussed the following items. HYDRO AGENDA Public Utility District No. 1 of Okanogan County, Washington, Docket No. P-10536 This draft order rescinded the hydro license issued to Public Utility District No. 1 of Okanogan County, Washington (Utility District) after the National Marine Fisheries Service (NMFS) conditioned the license on construction of a fish ladder that would have rendered the proposed project uneconomic. Commissioner Hebert moved the item to the discussion agenda to highlight the difficulties incurred in hydro licensing proceedings due to the conditioning authority granted to certain federal agencies, such as NMFS. Because such agencies possess the authority to impose costly environmental conditions, Commission Hebert stated, they essentially hold veto power over project applications. Commissioner Hebert urged federal agencies to weigh potential public benefits before imposing costly environmental conditions that doom proposed projects. Avista Corporation, Docket No. P-2058 In this draft order, the Commission granted a hydro license to Avista Corporation. Chairman Hoecker moved the item to the discussion agenda to champion the use of alternate licensing procedures and applaud the parties for negotiating the settlement approved by the draft order. Avista began negotiating for the license in 1996 and eventually reached a settlement with 26 stakeholders. According to Chairman Hebert, such negotiations maximize benefits, reduce application costs, and set a positive example for other parties to follow. Although the other Commissioners generally echoed Chairman Hoecker's praise, Commissioner Hebert criticized the draft order for not quantifying the environmental benefits of Avista's proposed project. ELECTRIC MATTERS New England Power Pool, ISO New England, Docket Nos. ER00-984, et al. Price caps on the ISO's Operating Reserve and Operable Capability markets were extended by the Commission in this draft order, Commissioner Hebert dissenting. Both caps expired on December 31, 1999. The cap on the Operating Reserve Market was extended until June 30, 2000, or until the ISO submits a market redesign plan to correct market flaws. The cap on the Operable Capability Market was extended until February 29, 2000, after which the market will be terminated. According to the ISO's filing, which was approved in this draft order, the Operable Capability Market duplicates other ISO markets and is no longer needed. Commissioner Hebert dissented and moved the item to the discussion agenda to express his disapproval of price caps, both in general and in this particular proceeding. In general, Commissioner Hebert believes that price caps remove the natural incentives created by a competitive market. In this particular proceeding, Commission Hebert argues that supposedly temporary price caps have become a Acrutch@ relied on by the ISO. Moreover, Commissioner Hebert does not believe that the ISO market is flawed and contends that the ISO has failed to illustrate the existence of any flaws. For these reasons, Commissioner Hebert would not have extended the price caps. Regional Transmission Organizations (Order on Rehearing), Docket No. RM99-2 In this draft rehearing order, while making relatively minor clarifications and revisions, the Commission unanimously affirmed the policy decisions outlined in Order No. 2000.89 FERC & 61,285 (1999) Issued in December 1999, Order No. 2000 outlined the Commission's policy with regard to RTO formation and adopted regulations governing the filing and review of RTO proposals. This draft order affirmed the voluntary and flexible approach adopted by Order No. 2000, as well as the RTO functions and characteristics outlined in that order. However, the draft order does include a number of relatively minor revisions and clarifications. Specifically, the draft order: (i) denies requests to phase out passive ownership of RTO facilities by transmission owners, but clarifies that passive owners must not interfere with day-to-day RTO operations; (ii) clarifies Section 205 tariff filing rights by reiterating that RTOs should have control of their own tariffs, while transmission owners should determine their own return on equity; (iii) incorporates Order No. 2000's audit requirements into Commission regulations, while ruling that the both an RTOs ownership and governance structures are subject to audit; and (iv) clarifies that public utility compliance filings must specify what efforts were made to include RTO participation by public cooperatives. In approving the draft rehearing order only two months after the issuance of Order No. 2000, the Commission hopes that the ongoing collaborative process will be able to focus on the basic elements of RTO formation, rather than on the contentious issues raised in the rehearing requests. Order No. 2000's collaborative process began this month and is scheduled to run through April 2000. Public Utilities not currently participating in a regional transmission entity are required to make a compliance filing by October 15, 2000, while those utilities that are already a part of a regional entity must make a compliance filing by January 15, 2001. Midwest Independent Transmission System Operator, et al., Docket Nos. ER00-448, et al. In this draft order, the Commission unanimously (Commissioner Massey concurring) voiced its support for the binary RTO model proposed in this proceeding, but declined to issue the requested declaratory order until a final proposal is filed. The binary model proposed by Midwest ISO participants would require the ISO to delegate certain functions to a for-profit transco, while retaining other functions and maintaining responsibility for overseeing the transcos activities. The draft order commends parties for developing the proposal and finds that the proposed binary model generally conforms to the Commission's RTO mandate. However, the Commission declined to make a final determination until a complete proposal is submitted. Commissioner Massey's concurrence raises concerns associated with the sharing of power between an ISO and a transco. Commissioner Massey believes that such a division of power may be counterproductive and urges the parties to address the issue in their final filing. PIPELINE MATTERS ANR Pipeline Company, Docket No. CP99-241 ANR's proposal to increase mainline capacity from Joliet, Illinois, into Wisconsin was approved in this draft order. Specifically, the draft order permits ANR to construct an additional 20,000 horsepower of mainline capacity, thereby increasing mainline capacity into Wisconsin by 109,000 Dth/day by November 1, 2000. The Commission approved ANR's proposal after concluding that demand in Wisconsin justifies the expansion. The expansion approved in this draft order is part of ANR's SupplyLink proposal (to be built in conjunction with the Independence/MarketLink project). ANR decided to proceed with the Joliet-to-Wisconsin expansion after the SupplyLink/Independence/MarketLink project was delayed due to Commission concerns that the project was not adequately supported by market demand. Although the expansion approved in this draft order was unrelated to the contentious portions of the larger project, Commissioner Hebert nonetheless moved the item to the discussion agenda to express his belief that market demand justifies the Independence/MarketLink project. Specifically, Commissioner Hebert cited recent spikes in heating oil prices as evidence that gas demand in the northeastern United States more than justifies the project. Commissioner Breathitt disagreed with Commission Hebert and argued that the price of heating oil does not necessarily correlate to natural gas demand.