Below are summaries of the major cases discussed at today's FERC Open Sunshine Meeting.  More detailed summaries and analysis of the attendant orders will be included in the Weekly Report next week, or may be sent out as supplemental reports as the orders are issued.


OFO Presentation and Discussion, GX01-1 [Item G-1]

In a Power Point presentation Staff discussed OFOs, citing past customer concerns that gave rise to Order 637 revisions, and recommending further remedies in the form of monitoring mechanisms (see bullets from presentation below).  

The crux of the discussion among the three Commissioners (Commissioner Massey was absent due to illness) is that FERC will monitor pipeline OFO habits proactively to look for patterns of abuse on particular systems. Such a pattern could the need for additional facilities to alleviate constraint points.

Commissioner Breathitt agreed to the approach outlined, but indicated that it would be prudent to allow Order 637 revisions time to work. She noted that the issue is and has been pipeline specific, not industry-wide.  Commissioner Brownell also clarified that, though the monitoring mechanism (through EBB postings and reports to Commission) is new, the Commission has not seen a recent pattern of abuse - the mechanism is designed to anticipate future problems.
 
Presentation bullets:

Commission's Goals

Ensure reliable service;
Minimize OFOs, maximize market forces and customer flexibility;
Give shippers information needed;
Monitor OFO abuse to identify system constrain points.

Initiatives to Achieve Goals

Order 637 to enhance market design rules;
Market monitoring;
Necessary infrastructure additions.

OFO Definition

Issued by pipelines to maintain service reliability;
Can be system-wide or limited to specific pipeline segments;
Typically restricts use for receipt/delivery points;
Requires shippers to stay in balance at tightened tolerance levels.

OFO Addressed in Order 637

Too ill defined; too large in scope;
Remains in effect too long;
Market affiliates unduly benefit;
Shippers not informed on timely manner;
Level of OFO penalties excessive.

Order 637 Remedies

Better define OFO;
Develop a continuum of emergency measures;
Timely inform shippers of OFO;
Set proper OFO penalty level and credit revenues to shippers;
Require OFO activity report.

Market Monitoring

Staff will oversee OFO activity;
Oversight will rely on EBB postings; pipeline reports, and other sources.


Efficient and Effective Collection of Data,GX01-2  [Item G-22]

Chairman Wood called this item for discussion in response to queries from the American Public Gas Association (APGA) about what actual market data is generally available for the natural gas industry.  This issue came out in part due to the AGA storage data error that occurred a month or so ago.  APGA suggests the following information be available:
1.	Production
2.	Production capability (and resulting utilization rate based on #1 and #2)
3.	Pipeline capacity
4.	Operational capacity (and resulting utilization rate based on #3 and #4)
5.	End-use by customer class

Because of the AGA "hiccup" on its data storage numbers, Chairman Wood would like to see more than one data source for important market information (though it may not be FERC's job to collect such data). Commissioner Brownell suggested the establishment of a stakeholder group to determine what kind of information is needed, if any information is collected and not used, and how collected information will serve the market.  Staff noted that several information collection items are being developed for the 2002 FERC Business Plan, and the APGA list may be incorporated into that effort. 

East Tennessee Expansion for new generation, CP01-80  [Item C-1]

This case, in which an East Tennessee expansion to serve a new generation load is approved, was called by Chairman Wood in response to a specific issue raised by APGA.  APGA is concerned that the "proliferation of pipeline projects" to serve generation are being approved without consideration of the resultant impact on the nation's gas customers - that impact being the exacerbation of natural gas prices across the board.  Chairman Wood said he wanted to clarify publicly that, as stated in the order, it is not FERC's job to decide "why any person needs gas?.the public is best served when the market dictates" price and supply.  He pointed out that the Commission's certificate policy is very direct and clear on risk, and he is comfortable with that state of affairs.

Generation Interconnection, EX01-5  [Item E-1]

The Commission agreed to establish a Straw Man model (probably using the ERCOT model) to modify generation interconnection procedures, service agreements and rights. This process will precede a NOPR that will establish interconnection standards to alleviate complaints, constrictions and delays in processes. Once the Straw Man method is finalized, the NOPR will have an accelerated process in which to comment, reply and implement in a final rule.  This is "Step One" of the process, with "Step Two" to be a subsequent and separate NOPR to examine and resolve the cost responsibility issues related to interconnection standards.  The Commissioners agreed that splitting the financial aspect out into a separate proceeding will allow for an "easy win" on the establishment of standards.  Cost issues include a) allocation between generators and providers and b) common costs recoverable across all users. 

Carolina Power & Light, ER01-1807  [Item E-15]

Chairman Wood called this case for discussion to highlight a change in Commission policy.  In this case, FERC is imposing the gas model for penalty revenue crediting to electric transmission providers.  Described as a "market based imbalance solution," the prospective change requires that revenues from imbalance penalties should be credited back to non-offending customers.  The exact mechanism for such crediting has not been outlined in the Carolina order.  Commissioner Brownell reiterated that this approach "sends the right economic signals" to transmission customers to stay in balance.