July 12, 2000

Via Internet

MEMORANDUM

TO: Interested Clients
FROM: John & Hengerer
RE: Commission Meeting -- July 12, 2000

At today's Commission meeting, the Commissioners approved the consent agenda 
and then discussed the following items.

 ELECTRIC MATTERS

Order Nos. 888 and 889
Chairman Hoecker announced the D.C. Circuit Court of Appeals' decision 
affirming the Commission's Order Nos. 888 and 889.  In its decision, the 
Court affirmed the open access principles and stated that public utilities 
must provide access to their transmission lines to purchasers and sellers of 
electricity in the interstate market.  While congratulating the Staff for a 
job well done, Chairman Hoecker also noted that these orders are only a first 
step with the next step being Order No. 2000, which is targeted at making the 
national grid available on fairer terms and more efficient for all 
transmission users.  He also added that functional unbundling has proven to 
be inadequate, and that a voluntary regime for reliability is not compatible 
with a competitive market.  Finally, he addressed the lack of investment in 
transmission and generation  and that he expressed hope that there will be 
federal legislation addressing jurisdictional transmission issues.  
Commissioner Massey noted that the Court affirmed a mandatory open access 
approach, thus translating well for a move to a similar mandatory approach 
for RTO policy.  

Open Access Same-Time Information System (OASIS) Phase II, Docket No. RM00-10
Today, the Commission issued, with Commissioner Hebert concurring, an 
advanced notice of proposed rulemaking to begin the development of OASIS, 
Phase II.  By February 15, 2001, interested parties are asked to file 
detailed standards for communication protocols and business practices for 
transmission providers and customers to reserve and schedule transmission.  
The standards are expected to be in operation by December 15, 2001, to 
coincide with the date RTOs are to become operational.  This proceeding is 
considered to be part of a continuing evolution of OASIS in order to account 
for e-commerce and the development of RTOs, while also addressing the need 
for fewer seams among regions, increased communications across regions, and 
an increase in functionality via uniformity.  The Commissioners urged the 
industry to develop an industry consensus in order to allow for an expedited 
implementation process.  

However, in his concurrence, Commissioner Hebert expressed concern that this 
proceeding is unnecessary and/or a distraction to competition and to viable, 
stand-alone transmission entities.  Commissioner Hebert believes that this 
implementation issue already is covered by Order No. 2000's recognition of 
the need for interregion coordination and deeming the RTO as the OASIS 
administrator.  Thus, according to Commissioner Hebert, OASIS Phase II is a A
waste of time@.  He also noted his concern that the tight timetable may 
stifle innovation, while diverting attention away from more important issues 
such as scope and pricing.  
     
 NATURAL GAS MATTERS

Post-Order No. 637 Workshops
The first post-Order No. 637 workshop has been announced for September 19th 
as a technical conference.  The subject matter will include changes in the 
market, rates and service changes needed for a more liquid gas market, the 
role of service standardization, and how the electric generation market can 
be supported.  Details on the conference are to follow shortly.

Independence Pipeline Company, Docket Nos. CP97-315, et al.
As part of the consent agenda, the Commission granted a certificate of 
necessity and convenience to the Independence Pipeline project.

Well Category Determinations, Docket No. RM00-6
In response to a court decision, which called into question tax credits for 
certain wells, the Commission approved a final rule re-instating a process 
for natural gas production well category determinations.  The rule 
establishes certain formations and types of wells that can be classified as 
high cost gas eligible for tax credits under Section 29 of the IRS Code.  The 
rules were established to satisfy the court's ruling that a NGPA section 503 
well determination needed to be performed by FERC for the wells to be 
eligible for the tax credit.  The Commissioners noted that this rulemaking 
provides equity for gas producers who have relied on the tax credit, while 
also fulfilling a Congressional expectation.