Cost-of-service rates to market-based rates to price caps to ?!#?#!?

Electricity Journal

Volumn 14, Issue 4, 2001, Pages 61-72

  Bogorad, Cynthia S ^a   Penn, David W ^b  

^a Spiegel and McDiarmid   (United States)

^b American Public Power Association   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COST OF SERVICE; MARKET FORCES; MARKET-BASED RATES; PRICE CAPS; SERVICE RATES;

COMMERCE;

EID: 0002483294     PISSN: 10406190     EISSN: None     Source Type: Journal    
DOI: 10.1016/S1040-6190(01)00198-1     Document Type: Article

References (9)

1. Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953 (1986). This general rule is subject to a potential exception in the context of a state examination of the prudence of the FERC-regulated purchase or the failure to take prudent steps to mitigate losses resulting from that purchase. Pike County Light & Power Co. v. Pennsylvania Pub. Util. Comm'n, 465 A.2d 735 (Pa. Commn. Ct. 1983); New Orleans Pub. Serv., Inc. v. Council of New Orleans, 911 F.2d 993 (5th Cir. 1990). However, that exception has not been expressly adopted by the Supreme Court. See Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354, 373-74 (1988); Nantahala, 476 U.S. at 972.
2. The applicability of Nantahala during an agreed-upon retail rate freeze (as is currently the case in California) is not clear. This issue is among those before the United States District Court for the Central District of California in Southern California Edison v. Lynch, Case No. CV00-12056-RSWL (filed Nov. 13, 2000).
3. FERC has asserted jurisdiction over the "unbundled" transmission service used by retail customers to access suppliers in a retail choice environment. This assertion was upheld in Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000) ("TAPS"). The D.C. Circuit's opinion leaves open the door for FERC to choose to exercise jurisdiction in the future over all interstate transmission by public utilities, including transmission used for "bundled" retail electric sales (where transmission and electric energy are sold together under one rate). The Supreme Court recently agreed to hear the petitions for certiorari filed by both sides of this jurisdictional debate. New York v. FERC, 121 S. Ct. 1185 (Feb. 26, 2001) (Nos. 00-568 and 00-809).
4. In some states, the state regulatory commission has direct statutory authority over utility reserve levels. See, for example, Florida's Grid Bill, Fla. Stat. §§ 366.04, 366.05, 366.055(1) (2000). In other states, state commission authority over reserves is indirect, an outgrowth of statutory authority over the utility's retail rates and service adequacy.
5. See, for example, Gainesville Utils. Dep't v. Florida Power Corp., 402 U.S. 515 (1971).
6. See Promoting Wholesale Competition Through Open-Access Non-Discriminatory Transmission Services by Public Utilities: Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888-A, III FERC Stats. & Regs. ¶ 31,048, at 30,354-55 (1997) ("we believe there previously has been an implicit obligation to serve at wholesale in many cases," but a utility seeking to recover stranded cost is subject to a "heavy burden" of "demonstrat[ing] that it incurred costs . . . based on a reasonable expectation of continuing service to that customer beyond the end of the contract"), aff'd,
7. TAPS, 225 F.3d at 702.
8. Compare Pacific Gas & Elec. Co., 44 FERC ¶ 61,010, at 61,050-51 (1988),
9. reh'g denied, 45 FERC ¶ 61,061 (1998):