Order No. 2000: FERC Calls For Voluntary RTO Formation; Anticipates Rtos By The End Of 2001
Mondaq Business Briefing › United States Law Articles in English (2001)
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Order No. 2000: FERC Calls For Voluntary RTO Formation; Anticipates Rtos By The End Of 2001
On December 20, 1999, the Federal Energy Regulatory Commission ("the Commission") issued Order No. 2000 ("the Final Rule"). In the Final Rule, the Commission called on all transmission owners to join regional transmission organizations ("RTOs") in order to enhance competition in the wholesale electric energy market. The Commission expects each public utility to be a participant in a working RTO no later than December 15, 2001.
The Final Rule does not mandate RTO participation. Instead, the Final Rule offers incentives (both carrots and sticks) to encourage transmission owners to join RTOs voluntarily. The principal stick is that the Commission will evaluate market-based rate filings and merger applications filed by recalcitrant utilities on a case-by-case basis to ensure that the applicants in those proceedings have adequately mitigated market power absent their participation in an RTO. The carrots include maximum flexibility in forming an RTO and the possibility of incentive rates for transmission owners that join an RTO. The only mandatory requirement in the Final Rule is that each public utility must report to the Commission the utility's plans to participate in an RTO in its region or describe its efforts to participate in an RTO. Utilities not members of a Commission-approved regional transmission entity as of March 6, 2000 must submit their reports to the Commission by October 15, 2000. Utilities that, as of March 6, 2000, are members of a regional entity that the Commission has found complies with the independent system operator principles set forth in Order No. 888 must submit their reports to the Commission by January 15, 2001. The Commission also directed that each transmission owner, including nonjurisdictional transmission owners, participate in good faith in the collaborative workshops the Final Rule established to facilitate RTO formation. Form and Function of an RTO The Commission established four minimum characteristics and eight functions that each RTO must satisfy. The minimum characteristics are: Independence Scope and Regional Configuration Operational Authority Short-Term Reliability The functions the Commission will require RTOs to perform are: Transmission Tariff Administration and Design Congestion Management Parallel Path (Lo...See the full content of this document
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