FERC budget request reveals
plans for the year

FERC's request for money for the year beginning Oct 1 reveals that the commission intends to identify transmission and pipeline projects with high public benefit and foster their speedy completion -- specifically identifying regionally where grid capacity is needed.
     Another order in the works will require grid operators to report reliability violations -- the first step in exploring what FERC's authority is.
     To help with investment the agency will set a clear recovery process for transmission investment in each region, consistent with a regional transmission plan to foster timely cost recovery for infrastructure investors.
     FERC intends issuing a power plant hook-up rule for large and small generators this year.
     Electric reliability is at the top of FERC's agenda in the coming year, the commission wrote in its FY 2005 budget.
     Yet the request for money at $210 million is a mere 2.7% rise over FY 2004.
     Even so, since FERC recovers the full cost of its operations from assessments on regulated industries, the net appropriation is zero.
     The request doesn't ask for any money resulting from pending legislation on Capitol Hill.
     FERC expects to act on several reliability initiatives in coming months to get ready for summer peaks and to help assure improvements to the grid are made in a timely fashion.
     The commission has an extra $5 million this year earmarked for reliability.  Chairman Pat Wood will use the money to set up a reliability division within the Office of Markets, Tariffs & Rates staffed by 30 engineers and others.
     Under "competitive markets" FERC spotlighted its efforts to develop independent RTOs and competitive electric wholesale markets.
     Expect FERC to encourage standardized business rules to foster market efficiency, to ease market entry and cut transaction costs -- relying where appropriate on NAESB, NERC and the regional groups.
     The commission committed to process filings to create RTOs, ISOs or Independent Transmission Companies (ITCs) within six months of filing or before the applicants' proposed effective date.
     The leadership promised to complete non-controversial rulemakings on industry-wide practice and reliability standards within nine months and controversial ones within a year.
     FERC's Office of Market Oversight & Investigations (OMOI) will be "the cop on the beat" to ensure market players observe the rules.
     The agency intends to report systematically how well markets are operating and whether markets are being manipulated promising to act against individual players to ensure just and reasonable market outcomes.
     FERC wrote about its growing cooperation with agencies such as CFTC in investigating gas and electric price spikes.  (Story originally published in Restructuring Today 2/3/04)

(c) 2004 ghi