On May 15, 2014, the Federal Energy Regulatory Commission issued a Notice of Proposed Rulemaking (NOPR) proposing blanket waivers of its Open Access Transmission Tariff (OATT), Open Access Same-Time Information System (OASIS) and Standards of Conduct requirements for any public utility that is subject to those requirements solely because it owns, controls or operates Interconnection Customer’s Interconnection Facilities (Generator Tie Lines) and sells electric energy from its Generating Facility.  FERC proposes to find that requiring the filing of an OATT is not necessary to prevent unjust or unreasonable rates or unduly discriminatory behavior with respect to Generator Tie Lines over which FERC could order interconnection and transmission services pursuant to Sections 210, 211 and 212 of the Federal Power Act (FPA).

In its NOPR, FERC proposes to require third parties seeking transmission service over a Generator Tie Line that is subject to the blanket waiver to request interconnection or transmission service under Sections 210, 211, and 212 of the FPA.  FERC also proposes a five-year safe harbor period during which a Generator Tie Line owner subject to the blanket waiver, who initially has excess capacity on the line that it intends to serve its own future generator additions, may establish a rebuttable presumption for priority right over third parties to use that excess capacity.

FERC’s goal in the NOPR is to balance the burden on Generator Tie Line owners, while maintaining access to available capacity for third parties where appropriate.  The new proposal is a departure from its current policy, which requires a Generator Tie Line owner to make excess capacity available to third parties and to file an OATT following a third-party request unless it can justify its planned use of the line.  FERC’s current policy has led to Generator Tie Line owners filing petitions for declaratory orders to show their plans to use their lines, which FERC has generally granted.  In the NOPR, FERC finds that its policy of treating Generator Tie Line owners the same as other transmission facilities for OATT purposes creates undue burden for Generator Tie Line owners without a corresponding enhancement of access, given Generator Tie Line owners’ typical ability to establish priority rights.

In the NOPR, FERC recognizes that filing and maintaining an OATT can be burdensome to Generator Tie Line owners who are not in the business of providing transmission service, and that the pro forma OATT is not a very good fit for the limited services that could be provided over the Generator Tie Line.  Furthermore, the existing obligation for a Generator Tie Line owner to file an OATT within 60 days of a request for service by a third party, and the corresponding requirement that it begin interconnection studies, are burdensome.  This obligation can be triggered with a minimal effort by a requester without any obligation for the requester to pursue further development.  FERC also recognizes the substantial risk Generator Tie Line owners face under the current policy of losing to third parties the excess capacity they plan to use themselves for staged generation development, and the burden associated with a petition for declaratory order to preserve the priority rights to that excess capacity.  Even with priority established through a request for declaratory order, under current policy, the Generator Tie Line owner must still file an OATT if a transmission request is filed.

FERC’s proposal would reduce the burdens on Generator Tie Line owners.  By granting a blanket waiver of all OATT, OASIS and Standards of Conduct requirements to qualifying Generator Tie Line owners, those Generator Tie Line owners will no longer need to seek individual waivers from FERC.  This blanket waiver would not be automatically revoked if transmission service is requested by a third party, but could be revoked in a FERC order if FERC determines that it is in the public interest to do so.  The waiver would also be deemed to be revoked as of the date the public utility ceases to satisfy the qualifications for the waiver.

FERC’s proposal would maintain access to available capacity for third parties where appropriate.  FERC would require a third party seeking to use the Generator Tie Line subject to a blanket waiver to follow the rules and regulations applicable to requests for service under Sections 210 and 211 of the FPA.   Requests for service under Sections 210 and 211 must meet the requirements of Section 212 of the FPA.  FERC proposes to find that, with respect to Generator Tie Lines eligible for blanket waivers, it is generally in the public interest under FPA Sections 210 and 211 to allow a Generator Tie Line owner to retain priority rights to use the excess capacity on a Generator Tie Line that it plans to use to interconnect its own or its affiliates’ future generation projects to the extent the Generator Tie Line owner can demonstrate specific plans and milestones for that use.  FERC explains that using FPA Sections 210 and 211 will protect Generator Tie Line owners from non-serious requests for transmission service.

To reduce risks to Generator Tie Line owners eligible for blanket waivers during the critical early years of their projects, FERC proposes a safe harbor period of five years during which there would be a rebuttable presumption that:  (1) the eligible Generator Tie Line owner has definitive plans to use its capacity without having to make a demonstration through a specific plans and milestones showing; and (2) the eligible Generator Tie Line owner should not be required to expand its facilities.  A third-party requester for service during the safe harbor period could rebut these presumptions, but it would have the burden of proof to show that the owner does not have definitive plans to use its capacity and the public interest under Sections 210 and 211 is better served by granting access to the third party.  FERC proposes that the safe harbor period begin on the Generator Tie Line energization date, which must be reported to FERC in an informational filing.

Comments on the NOPR are due 60 days after publication of the NOPR in the Federal Register.