UNITED STATES OF AMERICA85 ferc61,142 FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: James J. Hoecker, Chairman; Vicky A. Bailey, William L. Massey, Linda Breathitt, and Curt H‚bert, Jr. Champion International ) Corporation and Bucksport ) Energy, L.L.C. ) ) v. ) Docket No. EL98-69-000 ) ISO-New England, Inc., New ) England Power Pool, and ) Central Maine Power Company ) ORDER ON COMPLAINT (Issued October 29, 1998) On August 7, 1998, Champion International Corporation (Champion) and Bucksport Energy, L.L.C. (Bucksport) (collectively Complainants), filed a complaint against ISO New England, Inc. (ISO-New England), the New England Power Pool (NEPOOL), and one of NEPOOL's member utilities, Central Maine Power Company (Central Maine) (collectively, Respondents). The complaint takes issue with the transmission access tariff rules employed by Respondents, including the System Impact Study (SIS) procedures that are relied upon by Respondents to condition access to NEPOOL's Pool Transmission Facilities (PTF). 1/ Complainants charge that their access to the NEPOOL PTF has been made uncertain and prohibitively costly as a result of Respondents' delayed placement of Bucksport in the NEPOOL SIS transmission request queue, and that under NEPOOL's existing SIS requirements, Complainants will be required to pay for system upgrade costs that may be unnecessary. 1/ NEPOOL is operated as a single control area under the NEPOOL open access transmission tariff (NEPOOL Tariff) and Restated NEPOOL Agreement. NEPOOL's control area consists of virtually all of the generation and transmission facilities in the states of Connecticut, Massachusetts, Rhode Island, Maine, Vermont and New Hampshire. ISO-New England is a non- profit corporation that, on July 1, 1997, assumed operational control of the transmission facilities owned by NEPOOL's public utility members. See New England Power Pool, 79 FERC  61,374 (1997), reh'g pending. Docket No. EL98-69-000 -2- Complainants request that Bucksport's placement in the SIS transmission request queue be made effective as of the date Bucksport filed its initial application seeking access to the NEPOOL PTF grid, i.e., March 24, 1998. Complainants also request that Bucksport be allowed to interconnect with the NEPOOL PTF grid subject to: (1) the payment of upgrade costs to preserve the reliability of the local PTF and non-PTF system; and (2) the use of economic redispatch in lieu of paying for PTF upgrade costs until such time as NEPOOL implements a congestion management plan. For the reasons discussed below, we will grant Complainants requests for relief. We do so based on our findings herein, and based on our companion order on NEPOOL's SIS procedures in Docket No. ER98-3853-000. 2/ Background Champion owns and operates a pulp and paper mill located in Bucksport, Maine (Bucksport Mill), which is currently being used to self-generate approximately 70 MW of electricity for use in Champion's manufacturing processes and for sale to Central Maine. Pursuant to a Request for Proposal issued in mid-1997, Champion entered into an agreement with Multinational Electricity & Gas Corporation (MEG) to develop a 174 MW gas-fired, cogeneration facility at the Bucksport Mill. The project, which will be co- owned by MEG's affiliate, Bucksport, is planned to go on-line in the year 2000. At that time, Complainants anticipate that 120 MW of capacity and energy produced by the project will be made available for sale through a power marketer into the NEPOOL Power Exchange utilizing PTF lines. 1. Complainants' Allegations Regarding Their Request for Transmission Access and Placement in the SIS Queue Complainants state that on March 24, 1998, Bucksport submitted to ISO-New England, a transmission application for the Bucksport Mill project. In doing so, Complainants state that they followed the procedures outlined in the Respondents' tariffs and other applicable rules, and followed the guidance provided to Complainants by an ISO-New England representative. 3/ ISO-New England gave the application a "date-time stamp" of March 24, 1998, and notified Bucksport of this action by letter dated March 25, 1998. Complainants state that, within days, ISO-New England rescinded its acceptance of their application. On 2/ In the companion order, we find that NEPOOL's existing SIS procedures are based on faulty assumptions and that these procedures produce expansion project cost estimates that are inaccurate and unreliable. See New England Power Pool, 85 FERC  61,___ (1998). 3/ Complaint at 15. Docket No. EL98-69-000 -3- March 30, 1998, ISO-New England notified Complainants by letter that their application would not be considered complete until the tariff requirements of Central Maine were met. 4/ Complainants were subsequently informed by Central Maine that Bucksport would be required to file for local point-to-point service in order to initiate an SIS, even though the interconnection being requested by Bucksport was a PTF interconnection. 5/ Central Maine also indicated that Bucksport would be required to submit a deposit with its application equal to one month of transmission service, regardless of the fact that Bucksport had no intention of using the service. On April 16, 1998, under protest, Bucksport filed its application with Central Maine and made the necessary deposit, as requested. Its SIS queue position was made effective the following Monday, April 20, 1998. In the meantime, project capacity requests totaling approximately 11,030 MW were placed in the NEPOOL SIS queue ahead of Bucksport. 6/ 2. Complainants' Allegations Regarding NEPOOL's Existing SIS Procedures Complainants assert that NEPOOL's existing SIS procedures are based on a number of unrealistic operating assumptions which render the results meaningless. Complainants state that the NEPOOL SIS procedures require that for reliability purposes, new generators be "fully integrated" with load. 7/ By this, Complainants mean that any generator located anywhere in NEPOOL must be able to serve load anywhere in NEPOOL. More specifically, Complainants state that NEPOOL's full integration requirement means that a new generator's request for capacity will be considered to have an "adverse impact" on the NEPOOL system in any instance where an existing generator has a reduced ability of any amount to serve load anywhere on the NEPOOL grid 4/ Id. at Exhibit C. 5/ Id. at 17. 6/ Id. at 18. Complainants state that included in these capacity requests was a request for capacity made by FPL Energy, Inc. (FPL Energy) which has agreed to purchase generation from Central Maine. Complainants state that FPL Energy was also granted preferential treatment in connection with its capacity request over non-PTF facilities. Specifically, Complainants charge that Central Maine did not require FPL Energy to make a deposit of one month's transmission service, as Central Maine has required of all other project developers. Id. at 19. 7/ Id. at 21-22, citing NEPOOL Agreement at Section 18.4. Docket No. EL98-69-000 -4- for any amount of time. 8/ Complainants charge, however, that in order to preserve system reliability, it is not necessary that every generator be fully integrated. Complainants add that NEPOOL's SIS assumptions are also unreliable because they assume that generators currently using the system will never be displaced by new generation and that every proposed project in the SIS queue will in fact come on- line. 9/ Complainants also charge that NEPOOL's existing SIS procedures result in unreasonable delays for new generators and that as a result of these unreasonable delays, new generators, such as Bucksport, are faced with the prospect of risking substantial development costs prior to receiving a completed SIS. 10/ In addition, Complainants point out that NEPOOL's existing procedures, as applicable to existing generators, rely on a congestion management protocol that allows for redispatch in lieu of adding additional system capacity to handle constraints. Complainants argue that not applying these same protocols to new generation is unjustified. Complainants request access to the NEPOOL transmission grid, subject to the following conditions: (1) that Bucksport pay for any upgrades that may be necessary to preserve the reliability of the local PTF and non-PTF system; (2) that, as to NEPOOL's PTF lines, Bucksport be made subject, on the same terms as NEPOOL's existing generators, to the current congestion management protocol in lieu of the requirement that Bucksport be required to pay for system upgrades; and (3) that the aforementioned conditions be applied until such time as the Commission approves a congestion management plan for the NEPOOL system. Notice of Complainants' filing was published in the Federal Register, 11/ with comments, protests and interventions due on before September 8, 1998. Interventions, Comments and Protests Motions to intervene, protests and comments were filed by the parties listed in Attachment A. As discussed below, Respondents filed separate answers to the complaint, but take consistent positions on a number of the issues presented. 8/ Id. at 22. 9/ Id. at 24. 10/ Id. at 26-28. 11/ 63 Fed. Reg. 44,584 (1998). Docket No. EL98-69-000 -5- 1. Respondents Answers and Intervenors Protests and Comments Addressing Bucksport's Queue Position and the NEPOOL Application Process In their answers, Respondents argue that Bucksport's current position in the SIS queue is due to actions solely attributable to Complainants and that Complainants could not have been misled by the NEPOOL filing procedures which are neither confusing nor illogical. Respondents conclude that Complainants' request to improve Bucksport s queue position should be rejected. NEPOOL states that the procedures in place today and at the time that Bucksport filed its request required Bucksport to submit a standard application to ISO-New England and, in addition, to comply with any applicable requirements that may exist under the local transmission tariff of the interconnecting transmission provider. 12/ Central Maine asserts that these procedures have been followed by others and that Complainants' were made aware of these procedures at least four months prior to the filing of their application. 13/ In addition, ISO-New England states that these requirements were included in draft procedures a number of weeks before the Bucksport application was filed. 14/ H.Q. Energy Service (U.S.) Inc. filed comments supporting Complainants' request to retain their initial queue position. Rumford Power Associates, L.P., whose queue position is currently ahead of Bucksport's, argues that it was required to comply with the same rules imposed on Complainants and that it will be disadvantaged if Complainant's relief is granted. 2. Respondents Answers and Intervenors Protests and Comments Addressing NEPOOL's Existing SIS Procedures On the issue of NEPOOL s existing SIS procedures, Respondents argue that Complainants' request for interconnection to the NEPOOL grid and interim relief from paying upgrade costs should be denied. Complainants, they claim, are seeking preferential treatment that would be disruptive to the NEPOOL system and unfair to others. Central Maine argues that Complainants immediate interconnection approval would be "a prelude to disaster." 15/ 12/ NEPOOL answer at 6-7. 13/ Central Maine answer at 8-9. 14/ ISO-New England answer at 11-12. 15/ Central Maine answer at 11. Docket No. EL98-69-000 -6- NEPOOL responds to the Complainants' charge that it is unjust and unreasonable to require that all new generators be "fully integrated" to the NEPOOL grid. NEPOOL argues that the transmission system network model used in the SIS analysis is tied to three periods that are intended to measure "reasonably stressed conditions" on NEPOOL's PTF and non-PTF lines. 16/ NEPOOL further states that while the NEPOOL SIS procedures are not designed to consider generation displacement issues, in fact, NEPOOL should not be in the business of speculating over market winners and losers. 17/ NEPOOL adds that no matter what flaws might exist in the existing NEPOOL SIS procedures, the SIS evaluation is not conclusive on the issue of interconnection approval. 18/ ISO-New England states that NEPOOL's SIS process can and should be speeded up, that a congestion management system needs to be put in place, and that a SIS process using assumptions other than full integration are appropriate. However, ISO-New England argues that Complainants' request for relief should be rejected because it would represent a generator-specific waiver that would be unfair and discriminatory to other generators. Similarly, Central Maine argues that because Complainants' requested relief involves procedures that might be appropriate on a system-wide basis, NEPOOL's restructuring proceeding and not the instant proceeding would be the proper forum to consider these issues. NEPOOL and Central Maine also argue that allowing Bucksport's request for an immediate interconnection without a thorough SIS review could result in system instability, and would be unfair to those existing generators who have played by the rules as they currently exist. Central Maine also responds to Complainants' allegation that the NEPOOL SIS procedures are being administered, in part, for the purpose of granting FPL Energy preferential treatment. Central Maine denies the allegation and points out that, as part of its sale of generation assets, it sold FPL Energy the generators' right to access the NEPOOL grid because the generators at issue were fully integrated. By contrast, Central Maine states that FPL Energy has also requested transmission access to non-PTF lines for new generation it intends to bring on line. Central Maine states that FPL Energy complied with Central 16/ NEPOOL answer at 15-16. 17/ Id. at 17. 18/ Id. at 18. Docket No. EL98-69-000 -7- Maine's Tariff in making this request, including payment of the necessary deposit. 19/ A number of the protests and comments support the position taken by the Respondents on the issue of NEPOOL s SIS procedures. U.S. Generating Company, USGen New England, Inc., Millennium Power Partners, L.P., Lake Road Generating Company, L.P., and Pittsfield Generating Company, L.P. (collectively, USGen Companies), for example, argue that Complainants objections to the NEPOOL SIS procedures are in fact a collateral attack on the Commission s order issued in NEPOOL s restructuring proceeding in Docket No. OA97-237-000 on April 20, 1998. 20/ USGen Companies argues that the NEPOOL SIS procedures are reasonable and should be continued until such time as NEPOOL's congestion management regime is revised and procedures are put in place to accommodate both firm and non-firm transactions and to compensate backed-down existing generators for their lost opportunity costs. 21/ Sithe New England Holdings, L.L.C. (Sithe New England) adds that while NEPOOL's existing SIS procedures are flawed, the Commission should defer making any findings on this issue until such time as the NEPOOL participants have the opportunity to address the issue through a collaborative negotiation process. 22/ Other comments were filed that were generally supportive of the Complainants position. Westcoast Power Inc. (Westcoast) and Engage Energy, U.S., L.P. (Engage Energy), for example, point out that while they take no position with respect to Complainants specific allegations, there "appear to be no clearly defined rules or procedures that [ISO-New England] and NEPOOL are following in establishing the SIS queue." 23/ 3. Additional Answers and Replies On September 22, 1998, Complainants filed an answer addressing the answers filed by Respondents. Among other issues, Complainants dispute that they had notice of Respondents' SIS filing procedures; lodge additional critiques of NEPOOL's full integration requirements; counter the charge that their requested relief would represent preferential treatment of their project request; and claim that their requested relief would not impair 19/ Central Maine answer at 18-19. 20/ See New England Power Pool, et al., 83 FERC  61,045 (1998), reh'g pending. 21/ USGen Companies protest at 20. 22/ Sithe New England comments at 7. 23/ Westcoast and Engage Energy comments at 3. Docket No. EL98-69-000 -8- system reliability and could be applied to others who may be similarly-situated. On October 6, 1998, NEPOOL filed a reply to Complainants' answer. The reply reiterates Respondents' positions that the instant complaint proceeding is not the proper forum to consider revisions to the NEPOOL SIS procedures, and that granting Complainants' requested relief could cause adverse impacts on the NEPOOL system. Discussion Procedural Issues Pursuant to Rule 214 of the Commission's Rules of Practice and Procedure, 24/ the timely, unopposed motions to intervene filed by the parties listed on Attachment A serve to make them parties to this proceeding. In addition, we will grant the unopposed motions to intervene out-of-time filed by American National Power, Inc. and Northeast Utilities Service Company, given the early stage of this proceeding and the absence of undue prejudice or delay. Pursuant to Rule 213(a)(2) of the Commission's Rules of Practice and Procedure, 25/ we hereby reject the answers and replies filed by Complainants and NEPOOL, respectively, on September 22, 1998 and October 6, 1998. Complainants' Requests for Relief As discussed below, we will grant Complainants requests for relief: (1) based on our findings herein, on the issue of Bucksport s rightful place in the NEPOOL SIS queue; and (2) based on our companion order on NEPOOL's SIS procedures in Docket No. ER98-3853-000, on the issue of whether NEPOOL s SIS procedures should be applied to Bucksport s request to interconnect to the NEPOOL PTF grid. 1. Bucksport s SIS Queue Priority Complainants state that Bucksport should be permitted to maintain the queue position to which it would have been entitled on the date it filed its application with NEPOOL, on March 24, 1998. In support of their position, Complainants state that the application rules were unwritten, vague and confusing, and that it was reasonable to file with only ISO-New England, given the fact that Bucksport had no need for service under Central Maine's tariff in order to interconect with the PTF facilities. We agree. NEPOOL procedures require that an applicant meet any 24/ 18 C.F.R.  385.214 (1998). 25/ 18 C.F.R.  385.213(a)(2) (1998). Docket No. EL98-69-000 -9- "applicable" requirements under the local utility s tariff. However, since Bucksport will connect directly with the PTF grid and will not need transmission service over non-PTF facilities, it is understandable that Bucksport did not apply for service under Central Maine s tariff, even though it may have needed to consult with Central Maine on the impact of the interconnection. The Commission will grant Complainants request that Bucksport s position in NEPOOL s queue be made effective as of March 24, 1998. 26/ 2. NEPOOL s SIS Procedures Complainants charge that NEPOOL's SIS procedures are based on unrealistic assumptions that render the conclusions reached inaccurate and meaningless. In particular, Complainants take issue with the SIS assumptions that all prospective generation will serve new load and that every project in the queue that is ahead of Bucksport's project will in fact be constructed. Complainants also take issue with the requirement that new generators be "fully integrated" with load as a necessary condition to preserving system reliability. For the reasons discussed in our companion order, in Docket No. ER98-3853-000, we find that NEPOOL s existing SIS procedures are based on unrealistic assumptions, produce unreliable cost estimates, and are not otherwise justified. In fact, ISO-New England acknowledges these problems and has itself requested improvements in the process. 27/ NEPOOL too has acknowledged the problem. 28/ Until NEPOOL's SIS procedures are rationalized, 26/ However, we will deny Complainants request that Central Maine be ordered to return Bucksport s deposit made on April 16, 1998. Complainants argument in support of this request for relief, i.e., that Central Maine did not require FPL Energy to make a deposit in a similar circumstance, is in error. 27/ See, e.g., ISO-New England answer at 15 ("On July 10, 1998, ISO[-New England] and the [New England Conference of Public Utility Commissioners] agreed that the interconnection study process required immediate attention, and appointed delegates to prepare a white paper detailing the problems with the study process and potential solutions.") 28/ See, e.g., NEPOOL's July 22, 1998 compliance filing in Docket No. ER98-3853-000, transmittal letter at 20 ("Issues that must be addressed soon include the consequences of trying to complete a large number of requests for System Impact Studies and the use of a queue approach for these analyses, treatment of costs of construction, and (continued...) Docket No. EL98-69-000 -10- Bucksport and other project applicants who may be similarly- situated should be allowed to connect to the NEPOOL PTF without regard to the expansion cost estimates resulting from NEPOOL's existing SIS criteria. Once NEPOOL revises its SIS procedures, Bucksport will be responsible for whatever upgrade costs result from the revised SIS procedures. In addition, we grant Bucksport's request to use economic redispatch in lieu of paying for PTF upgrade costs until such time as NEPOOL implements revised SIS procedures. The Commission orders: (A) The untimely motions to intervene of American National Power, Inc. and Northeast Utilities Service Company, are hereby granted. (B) Complainants requests for relief are hereby granted as discussed in the body of this order. By the Commission. ( S E A L ) David P. Boergers, Secretary. 28/ (...continued) construction scheduling."). Attachment A Motions to Intervene, Comments and Protests *** American National Power, Inc. Californian Independent System Operator Corporation Cambridge Electric Light Co. and Commonwealth Electric Company ** Central Maine Power Company Electric Clearinghouse, Inc. * Enron Power Marketing, Inc. * FPL Energy, Inc. * H.Q. Energy Service (U.S.) Inc. * ISO New England Inc. ** NEPOOL Industrial Customer Coalition * New England Power Pool *** Northeast Utilities Service Company Power Development Company, L.L.C. * Rumford Power Associates, L.P. ** Sithe New England Holdings, L.L.C. Statoil Energy, Inc. * U.S. Generating Company, USGen New England, Inc., Millennium Power Partners, L.P., Lake Road Generating Company, L.P., and Pittsfield Generating Company, L.P. Westbrook Power L.L.C. * Westcoast Power Inc. and Engage Energy, U.S., L.P. _________________ * Intervention includes a protest ** Intervention includes comments *** Intervention out-of-time