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Kelliher Likes Idea of FERC Having Some Jurisdiction Over TVA Power Lines

FERC Commissioner Joseph Kelliher last Wednesday said that a proposal forwarded by the Bush Administration earlier this year that would give FERC some jurisdiction over the transmission system of the Tennessee Valley Authority (TVA), similar to what the Commission already has over public utilities, is a "good idea."

He made his comments at FERC's latest open meeting where Commissioners took action on a filing made in October 2004 by East Kentucky Power Cooperative (EKPC). The cooperative sought a FERC order under sections 210 and 212 of the Federal Power Act (FPA) to require TVA to interconnect its transmission system with EKPC's.

The idea of giving FERC a certain amount of authority over TVA was included in the White House's budget proposal issued in February.

Kelliher noted that Congress has considered reforms to the TVA Act in the past. He recommended that federal lawmakers "dust off and look at" a 1999 measure related to TVA changes. TVA customers would be allowed to have more than one choice of power supplier under the bill. TVA's customers "would get first crack at TVA's power -- if they wanted it, they'd have it first. TVA could only sell excess power outside the [Tennessee] Valley."

EKPC is seeking three new interconnections with TVA to allow it to provide full requirements service to Warren Rural Electric Cooperative following the termination of Warren's existing power contract with TVA on April 1, 2008.

FERC last week moved to direct TVA to interconnect its transmission system with EKPC under section 210 of the FPA. FERC also ordered further procedures to establish the terms and conditions of the proposed interconnection.

EKPC had also asked FERC to provide guidance on determining which system upgrades are needed as a result of the interconnection. Specifically, the cooperative asked whether the base case analyzed in a system impact study should assume that Warren's load continues to exist on the TVA system as it does today. FERC indicated that it should.

In order to facilitate EKPC's service pact with Warren, FERC wants the parties to resolve their differences associated with interconnection arrangements and offered settlement judge procedures in support of that outcome.

Consistent with section 212(c) of the FPA, FERC will issue a proposed order and set a reasonable time for parties to the proposed order to agree to terms and conditions under which the order is to be carried out.

FERC therefore directed the parties to the case to submit to FERC, within 15 days after the expiration of a 30-day negotiation period, all terms and conditions on which they have mutually agreed, accompanied by explanations. If there are matters still in dispute, the parties are directed to file, on or before that date, briefs to support their final positions.

"The Tennessee Valley is the one area of this country which under current federal law, wholesale competition is prohibited," Kelliher noted. "So it's unique in that respect."

TVA has argued that section 212(j) of the FPA bars the Commission from issuing the EKPC order. "I think that's clearly incorrect," Kelliher said, adding that 212(j) "is limited to wheeling orders issued under section 211 of the act, and this order is being issued under section 210 of the act."

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