The U.S. Supreme Court last week said it will hear twochallenges to the Federal Energy Regulatory Commission’s landmarkOrder 888 that kicked off competition in the electric market bydirecting utilities to open up their interstate transmissionfacilities.

The high court agreed to review a June 2000 decision by the U.S.Court of Appeals for the D.C. Circuit, which had upheld theCommission’s groundbreaking ruling that was issued in 1996.

In Order 888, FERC required transmission-owning utilities toprovide transmission service to competing electric providers underterms that were comparable to those offered to their own customers.By taking this step, the Commission sought to give customers accessto power providers other than utilities.

The open-access requirement did not apply to all transmissionfacilities, however. FERC ordered open access for all transmissionfacilities that operated in interstate commerce, but it exemptedtransmission that was bundled with retail sales. The latter was thejurisdiction of the states, it said.

Nine state regulatory commissions challenged the manner in whichthe Commission split the baby on what was jurisdictional andnon-jurisdictional transmission. They argued that FERC went too farin Order 888 and pre-empted state jurisdiction over essentiallyintrastate retail transmission.

The nine states were New York, Idaho, Florida, North Carolina,Washington, Wyoming, Vermont, New Jersey and Virginia.

But Enron Power Marketing Inc., which brought the secondchallenge, claimed that FERC hadn’t gone far enough in Order 888.It believes both interstate transmission and retail bundledtransmission should be subject to open access.

The challenges to the open-access rule were seen as inevitablebecause the division between the interstate and intrastatetransmission grids is more blurred on the electric side than withnatural gas.

Enron was pleased with the Supreme Court’s decision to reviewthe dispute. “The Supreme Court is right to review FERC rules thatallow monopolies to block transmission lines in any states. FERChas the obligation to make sure that the transmission of powerbetween states happens with equal and non-discriminatory access.”

The high court will likely rule on the two challenges during itsnext term, which begins in October.

Susan Parker

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