CA Power Authority May Fall Under FERC Jurisdiction

Legislation in California that created the California Consumer Power and Conservation Financing Authority allows the new authority to engage in certain activities that may require FERC's approval or, in certain cases, make the authority subject to the Commission's jurisdiction.

The Federal Energy Regulatory Commission's views on the legal implications of the authority were fleshed out in a recent letter sent by FERC's general counsel Kevin Madden to Rep. Doug Ose (R-CA), chairman of the House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs. The authority is chaired by S. David Freeman .

In his letter to Ose, Madden points out that the legislation that created the authority allows it to acquire, own or operate enterprises and projects. Under the legislation, enterprises include buildings and facilities "used or useful for the generation or production of electric energy," while projects include facilities and equipment within the state that serve the purposes of this division as approved by the authority.

These activities, Madden said, may require FERC's approval or, for certain purposes, make the authority subject to FERC jurisdiction. By way of example, Madden said that the acquisition of transmission facilities from a public utility would require the Commission's approval under the Federal Power Act (FPA). Similarly, the acquisition of wholesale power sales contracts that accompany acquisitions of generating facilities from a public utility would require FPA section 203 approval.

Madden said that another jurisdictional implication under the FPA involves the authority's possible acquisition or control of hydroelectric generating facilities that are licensed by FERC under part I of the FPA. A transfer of any license would require approval by FERC under section eight of the FPA and the authority would be a licensee subject to FERC's regulation and would not have independent authority to "regulate" such projects, Madden added.

Madden also pointed out that the enabling legislation for the authority asserts state jurisdiction for transmission for transmission facilities. But the Commission's general counsel noted that FERC has asserted exclusive jurisdiction over the rates, terms and conditions of all unbundled transmission in interstate commerce, including unbundled transmission to serve retail customers.

In addition, FERC held in Order 888 that any facilities, regardless of their original nominal classification, used by public utilities to provide transmission service in interstate commerce in order to deliver power and energy to wholesale purchasers are subject to FERC's jurisdiction and review.

"Finally, to the extent transmission facilities are used for both bundled retail sales and for other purposes, it is questionable whether they can be segregated without interfering with FERC's jurisdictional responsibilities over transmission in interstate commerce."

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