Although the agenda for Wednesday’s FERC meeting — the last one of 2001 — is top-heavy with electricity, there are several key natural gas items slated for action, ranging from stepped-up reporting of derivatives and hedging activities to the El Paso Natural Gas complaint investigation, to two embattled gas pipeline projects that have been pending at the Commission since the Hoecker administration.

In the wake of Enron Corp.’s financial breakdown, the agency is expected to consider a proposed rulemaking to change the Uniform System of Accounts’ reporting for public utilities, natural gas companies and natural gas and oil pipelines to recognize changes in the fair market value of securities and assets. Also, sources said, the Commission will propose adding a new balance sheet to the Uniform System of Accounts to record accounting and reporting of financial instruments, comprehensive income, derivatives and hedging activities. Reporting could be extended to marketers as well.

FERC had intended to offer the rule even prior to the emerging reports of Enron’s trading irregularities, but the recent events have hastened the agency’s timetable for unveiling the proposed rule (RM02-3).

The Commission also has scheduled for action the ongoing complaint case against El Paso Natural Gas and its affiliates, El Paso Merchant Energy Co. and El Paso Merchant Energy-Gas LP. It could act on one of three things: 1) a request of the FERC Office of General Counsel’s Market Oversight and Enforcement Section (MOE) for an expanded investigation into whether El Paso Natural Gas violated FERC’s open-access regulations by withholding interruptible transportation service to California last winter; or possibly 2) the certified decision of Chief Administrative Law Judge Curtis Wagner Jr., which cleared the El Paso pipeline of market-power abuse charges, but found it guilty of the bid-rigging offense; or 3) a request by the parties to make oral arguments in the case before the full Commission (RP00-241).

However the Commission acts, its ruling in the El Paso case will have far-reaching ramifications for both the natural gas and electricity markets.

In addition, the agency could decide once and for all the fates of the long-pending and troubled Millennium Pipeline and Independence Pipeline projects. The proposed pipelines have been before FERC for years, and have been the target of countless attacks from landowners and from Capitol Hill lawmakers (CP98-150, CP97-315).

Most recently, critics asked the Commission to cancel the Chicago-to-East Coast Independence project because of its failure to obtain adequate contract support by an agency-imposed deadline, while Millennium’s project routing in New York State has been the source of constant and heated disputes.

Rounding out the gas agenda is the Cove Point liquefied natural gas (LNG) terminal in Maryland. FERC is weighing whether, in light of the Sept. 11 terrorist attacks, to rescind an October certificate order in which it gave Williams the go-ahead to re-open and expand its import facilities (CP01-76). The Commission’s order came under attack from Maryland Sen. Barbara Mikulski because of the LNG plant’s close proximity to a nuclear site in her state.

But the Commission said last Thursday that it won’t decide the fate of Williams’ certificate until late January 2002, which means that the agency either plans to pull Cove Point from the this week’s hearing agenda or it will address some other aspect of the project.

On the electric agenda, which includes 79 items, the agency is expected to look at some of the issues raised on rehearing of various California-related dockets at FERC, a spokesperson said. FERC recently ordered an administrative law judge (ALJ) overseeing a hearing examining possible refunds for electricity overcharges in California to defer further action in the proceeding.

This could mean that FERC will consider the numerous petitions for rehearing of its July 25 order that established the scope and methodology for calculating refunds in spot markets operated by the Cal-ISO and now-defunct Cal-PX.

FERC also is scheduled to take up dockets related to the Midwest Independent System Operator (MISO) and the Alliance regional transmission organization (RTO). MISO, based in central Indiana, is due to begin commercial operations on Dec. 15. At that time, the ISO will have functional control of 73,000 miles of transmission lines carrying up to 81,000 MW.

In addition, the agency may act on National Grid’s bid to serve as the managing member of the Alliance RTO [EL01-80]. The Commission this past summer said it wanted assurances from National Grid that it would be truly independent before the Commission decides whether the company is eligible to serve as the managing member of the Alliance RTO (see Power Market Today, July 26).

The Commission has placed on the agenda a case [IN01-7] involving Exelon Corp. and affiliates PECO Energy Co., Exelon Generation Co. LLC and Power Team. FERC has ordered Exelon and affiliates to show cause that they did not violate the Federal Power Act (FPA) and the Commission’s standards of conduct by operating PECO’s transmission system in an unduly preferential manner or by sharing non-public information related to the timing and location of maintenance outages (see Power Market Today, Oct. 4).

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