FERC Filings
REQUEST FOR REHEARING OF THE ELECTRIC POWER SUPPLY ASSOCIATION re: AMEREN ENERGY GENERATING COMPANY AND UNION ELECTRIC COMPANY d/b/a AMERENUE
REQUEST FOR REHEARING
The Commission’s May 5, 2003, order recognized and upheld the general concerns expressed in EPSA’s Protest, stating that “Applicants have not shown that the proposed transaction will not adversely affect competition.” Moreover, the Commission expressly acknowledged the similarity between the type of Section 203 transactions that are the subject of the instant proposal and the affiliate transactions the Commission addressed in Edgar. Accordingly, the Commission found that “a franchised utility should be required to demonstrate that its purchase of an affiliate’s plant is on terms similar to any other competitive alternatives available.” The Commission’s references to Cinergy in its May 5 Order confirm the fundamental nature of the accumulating problems associated with the transfer of merchant affiliate plants to affiliated regulated utilities. “The ability of a franchised utility to assume its affiliated merchant’s generation when market demand declines gives the affiliated merchant a ‘safety net’ that merchant generators not affiliated with a franchised utility lack.” The Commission further observed that such transfers could undercut incentives for merchant investment in new facilities, create barriers to entry and deprive the market of price discipline that would otherwise lower consumer prices.
In expressing reservations about the difficulty of reconciling the proposed transfer with the Commission’s goal of securing competitive wholesale markets, the Commission identified the inadequacies of the Applicants’ filing. The extensive list of deficiencies includes: AmerenUE’s failure to issue an RFP, open questions regarding transmission availability and the related consideration of alternatives to transmission service factors, the cost of solutions to the lack of transmission availability, whether Applicants fairly evaluated the option power purchase contracts for 2003 in conjunction with buying power plants in 2004 or beyond, and the Applicants’ apparent failure to update a 2001 assessment of transmission availability before concluding that the transmission service required to import power from surrounding control areas was inadequate.
No doubt these are all factual issues, but they only should be resolved once the Applicants have met their initial burden of going forward. Here, though, the Applicants haven’t even attempted to satisfy the Edgar standards. Indeed, given the fundamental objectives at stake, there are compelling, practical reasons for the Commission to reconsider whether a full evidentiary, trial-type hearing is the best way to proceed under circumstances where, as here, the Applicants have not even met their initial burden, as the Commission explicitly stated was the case for the Applicants here.
While EPSA welcomes the increased scrutiny and the Commission’s acknowledgement of the higher threshold for the intra-corporate transactions involved here, it urges the Commission to set such matters for hearing only after the Commission first determines that the Applicants have met the Commission’s standards for moving forward. EPSA has no issue with setting appropriate matters for hearing, but since any time-consuming and expensive hearing threatens to deplete critical resources which could better be used to support and develop the very competitive markets the Commission seeks to protect. The Commission should require applicants first to show why they believe their filings satisfy Commission requirements before having to proceed with contested and costly litigation.
As the Commission stated in its May 5th Order, “[w]hile the Commission did not withhold approval of the transaction in Cinergy…we also stated that ‘in light of the generic concerns raised by this case, the Commission will in the future modify its approach to analyzing competitive effects of intra-corporate transactions of this nature.” Ameren’s failure to address the Commission’s established analytical framework for identifying whether there are any adverse competitive impacts associated with the type of intra-corporate transfers at issue here provides further justification for postponing a full evidentiary hearing until the Commission receives a completed filing which does address that framework. Indeed, in its Order, the Commission stressed that Ameren’s filing
“marks the second occasion within a very short period that a franchised utility has sought approval to acquire jurisdictional facilities associated with generating facilities initially developed and marketed as merchant generation by a power marketer affiliate. We indicated in Cinergy our concerns about ‘the possible implications of affiliate transactions of the type proposed here for the competitive process in general and for the region’s wholesale competition.’” (emphasis added).
The inadequacies presented in Ameren’s filing are all the more glaring in light of the reservations and concerns the Commission expressed in Cinergy.
Given the Application’s shortcomings, therefore, EPSA requests that the Commission should have proceeded as it has with respect to its consideration of the affiliated power purchase agreements recently submitted by Entergy. There, the Commission simply found that Entergy’s filing was deficient and it issued a deficiency letter in which it required Entergy to supplement its filing with considerable information, information which otherwise likely would not have been provided absent significant discovery proceedings. Accordingly, EPSA asks the Commission to balance the efficiency and resource issues which are critical considerations for all parties who share the Commission’s commitment to non-discriminatory, well-functioning competitive markets. On balance, here, the central procedural question is: what is the most efficient way for the Commission to obtain sufficient information to make a reasoned decision on the competitive impacts of the application? No doubt a full evidentiary hearing could be necessary, and should, therefore, eventually be convened to clarify and resolve bona fide factual disputes. But given that Ameren demonstrably has disregarded the Commission’s concerns expressed in Cinergy and failed to undertake anything close to an “Edgar-type” analysis, its filing was incomplete, and it should have been required to make it complete before requiring the parties to litigate this threshold issue.
EPSA urges the Commission, therefore, to restate the evidentiary shortcomings of Ameren’s filing, to stay the hearing it has ordered in this matter, to issue a deficiency letter of the type it issued in the Entergy proceedings noted above, and, thereby, to minimize the burdens and costs associated with prematurely having to litigate the factual questions and deficiencies for which Ameren itself is solely responsible. Upon the receipt of this information, the Commission will be in a far better position to determine whether a hearing is even needed or, whether as EPSA believes, the Commission even without a hearing should reject the Application for failure to meet the Commission’s threshold evidentiary requirements.