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In the attached order, FERC held that New Horizon is not subject to the Sch= .=20 4 (load) imbalance penalties to the extent that its load is dynamically=20 scheduled (as long as the dynamic scheduling is "successful" -- even if the= re=20 are some imbalances during successful dynamic scheduling). New Horizon is= =20 not a control area. It is important to note that these provisions were=20 included in New Horizon's network operating agreement with Duke. We can pu= ll=20 the New Horizon/Duke contracts, if necessary, for language, but need to=20 include some language if Enron takes the service or alert our potential=20 services customers to this requirement. FERC did not discuss whether this same result would be applicable to=20 generation imbalances that are dynamically scheduled, but we would argue a= =20 similar result. In addition, FERC has stated that there cannot be double= =20 counting of the generation imbalance provision and the Sch. 4 load imbalanc= e=20 provision. ---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 03/20/2001= =20 02:47 PM --------------------------- Linda L Lawrence@ENRON 03/19/2001 01:48 PM Sent by: Linda L Lawrence@ENRON To: Christi L Nicolay/HOU/ECT@ECT cc: =20 Subject: Re: New Horizon FERC Order =20 UNITED STATES OF AMERICA 94 FERC =0F4 61,213 FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: Curt H=017bert, Jr., Chairman; William L. Massey, and Linda Breathitt. =20 =20 New Horizon Electric Cooperative, Inc. v. Docket No. EL00-101-001 Duke Power Company ORDER ON REHEARING (Issued February 26, 2001) In response to a request for clarification or rehearing of our order issued in this proceeding on October 11, 2000, New Horizon=20 Electric Cooperative, Inc. v. Duke Power Company, 93 FERC =0F4 61,029 (2000= )=20 (October 11 Order), we clarify that, to the extent dynamic scheduling by New Horizon Electric Cooperative, Inc. (New Horizon) operates successfully, New Horizon should not be subject to charges under Duke's Schedule 4 Energy Imbalance Service. In such circumstances, any imbalances between energy deliveries on behalf of New Horizon and New Horizon's load should be accounted for by Duke as inadvertent interchanges only. In addition, we direct the parties to negotiate in good faith to establish a standard for the successful operation of dynamic scheduling. BACKGROUND Our October 11 Order addressed a complaint by New=20 Horizon 1 agains= t=20 Duke, under section 206 of the Federal Power Act,=20 seeking Commission resolution of four disputed issues, including the=20 treatment of energy imbalances not prevented by dynamic 2 scheduling. New Horizon's complaint claimed that energy imbalance service does not apply to it, since it will employ dynamic scheduling to effectively remove its load from Duke's control area. Further, New Horizon maintained that any deviation between the dynamic schedule and the actual metered delivery of energy constituted inadvertent interchange energy (which is the net difference between actual and scheduled interchange energy between two control areas) and proposed that any differences would be returned in-kind within two hours. Duke agreed that energy imbalance does not apply to a transmission=20 customer like New Horizon that electronically 1 16 U.S.C. =0F4 824e (1994). 2 New Horizon requested fast track resolution of this issue. =0F, Docket No. EL00-101-001 -2- transfers its load from its control area via dynamic scheduling, 3 to the extent such load is in fact transferred. However, Duke asserted that New Horizon should be required to procure energy imbalance service from Duke to the extent dynamic scheduling fails and there is a mismatch between scheduled delivery of energy by New Horizon and the actual loads of New Horizon served by that energy. In our October 11 Order, we found that, in the absence of backup=20 procedures, a Duke customer that dynamically schedules its load is subject = to=20 Schedule 4 Energy Imbalance Service under Duke's Open Access Transmission Tariff (OATT) if the customers dynamic scheduling syste= m=20 fails to effectively=20 transfer 4 its entire load= =20 out of Duke s control area.[ ]=20 We agreed with Duke that New Horizon should be subject to Duke's Schedule 4 Energy Imbalance Service to the extent its dynamic scheduling model failed to remove its load from Duke's control area. We disagreed with New Horizon's contention that such mismatches constitute inadvertent energy and therefore should receive comparable or similar treatment as the mismatches between the net interchange schedules that exist between control areas. In addition, we agreed with Duke that if New Horizon's load is not dynamically transferred, it remains within Duke's control area and Duke's generators will respond automatically to mismatches between scheduled and actual energy to load. In making these determinations, we relied on our findings in=20 American Electric Power Company, 84 FERC =0F4 61,314 (1998) (AEP), where we reviewed service agreements related to dynamically scheduling load for Blue Ridge Power Agency. American Electric Power Service Corporation's NITSA included provisions that stated that "[f]or such time as [the customer] successfully employs dynamic scheduling . . . the provisions of Energy Imbalance 5 Service (Schedule 4) will not apply." However, the agreement also provided that in the event of data outages, the provisions of Schedule 4 Energy Imbalance Service will also apply.=20 Consistent with the provisions in the AEP agreements, we found that New Horizon is required to take Schedule 4 Energy Imbalance Service from Duke or it must make alternative comparable arrangements to the extent dynamic scheduling is unsuccessful. 3 Duke Answer at 6. 4 93 FERC at 61, 051. 5 84 FERC at 62,416. =0F, Docket No. EL00-101-001 -3- New Horizon seeks clarification or, in the alternative, rehearing, of the Commission's October 11 Order. Duke filed an answer to New Horizon's request for rehearing.=20 New Horizon filed a motion for leave to respond to Duke's answer and= =20 Duke filed an answer to New Horizon's motion. DISCUSSION 1. Procedural Matters Pursuant to 18 C.F.R. =0F5 385.213 (2000), we will deny Duke's 6= =20 answer as an impermissible answer to a request for rehearing. =20 This being the case, we will deny New Horizon's response and Duke's response thereto as moot. 2. Request for Clarification or Rehearing New Horizon argues that there may be times when despite the=20 successful operation of dynamic scheduling some mismatches between its load and energy deliveries would still result. In these instances, New Horizon argues it should not be subject to Duke s Schedule 4 Energy Imbalance Service and that the mismatches should be accounted for as inadvertent interchanges as is customary between adjacent control areas. Furthermore, New Horizon requests that we require Duke to negotiate with it in good faith to establish a standard for successful operation of dynamic scheduling. We agree with New Horizon that it is possible that some mismatches could result even during successful operation of 7 dynamic scheduling. In fact, Duke and New Horizon agreed, in their network operating agreement (NOA), that the dynamic scheduling information may not be 100 percent accurate (and also 8 that this should not be a basis for penalties).=20 6 Duke may not file an answer to New Horizon's rehearing request merely because New Horizon alternatively argued for clarification.=20 7 These mismatches are the result of the inherent differences between the actual metered load for an hour and the dynamic schedule value for the same hour created by integrating the four second dynamic scheduling signal values over the hour. 8 See NOA, section 7.0(g), Original Sheet No. 13. We further note that section 7.0 (e) of the NOA allows for the estimation of dynamic scheduling data and that the use of estimated data would not "be [a] ground for a claim of unsuccessful operation of the dynamic scheduling arrangements . . . or a claim for penalties." =0F, Docket No. EL00-101-001 -4- Mismatches that result during successful operation of dynamic scheduling, if accounted for by Duke through Schedule 4 Energy Imbalance Service, would cause double recovery -- once through inadvertent interchange and again through Schedule 4 Energy Imbalance Service charges. Therefore, we will require that mismatches that result during successful operation of dynamic scheduling be accounted for by Duke only through inadvertent interchange. New Horizon should only be subject to Duke s Schedule 4 Energy Imbalance Service during periods when New Horizon s dynamic scheduling fails to operate successfully. We further agree with New Horizon that it is necessary to define what constitutes successful dynamic scheduling, in order to then determine what should occur in the event that dynamic scheduling is not successful. Accordingly, we direct the parties to negotiate in good faith to establish a standard for successful operation of dynamic scheduling and to incorporate this standard in the parties' agreements (and to file such changes with us). The Commission orders: New Horizon's request for rehearing or clarification is hereby granted, as discussed in the body of this order. By the Commission. ( S E A L ) Linwood A. Watson, Jr., Acting Secretary. =20 =0F, =09Christi L Nicolay@ECT =0903/15/2001 11:33 AM =09=09=20 =09=09 To: Linda L Lawrence/NA/Enron@Enron =09=09 cc:=20 =09=09 Subject: Weekly Electric FERC Report At your convenience, could you print No. 4 New Horizon (need order). and No. 45 (Southern) need filing and order. Thanks ---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 03/15/2001= =20 11:23 AM --------------------------- From: Janet Butler/ENRON@enronXgate on 03/13/2001 10:57 AM To: Daniel Allegretti/NA/Enron@Enron, Eric Benson/NA/Enron@ENRON, James=20 Brown/ENRON@enronxgate, Alan Comnes/PDX/ECT@ECT, Shelley=20 Corman/ENRON@enronXgate, Tom Delaney/Corp/Enron@ENRON, John=20 Dushinske/ENRON@enronXgate, Robert Frank/NA/Enron@Enron, Howard=20 Fromer/NA/Enron@Enron, Donna Fulton/Corp/Enron@ENRON, Mary Hain/HOU/ECT@ECT= ,=20 Joe Hartsoe/Corp/Enron@ENRON, Rod Hayslett/ENRON@enronXgate, Tom=20 Hoatson/NA/Enron@Enron, Richard Ingersoll/HOU/ECT@ECT, Paul=20 Kaufman/PDX/ECT@ECT, Steven J Kean/NA/Enron@Enron, Kerry Stroup=20 <Kerry.Stroup@enron.com<@SMTP@enronXgate, Robin Kittel/NA/Enron@Enron,=20 Elizabeth Linnell/NA/Enron@Enron, Kathleen E Magruder/HOU/EES@EES, Susan J= =20 Mara/NA/Enron@ENRON, Posey Martinez/HOU/ECT@ECT, Ron McNamara/NA/Enron@Enro= n,=20 Janine Migden/NA/Enron@Enron, Marcie Milner/Corp/Enron@ENRON, Steve=20 Montovano/NA/Enron@Enron, Christi L Nicolay/HOU/ECT@ECT, Sarah=20 Novosel/Corp/Enron@ENRON, Richard Shapiro/NA/Enron@Enron, Dan=20 Staines/HOU/ECT@ECT, James D Steffes/NA/Enron@Enron, Kerry=20 Stroup/NA/Enron@Enron, Edith Terry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Den= is=20 Tu/FGT/Enron@ENRON, Thane Twiggs/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: =20 Subject: Weekly Electric FERC Report Please excuse this report, if you already received this last Thursday. Plea= se=20 also note the attachments for your perusal. =20 Commission Agenda http://www.ferc.fed.us/public/isd/sunshine.htm Rulemaking, Electronic Filing of Documents, RM00-12 http://cips.ferc.fed.us/Q/CIPS/RULES/RM/RM00-12.00C.TXT Marketing Affiliate Conference http://cips.ferc.fed.us/Q/CIPS/MISC/PL/PL00-1.00D.TXT
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