US FERC finds APS, TEP violated transmission rules

Washington (Platts)--15Dec2004

Two of Arizona's largest investor-owned utilities violated federal electric
transmission rules by providing their merchant power units with information on
the status of the grid and transmission capacity that were not available to
other customers, the US Federal Energy Regulatory Commission said in two
orders approved Wednesday. The orders, an outgrowth of random operational
audits conducted by the agency's Office of Market Oversight and
Investigations, found that both Arizona Public Service and Tucson Electric
Power violated commission rules and regulations in the management of their
transmission grids by, among other things, failing to make timely data
postings on their Web-based Open Access Same-Time Information Systems (OASIS)
and by providing favorable treatment to their merchant power subsidiaries.
FERC directed APS to return $4-mil in improper revenues it gained through the
practices. Of that amount, FERC told APS to spend $2.75-mil for a transmission
upgrade project in the Phoenix area and to devote the remaining $1.25-mil to
low-income residential energy assistance programs. APS will not be permitted
to recover the money through rates. FERC said APS had agreed to establish an
office of compliance and directed the new office to provide semiannual reports
to the agency for the next two years. TEP was ordered to relinquish about
$25,000 FERC said it gained when its merchant subsidiary was given capacity on
a line that the utility said was fully subscribed. Both utilities also agreed
to fund market monitors in their service territories.

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