1. Federal Energy Regulatory Commission Participation In Interstate Legal Processes Federal vs. State Authority August 10, 2005 Brazilia, Brazil

2. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes2 U.S Two-Tiered Regulation Regulatory authority over investor owned utilities is divided between the FERC and the State Regulatory Commissions.

3. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes3 What Does FERC Regulate? Electric Power Industry –Interstate transmission rates and services –Wholesale energy rates and services –Corporate transactions, mergers, securities issued by public utilities

4. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes4 What the State Public Utility Commissions (PUCs) Regulate Establish retail franchise areas Develop and enforce retail service quality standards Review and approve retail rates and tariffs Monitor and approve planning of the transmission system and generation facilities Approve construction of non-hydro generation and transmission facilities

5. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes5 What FERC Does Not Regulate Plan or finance investments Set electric reliability standards ( North American Electric Reliability Council ) Regulate pollution produced by electric generators (Environmental Protection Agency) Regulate safety standards of nuclear generation (Nuclear Regulatory Commission)

6. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes6 Electric Restructuring in the U.S. Pre 1996 - Electric industry –Services were combined (bundled) –One utility served entire franchise area Major Orders issued by FERC –Order No. 888 (1996) –Order No. 2000 (1999)

7. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes7 Electric Restructuring in the U.S. Some states resist opening their markets up –Nothing to be gained –May drive local prices up

8. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes8 Another Example of Federal/State Conflict Requests for Proposals (RFP) –States interested in reliable service at a low price –FERC concerned that the RFP process is run in a fair, non-discriminatory fashion.

9. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes9 New Chairman at FERC Joseph T. Kelliher –Has pledged to work closely with the states –Have to wait to see if policies change

10. Federal Energy Regulatory Commission August 10, 2005Interstate Legal Processes10 Thank you for your attention ! Dennis H. Melvin, Esq. »Federal Energy Regulatory Commission »888 First Street, NE »Washington, DC 20426 »(202) 502-8042 : Phone »(202) 208-0118 : FAX »dennis.melvin@ferc.gov