RM93-1-000 Final Rule

UNITED STATES OF AMERICA 62 FERC 61,127
FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Parts 365 and 381

Filing Requirements and Ministerial Procedures
for Persons Seeking Exempt Wholesale Generator Status

(Docket No. RM93-1-000)

ORDER NO. 550

(Issued February 10, 1993)

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final Rule

SUMMARY: The Federal Energy Regulatory Commission (Commission)

is issuing this final rule to establish regulations implementing

section 32 of the Public Utility Holding Company Act of 1935, as

added by section 711 of the Energy Policy Act of 1992. The final

rule establishes the filing requirements and ministerial

procedures for persons seeking exempt wholesale generator status.

EFFECTIVE DATE: This final rule is effective 30 days after the

date of publication in the Federal Register.

FOR FURTHER INFORMATION CONTACT:

James H. Douglass
Office of the General Counsel
Federal Energy Regulatory Commission
825 North Capitol Street, N.E.
Washington, D.C. 20426
Telephone: (202) 208-2143

SUPPLEMENTARY INFORMATION: In addition to publishing the full

text of this document in the Federal Register, the Commission

also provides all interested persons an opportunity to inspect or

copy the contents of this document during normal business hours

in Room 3308, at 941 North Capitol Street, N.E., Washington, D.C.

20426. The Commission Issuance Posting System (CIPS), an

Docket No. RM93-1-000 -2-

electronic bulletin board service, provides access to the texts

of formal documents issued by the Commission. CIPS is available

at no charge to the user and may be accessed using a personal

computer with a modem by dialing (202) 208-1397. To access CIPS,

set your communications software to use 300, 1200, or 2400 baud,

full duplex, no parity, 8 data bits and 1 stop bit. The full

text of this Notice of Proposed Rulemaking will be available on

CIPS for 10 days from the date of issuance. The complete text on

diskette in WordPerfect format may also be purchased from the

Commission's copy contractor, La Dorn Systems Corporation, also

located in Room 3308, 941 North Capitol Street, N.E., Washington,

D.C. 20426.

UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Elizabeth Anne Moler, Chair;
Charles A. Trabandt, Jerry J. Langdon,
Martin L. Allday, and Branko Terzic.

Filing Requirements and ) Docket No. RM93-1-000
Ministerial Procedures for )
Persons Seeking Exempt )
Wholesale Generator Status )

ORDER NO. 550

FINAL RULE

(Issued February 10, 1993)

I. INTRODUCTION

The Federal Energy Regulatory Commission (Commission) is

adopting as final an amendment to its regulations pertaining to

the filing requirements and ministerial procedures for persons

seeking exempt wholesale generator (EWG) status. The final rule

will create a new Subchapter T, Part 365 under Title 18, Chapter

I of the Code of Federal Regulations for regulations under

section 32 of the Public Utility Holding Company Act of 1935

(PUHCA), as added by section 711 of the Energy Policy Act of 1992

(Energy Act). 1/

II. BACKGROUND

Section 32(a) of PUHCA requires the Commission to promulgate

rules implementing procedures for determining EWG status within

12 months after the date of enactment of the Energy Act. 2/

1/ Pub. L. No. 102-486, 106 Stat. 2776 (1992).

2/ The Energy Act was enacted on October 24, 1992.

Docket No. RM93-1-000 -2-

Section 32 of PUHCA creates a new category of electric

entities, known as EWGs, that are exempt from regulation under

PUHCA. Section 32(a) of PUHCA requires that applicants for EWG

status file an application for a determination of their status by

the Commission. The Commission is required to render its

determination within 60 days of the receipt of an application.

Section 32(a) provides that an applicant that has applied in good

faith for a determination by the Commission is deemed an EWG

pending the Commission's determination.

An EWG is defined as a person determined by the Commission

to be engaged directly, or indirectly through one or more

affiliates, and exclusively in the business of owning and/or

operating all or part of one or more eligible facilities, as

defined in section 32(a)(2) of PUHCA, and selling electric energy

at wholesale. An EWG may sell power it generates, as well as

power generated by others. 3/ An eligible facility may include

interconnecting transmission facilities necessary to effect a

sale of electric energy at wholesale. An eligible facility may

include a portion of a facility, subject to a limitation on

hybrid facilities. If any retail rate associated with a facility

was in effect at the time of enactment of the Energy Act, each

State commission having retail rate jurisdiction must make

3/ The Joint Explanatory Statement of the Committee of
Conference provides: "The definition of an EWG has
been drafted to permit an EWG to sell wholesale power
that it has not generated itself." H.R. Conf. Rep. No.
1018, 102nd Cong., 2d. Sess. 388 (1992).

Docket No. RM93-1-000 -3-

certain specified determinations. 4/ Certain hybrid

facilities, as defined in section 32(d) of PUHCA, may become

eligible facilities pursuant to approval of affected State

commissions.

The Commission is required to notify the Securities and

Exchange Commission (SEC) whenever the Commission makes a

determination that a person is an EWG.

On November 10, 1992, the Commission issued a Notice of

Proposed Rulemaking (NOPR) proposing regulations to establish the

filing requirements and ministerial procedures for persons

seeking EWG status. 5/

Under the proposed rule, a person seeking EWG status

(applicant) would file a sworn statement with the Commission.

The Commission would review the application and determine whether

the sworn statement contains sufficient information to establish

that the applicant meets the statutory requirements for EWG

status. The proposed rule would require an applicant to file:

(1) a sworn statement attesting to any facts presented to

demonstrate eligibility for EWG status, and attesting to any

representation otherwise offered to demonstrate eligibility for

EWG status; (2) a brief description of the facility or facilities

4/ See PUHCA section 32(c).

5/ Filing Requirements and Ministerial Procedures for Persons
Seeking Exempt Wholesale Generator Status, 57 FR 55195
(November 24, 1992), IV FERC Stats & Regs # 32,490 (1992).

Docket No. RM93-1-000 -4-

which are or will be eligible facilities 6/ owned and/or

operated by the applicant and related transmission

interconnection components, any lease arrangements involving the

facility and any public utility companies, and any electric

utility company that is an affiliate company or associate company

of the applicant; and (3) any necessary specific State commission

determinations required pursuant to sections 32(c) and (d) of

PUHCA. 7/

The proposed rule specified that the Commission must act

within 60 days of receipt of an application. Applications that

do not meet the requirements of the proposed rule set forth in

proposed section 365.3 will be rejected. Under the proposed

rule, if the Commission does not act within 60 days, the

application is deemed to have been granted.

Since there are no rehearing requirements under PUHCA,

Commission action under section 365.5 of the proposed rule would

be final action and would not be subject to rehearing.

The proposed rule would require the Secretary of the

Commission to notify the SEC whenever an application for EWG

status is granted. The Secretary would also notify the SEC if an

application were to be deemed granted pursuant to section 365.3.

In the NOPR the Commission specifically requested comment

concerning whether EWG filings should be subject to public notice

6/ Pursuant to PUHCA section 32(a)(2)(B) an eligible facility
may include a portion of a facility.

7/ See PUHCA sections 32(c) and 32(d)(2).

Docket No. RM93-1-000 -5-

and comment procedures and whether to create a separate filing

fee category for EWG applications.

III. PUBLIC REPORTING BURDEN

The final rule requires persons seeking a determination of

EWG status to file for a determination by the Commission. The

final form of the regulations requires applicants to file with

the Commission: (1) a sworn statement attesting to any facts

presented to demonstrate eligibility for EWG status, and

attesting to any representation otherwise offered to demonstrate

eligibility for EWG status; (2) a brief description of the

facility or facilities which are or will be eligible facilities;

and (3) any necessary State commission orders. The final rule

also requires that certain non-public utility EWGs pay filing

fees.

The Commission anticipates that respondents will submit only

one filing for each determination requested. As of January 29,

1993, the Commission had completed action on five applications.

Based on a survey of the five completed applications, the

Commission estimates that the reporting burden associated with

each application averages approximately eight hours.

The Commission received 14 applications for EWG status

during the first three months following enactment of the Energy

Act. If applications continue to be filed at the same rate, the

Commission projects that it will receive 56 applications

annually. Thus, the Commission estimates that the annual

reporting burden for the collection of information is 448 hours

Docket No. RM93-1-000 -6-

(56 applications multiplied by eight hours per response for each

application).

IV. DISCUSSION

The Commission received 50 comments in response to the

Notice of Proposed Rulemaking (NOPR). 8/ Most of the

commenters support the proposed rule. The Commission will

address the major issues raised by the commenters by subject

matter.

A. Notice and Comment Procedures

1. Comments

Twenty-nine commenters support publication of notice of EWG

applications in the Federal Register. These commenters state

that notice in the Federal Register is necessary to ensure that

interested persons will have an opportunity to comment on EWG

applications, and will provide important information to

participants competing in the wholesale electric industry. The

commenters state that notice should not interfere with the

Commission's timely determination of EWG status.

Destec Energy, Inc. (Destec) states that lack of notice may

provide a basis for subsequent judicial challenge of EWG

determinations.

Environmental Action Foundation, et al. (Environmental

Action) suggests that the Commission publish an annual report on

8/ A complete list of the commenters is attached as Appendix A.

Docket No. RM93-1-000 -7-

EWGs in order to provide information to the wholesale electric

market. 9/

Several of the commenters state that EWG applicants should

include with their filings a notice suitable for publication in

the Federal Register.

The Electricity Consumers Resource Council (ELCON) states

that if notice of an EWG application is published in the Federal

Register, it should include a factual summary of the application,

including information about affiliates of the applicant. ELCON

also states that the docket prefix assigned to an application

should indicate whether the applicant is an independent power

producer or affiliated power producer.

Most of the commenters supporting notice in the Federal

Register also support providing interested parties an opportunity

to comment on EWG applications. These commenters note that

interested parties may be able to provide the Commission with

information concerning whether an application is accurate and

whether an applicant meets the statutory requirements for EWG

status. At the same time, the Electric Generation Association

(EGA) cautions that notice and comment procedures should not be

permitted to develop into formal adjudicatory proceedings or to

delay the 60-day deadline for Commission action.

9/ This suggestion is beyond the scope of this rulemaking.
However, the Commission's action here will not prohibit the
Commission from publishing an annual report, if the
Commission, based on its experience, subsequently determines
that an annual report is desirable.

Docket No. RM93-1-000 -8-

Twelve commenters state that State commissions should be

provided notice and adequate time to respond to EWG applications. 10/

These commenters state that section 32 of PUHCA contemplates

State commission involvement in EWG determinations. They note

that section 32 specifically requires State commission approval

for certain EWG-related transactions. The commenters also note

that section 365.3(b) of the proposed rule requires that EWG

applicants must show that they have obtained necessary State

commission approvals: (1) if a rate or charge for, or in

connection with, the construction of a facility, or for electric

energy produced by a facility (other than any portion of a rate

or charge which represents recovery of the cost of a wholesale

rate or charge), was in effect under the laws of any state on

October 24, 1992; or (2) if any portion of an eligible facility

is owned or operated by an electric utility company that is an

affiliate or associate company of the applicant.

In order for State commission involvement to be effective,

these commenters assert that affected State commissions should be

notified when an EWG application is filed. The commenters state

10/ Arkansas Public Service Commission (Arkansas
Commission), Atlantic City Electric Company (Atlantic
City Electric), Destec, Environmental Action, Idaho
Public Utilities Commission, Michigan Public Service
Commission Staff (Michigan Commission Staff), Missouri
Public Service Commission (Missouri Commission),
National Association of Regulatory Utility
Commissioners (NARUC), New York State Department of
Public Service (New York Department), Public Service
Commission of Nevada, Public Service Commission of
Wisconsin, and Public Utilities Commission of
California (California Commission).

Docket No. RM93-1-000 -9-

that EWG applicants should be required to serve a copy of their

applications on each affected State commission at the same time

that the application is filed with the Commission. The

commenters state that an affected State commission should

generally include: (1) each State commission where a generating

facility owned and/or operated by the EWG applicant is located;

(2) each State commission regulating the retail rates of an

electric utility that will purchase power from the EWG, if known

at the time of application; (3) each State commission regulating

any retail utility that is affiliated with the applicant; (4)

each State commission that has authorized the removal of a

facility from retail rates and the transfer of the facility to

the EWG applicant; (5) each State commission where facilities are

located from which the applicant intends to purchase long-term

wholesale power.

The commenters state that service of EWG filings on affected

State commissions will entail minimal extra copying and mailing

costs.

In addition to service of EWG filings on affected State

commissions, NARUC also suggests that section 365.5 of the

proposed rule should be revised to direct the Secretary of the

Commission to notify each affected State commission once the

Commission has made an EWG determination.

Atlantic City Electric states that service of EWG filings

should also be provided to utilities that may provide

transmission for EWGs. Long Island Lighting Company (LILCO) adds

Docket No. RM93-1-000 -10-

that service of EWG filings should also be provided to: (1)

utilities in whose service area an eligible facility is located;

(2) utilities interconnected with the applicant; or (3) utilities

to which an EWG sells or intends to sell power.

Five commenters oppose publication of notice in the Federal

Register. 11/ These commenters state that the Commission's

role is ministerial and that the Commission's review is limited

to determining whether an entity satisfies the statutory criteria

for EWG status.

NIEP states that an opportunity for notice and comment is

not necessary because EWG status only provides an exemption from

regulation under PUHCA. NIEP states that EWGs remain subject to

other corporate, financial, rate, siting and environmental

regulation. NIEP states that intervenors may seek to use comment

procedures to raise irrelevant concerns and to thereby delay

determinations of EWG status. NIEP states that greater scrutiny

of EWG applications is not necessary because applicants have a

strong incentive to provide accurate information. An applicant

who misrepresents facts contained in a sworn statement in an EWG

filing could be subject to criminal penalties.

CMS Energy adds that Congress did not intend, as evidenced

by the relatively short 60-day time period for a determination,

to authorize notice and comment or subsequent formal hearings.

11/ American Gas Association, CMS Energy Corporation (CMS
Energy), Cogeneration Partners Group (Cogen Partners),
National Independent Energy Producers (NIEP), and
Pentzer Energy Services, Inc. (Pentzer).

Docket No. RM93-1-000 -11-

As an alternative to notice and comment, several commenters

state that the Commission could provide notice of EWG

determinations by publishing a periodic list of applications that

have been granted. Such a list could be similar to the

Commission's annual "Qualifying Facilities Report." 12/

Enron and Pentzer state that applicants should not be

required to file a copy of their application with the SEC. Enron

and Pentzer state that the SEC has no authority to review EWG

applications. The commenters state that it is sufficient that

the SEC is notified pursuant to section 365.5 of the proposed

rule when an EWG application is granted.

Four commenters state that the Commission should publish

notice in the Federal Register after the Commission has made a

determination. Texas Utilities Electric Company (Texas

Utilities) states that the notice should include a description of

the applicant and any eligible facilities granted EWG status.

Texas Utilities suggests that section 365.3 of the proposed rule

should be modified to require the Secretary of the Commission to

publish notice in the Federal Register at the same time that the

Secretary notifies the SEC of a determination.

2. Commission Ruling

The final rule incorporates provisions for limited public

notice of and comment on EWG applications. The Commission will

publish notice of EWG applications in the Federal Register and

12/ See supra n.9.

Docket No. RM93-1-000 -12-

will permit comments or interventions pursuant to Rules 211 and

214 of the Commission's Rules of Practice and Procedure. 13/

While there is no requirement in section 32 of PUHCA for the

Commission to provide notice and comment, neither is there any

prohibition on the Commission's discretion to do so. Based on

the comments, the Commission believes that public notice and

comment will help to ensure that applications are accurate and

will provide important information for participants in the

wholesale electric market.

At the same time, the Commission adheres to its initial goal

of developing as streamlined an EWG process as is feasible.

Therefore, the Commission intends to limit the comments that may

be submitted on EWG applications to information concerning the

adequacy or accuracy of the factual representations made to

satisfy the statutory criteria for EWG status. The Commission

will not permit interventions or comments to delay EWG

determinations. Given the narrow focus of the Commission's

inquiry, the Commission will not consider comments that raise

issues that fall outside the purview of the statutorily-fixed

determination, e.g., comments that object to a facility's

financing arrangements or to the environmental consequences of a

facility's construction or operation. Cf. Sugarloaf Citizens

Association v. FERC, 959 F.2d 508 (4th Cir. 1992). Furthermore,

the Commission will deny intervention to parties that raise

13/ 18 CFR 385.211, 385.214.

Docket No. RM93-1-000 -13-

issues which are irrelevant to the Commission's determination.

Finally, the Commission will not entertain requests for hearing.

The final rule adds a new subsection (c) to section 365.3 of

the proposed rule concerning the form of notice. Section

365.3(c) specifies the form and contents of a notice suitable for

publication in the Federal Register that applicants must submit

with their applications. The contents of the notice include a

brief description of the applicant and the facility or facilities

which are or will be eligible facilities owned and/or operated by

the applicant, including reference and citation to any applicable

State commission determinations.

The final rule does not establish separate docket prefixes

for affiliated and non-affiliated EWG applicants as suggested by

ELCON. The rule already requires that EWG applicants provide

sufficient information to evaluate relevant affiliation issues.

The Commission believes that establishing separate docket

prefixes based on affiliation could be confusing,

administratively burdensome, and might delay the Commission's

processing of applications. For example, the question of whether

a person seeking an EWG determination is an affiliate of an

electric utility company under PUHCA is not always readily

apparent. See 15 U.S.C. # 79b(a)(11) (1988). If ELCON's

suggestion were adopted, the Commission might have to expend

considerable staff resources before a docket prefix could even be

assigned to a particular application. This, in turn, could delay

Docket No. RM93-1-000 -14-

notice to the public and provide the Commission with little time

to consider the application within the 60-day statutory period.

The final rule requires applicants to serve a copy of the

EWG application on the SEC and affected State commissions.

Although service of applications on the SEC and State commissions

is not required by law, section 32 of PUHCA specifically

contemplates a role for the SEC and State commissions insofar as

certain eligible facilities are concerned (see PUHCA sections

32(c) and (d). It also contemplates that the SEC be aware of EWG

determinations. The Commission sees no reason not to inform

these agencies of pending EWG applications at an early stage,

particularly since the copying and mailing costs associated with

serving filings on the SEC and affected State commissions will be

minimal. An affected State commission is defined as each: (1)

State commission 14/ of each state in which a generating

facility owned and/or operated by the applicant is or will be

located; (2) State commission regulating the retail rates of an

electric utility that will purchase power from the applicant; and

(3) State commission regulating a retail utility that is

affiliated with the applicant.

The final rule does not require that special notice of EWG

applications be provided to utilities or that special notice of

determinations be provided to utilities or State commissions.

The general notice and comment procedures established by the

rule, including publication of notice of each EWG application in

14/ See 15 U.S.C. 79b(a)(26)(1988).

Docket No. RM93-1-000 -15-

the Federal Register, will provide utilities and all other

interested persons with sufficient ability to monitor filings and

to effectively participate in EWG proceedings. Moreover, the

Commission will continue to publish each determination in FERC

Reports.

B. Filing Fees and Annual Charges

1. Comments

Four commenters state that the Commission should not charge

filing fees for EWG applications. 15/ These commenters state

that the ministerial nature of the Commission's review should not

require the use of significant Commission resources. If filing

fees are assessed, UtiliCorp suggests that the Commission should

charge more for contested cases.

Mission Energy Company (Mission) states that EWGs should not

be assessed annual charges. Mission states that an exemption

from annual charges is justified because: (1) the nature of EWG

activities and holdings is limited; (2) EWGs contribute to

competition in the wholesale electric utility industry; (3)

Congress has demonstrated an intent to limit regulatory burdens

on the development of EWGs; and (4) the Commission is unlikely to

have substantial continuing oversight of EWGs.

15/ Destec, UtiliCorp United Inc. (UtiliCorp), NIEP, and
Pentzer.

Docket No. RM93-1-000 -16-

Fourteen commenters state that the Commission should charge

EWG applicants a filing fee and/or annual charges. 16/ Many

of the commenters state that it is not appropriate for other

regulated entities to subsidize the cost of reviewing EWG

applications. Therefore, the commenters suggest that EWG

applicants should pay a filing fee sufficient to recover the cost

of reviewing the application.

Florida P&L states that non-public utility EWGs should also

be charged a fee when they submit rate filings. 17/

Arizona Public Service states that filing fees should only

be applicable to EWGs that will not become public utilities, as

defined in section 201(e) of the Federal Power Act (FPA), 16

U.S.C. # 824(e) (1988), upon the sale of electric energy at

wholesale, i.e., non-public utility EWGs.

Environmental Action states that the Commission should waive

filing fees when the fee would cause undue financial hardship.

18/

16/ Allegheny Power System (Allegheny), Arizona Public Service
Company (Arizona Public Service), Atlantic City Electric,
Cogen Partners, Department of Energy, Detroit Edison, EGA,
El Paso Electric Company, Environmental Action, Florida
Power & Light Company (Florida P&L), Mission, New England
Power Company (NEPCO), Southern Company Services, Inc.
(Southern), and Southwestern Public Service Company
(Southwestern).

17/ However, the Commission notes that non-public utility
EWGs are not jurisdictional under the FPA and thus they
will not submit rate filings to the Commission.

18/ There is no need to address this issue at this time. EWG
applicants may request waiver of the applicable filing fee
(continued...)

Docket No. RM93-1-000 -17-

Southwestern states that EWGs that are public utilities as

defined by the FPA should be subject to annual charges on the

same basis as other public utilities. 19/

Southern states that EWGs that are "qualifying small power

producers" or "qualifying cogenerators" as those terms are

defined in section 3 of the FPA, 16 U.S.C. # 796 (1988), should

be treated as EWGs that are not public utilities and should not

be subject to annual charges.

2. Commission Ruling

The final rule creates a separate filing fee category

applicable only to non-public utility EWGs, i.e., EWGs that will

not become public utilities upon the sale of electric energy at

wholesale. 20/ Since non-public utility EWGs will not pay

annual charges, the Commission believes that filing fees are

necessary in order to recover the appropriate cost of

administering section 32 on behalf of non-public utility EWGs.

18/(...continued)
at the time of filing pursuant to the Commission's
regulations. See 18 CFR 381.106.

19/ EWGs that fall within the requirements of section 201(e) of
the FPA will be subject to the FPA requirements applicable
to public utilities. EWGs that do not fall within the
requirements of section 201(e), e.g., EWGs owning and/or
operating only eligible facilities located and selling
intra-ERCOT, will be non-public utility EWGs.

20/ This would include foreign EWGs, EWGs owning only
eligible facilities located and selling intra-ERCOT, in
Hawaii, in Alaska, in Puerto Rico, etc.

Docket No. RM93-1-000 -18-

The new filing fee category will be created by adding a new

subpart H to Part 381 of the Commission's rules. 21/

EWGs that do become public utilities will be assessed annual

charges under Part 382 of the Commission's existing rules. Thus,

the cost of administering section 32 for public-utility EWGs will

be recovered through annual charges. The final rule does not

incorporate Mission's request that EWGs be exempt from annual

charges.

Under this structure, the Commission will recover the cost

of administering the statute through annual charges for public

utility EWGs and filing fees for non-public utility EWGs.

C. Compliance and Enforcement

1. Comments

Nineteen commenters state that the Commission should specify

how it will monitor continuing compliance by EWGs with the

21/ The Commission will establish an initial fee of $1000
for non-public utility EWG applications. Based upon
the Commission's costs during the first quarter of FY
93, when the Commission acted on the first four EWG
applications, the Commission could establish a fee
approximately two and one-half times larger than the
fee the Commission establishes herein. However, the
Commission believes that the costs incurred on the
first four applications are not representative of the
cost of processing future non-public utility EWG
applications for the following reasons. First, of the
four applications acted on in the first quarter, only
one, Costanera Power Corp., 61 FERC # 61,335 (1992)
(Docket No. EG93-4-000), involved a non-public utility
EWG. Second, and more importantly, this rulemaking
will significantly simplify the process of obtaining an
EWG determination and consequently the cost of
processing EWG applications. Therefore, it would be
inappropriate to base the filing fee on applications
processed before the rule is in place.

Docket No. RM93-1-000 -19-

statutory requirements for EWG status. 22/ Some of the

commenters state that the Commission's authority to make an

initial EWG determination implies that the Commission also has

the authority to review whether an entity continues to conform to

the requirements of EWG status. Environmental Action states that

although PUHCA does not contain a specific complaint procedure

like that contained in section 206 of the FPA, the Commission

should not determine that it has no continuing authority to

review EWGs. Environmental Action suggests that the Commission's

determination should be viewed as a continuing responsibility.

Several of the commenters state that the Commission should

specify a mechanism for interested parties to inform the

Commission of new facts or changed conditions that may affect the

continuing validity of an EWG determination. Further, the

commenters state that the Commission should specify what action

it intends to take if an EWG fails to continue to adhere to the

statutory requirements for EWG status.

A few commenters suggest that the Commission should issue a

determination revoking EWG status when appropriate, for instance,

if a State commission revokes its earlier consent to an EWG-

22/ Arkansas Commission, Atlantic City Electric, Detroit
Edison, Edison Electric Institute (EEI), ELCON,
Environmental Action, Florida P&L, LG&E Energy Corp.
(LG&E Energy), LILCO, Michigan Commission Staff,
Missouri Commission, NARUC, NEPCO, New York Department,
New York State Electric & Gas Corporation, et al.,
Pennsylvania Power & Light Company (Pennsylvania
Power), California Commission, San Diego Gas & Electric
Company (SDG&E), and Texas Utilities.

Docket No. RM93-1-000 -20-

related transaction. 23/ NARUC suggests that the Commission

should adopt a complaint or protest procedure for interested

parties who seek to challenge the continuing validity of an EWG

determination.

EEI suggests that an EWG applicant should be required to

affirm that it will continue to adhere to the requirements of EWG

status and that it will inform the Commission if it no longer

meets the statutory requirements.

EEI also recommends that continued compliance be assured by

revising section 365.3(a)(1)(A) of the proposed rule to include

the phrase "and will always be." The amended provision suggested

by EEI would read as follows:

[t]he applicant is and will always be engaged
directly, or indirectly through one or more
affiliates, and exclusively in the business
of owning or operating, or both owning and
operating, all or part of one or more
eligible facilities and selling electric
energy at wholesale.

EEI and SDG&E suggest that every EWG should be required to

file an annual statement that it continues to satisfy the

statutory requirements. SDG&E also suggests that the Commission

should treat an EWG determination as a declaratory order. Thus,

SDG&E states that any subsequent change in facts underlying the

Commission's determination would render the original

determination invalid and require a new filing.

Atlantic City Electric and Florida P&L recommend that the

Commission require each EWG to make a periodic filing certifying

23/ See PUHCA sections 32(c) and (d).

Docket No. RM93-1-000 -21-

that it continues to comply with the statutory requirements for

EWG status. Alternatively, Florida P&L states that the

Commission could condition each EWG determination on an

applicant's continued compliance with the statutory requirements

for EWG status.

ELCON and LILCO state that the Commission should require

EWGs to report any material change in circumstance that could

affect EWG status. ELCON further suggests that after a material

change in circumstances, EWGs should be granted 30 days to

prepare a new filing reflecting the change in circumstances.

2. Commission Ruling

An EWG determination is based on the facts that are

presented to the Commission. Any material variation from those

facts may render an EWG determination invalid. 24/ If there

is any material change in facts that may affect an EWG's

eligibility for EWG status under section 32, the EWG must within

60 days: apply for a new determination of EWG status; file a

written explanation of why the material change in facts does not

24/ This is analogous to qualifying facility
determinations. See, e.g., CMS Midland, Inc., et al.,
50 FERC # 61,098 at 61,277 (1990), reh'g denied, 56
FERC # 61,177 (1991) appeal filed, No. 91-13-66 (D.C.
Cir.). The Commission notes that in Docket No. RM92-
12-000, infra note 27, the Commission has proposed a
streamlined procedure to deal with minor changes to a
facility that may affect qualifying facility status.
Given the infancy of the Commission's implementation of
PUHCA section 32, the Commission does not believe that
a need for similar action with respect to EWG filings
has been demonstrated. If such need later becomes
apparent, the Commission can address it at a later
time.

Docket No. RM93-1-000 -22-

affect the EWG's status; or notify the Commission that it no

longer seeks to maintain EWG status. This requirement is

incorporated in section 365.7 of the final rule.

The Commission also notes that any violations of PUHCA may

be reported directly to the SEC pursuant to section 18 of PUHCA.

For instance, section 18(a) of PUHCA provides, in part, as

follows:

The Commission [SEC], in its discretion may
investigate any facts, conditions, practices,
or matters which it may deem necessary or
appropriate to determine whether any person
has violated or is about to violate any
provision of this title, or any rule or
regulation thereunder ... .

15 U.S.C. # 79r (1988). Furthermore, section 18(e) provides that

the SEC may bring an action in the United States district courts

to enforce compliance with PUHCA. Id.

D. Section 365.5 - Applications Deemed Granted

1. Comments

Section 365.5 of the proposed rule provides that if the

Commission has not issued an order granting or denying an

application within 60 days of receipt of the application, the

application will be deemed to have been granted. Five commenters

state that the Commission should issue a written determination

for each application. 25/

25/ Allegheny, Environmental Action, LG&E Energy, Missouri
Commission, and NARUC.

Docket No. RM93-1-000 -23-

LG&E Energy states that deeming an application to have been

granted through inaction may not be adequate for the purpose of

securing financing for eligible facilities.

LG&E Energy states that the Energy Act requires an

affirmative determination and does not authorize the Commission

to permit its inaction to constitute a determination.

Accordingly, LG&E Energy states that the Commission should issue

an order for each EWG determination.

NARUC asks whether the Secretary of the Commission would

notify the SEC when an entity is deemed to be an EWG. NARUC

states that there must be some mechanism for informing the SEC

and State commissions when an entity is deemed to be an EWG.

NARUC states that if the Commission is unable to act on an EWG

application within 60 days, it should deny the application

without prejudice to refiling. A new 60-day time period would

begin upon refiling.

Environmental Action states that section 32 of PUHCA only

"deems" an entity an EWG for the 60-day period between filing and

a determination. Environmental Action states that the Commission

is without authority to deem an entity an EWG following the 60-

day period. Environmental Action states that the Commission must

make an actual determination.

Mission supports section 365.5 as proposed in the NOPR.

Mission states that section 365.5 eliminates regulatory

uncertainty that could arise if an application is not acted upon

within 60 days. Mission states that section 365.5 promotes

Docket No. RM93-1-000 -24-

administrative efficiency by eliminating the need to issue a

specific written determination in every case.

2. Commission Ruling

The final rule does not amend section 365.5 of the proposed

rule. As Mission states, section 365.5 eliminates the need to

issue a formal Commission determination in every case.

Contrary to Environmental Action's argument, the fact that

an entity is deemed an EWG following expiration of the 60-day

period does not mean that the Commission has not made a

determination. The Commission clarifies that applications where

the Secretary issues a notice that the application is deemed

granted will have been determined by the Commission to be an EWG.

The notification of the Commission's determination will be by

Secretary notice, as opposed to a formal Commission

determination. This is similar to the procedure employed by the

Commission in denying rehearing by operation of law.

However, the Commission agrees with NARUC that notice should

be provided when a person is deemed to be an EWG. Therefore, the

Secretary will issue a notice whenever an applicant is deemed to

be an EWG. 26/ The Secretary will also specifically notify

the SEC whenever an applicant is deemed to be an EWG.

26/ The Secretary will also notify the applicant and any
intervenors whenever an applicant is deemed to be an EWG.
Thus, State commissions or others that evidence an interest
in a proceeding by intervening will be notified whenever an
applicant is deemed to be an EWG.

Docket No. RM93-1-000 -25-

E. Affiliation

1. Comments

Section 365.3(a)(2)(C) of the proposed rule requires an EWG

applicant to disclose "any electric utility company that is an

affiliate company or associate company of the applicant." Eight

commenters state that this information is not relevant to the

review of an EWG application. 27/ The commenters state that

information about affiliates may be relevant in cases involving

affiliate transactions. However, the commenters state that

section 32 of PUHCA permits electric utilities, exempt holding

companies and registered holding companies to own and/or operate

EWGs.

The commenters note that section 365.3(b) of the proposed

rule separately requires an applicant to disclose if any portion

of an eligible facility is owned or operated by an electric

utility company that is an affiliate or associate company of the

applicant. Since other information about affiliates is

irrelevant, the commenters suggest that section 365.3(a)(2)(C) of

the proposed rules be deleted.

Pennsylvania Power supports retention of section

365.3(a)(2)(C) in order to ensure that EWGs do not engage in

reciprocal arrangements and that all required State commission

authorizations in the case of affiliate transactions or hybrid

facilities have been submitted.

27/ American Gas Association, Baltimore Gas and Electric
Company (BG&E), CMS Energy, EGA, Florida P&L, Mission,
Southern, and Utility Working Group.

Docket No. RM93-1-000 -26-

The Michigan Commission Staff states that each EWG applicant

should be required to disclose in its sworn statement its

affiliation with any exempt holding companies, registered holding

companies, and retail electric utilities. The Michigan

Commission Staff states that this information is necessary to

verify the applicant's compliance with the statutory

requirements.

2. Commission Ruling

The Commission will adopt section 365.3(a)(2)(C) as

proposed. The Commission believes that certain information

concerning affiliation is necessary to review the accuracy of

applications, particularly whether an applicant has obtained any

necessary State commission authorizations. The disclosure of

affiliation required by section 365.3(a)(2)(C) of the rule will

provide additional assurance that the applicant has complied with

the requirements of section 365.3(b) of the rule and section

32(c) of PUHCA.

F. Affirmation

1. Comments

EGA states that the Commission should eliminate the

requirement that applicants submit sworn statements. EGA notes

that applicants for qualifying facility status are not required

to submit sworn statements. 28/ EGA states that a material

28/ The Commission has proposed changes in its qualifying
facility regulations in this regard. See Docket No.
RM92-12-000, Streamlining of Regulations Pertaining to
Parts II and III of the Federal Power Act and the
(continued...)

Docket No. RM93-1-000 -27-

misrepresentation in an application will void the Commission's

determination.

Mission does not oppose the requirement that EWG applicants

file a sworn statement affirming that the applicant complies with

the statutory requirements for EWG status. However, Mission

states that the signature of an authorized representative of the

applicant demonstrates sufficient authentication for the purpose

of certifying qualifying facilities. If the Commission adopts

this recommendation, Mission states that the Commission should

clarify who may sign an application as an authorized

representative.

2. Commission Ruling

The Commission does not believe that the requirement of

affirmation will impede the preparation of EWG applications.

Affirmation provides additional assurance that an application is

accurate. However, pursuant to Mission's request, the Commission

clarifies that any representative legally authorized to bind an

applicant may execute the application and that this can provide

sufficient authentication for EWG application purposes.

G. EWGs and Qualifying Facilities

1. Comments

Several commenters submitted comments about the relationship

between EWGs and qualifying facilities under the Public Utility

28/(...continued)
Public Utility Regulatory Policies Act of 1978, 57 FR
55176, 55181; 57 FR 58168, Proposed Form No. 556, Part
A, 1d.

Docket No. RM93-1-000 -28-

Regulatory Policies Act of 1978 (PURPA). 29/ Enron and LG&E

Energy state that the Commission should clarify that a facility

may be both a qualifying facility under PURPA and an eligible

facility under section 32 of PUHCA.

Enron also asks the Commission to clarify that one part of a

facility may be a qualifying facility, while another part of the

same facility may be an eligible facility and be owned and/or

operated by an EWG.

The American Paper Institute, Inc. (American Paper) asks the

Commission to clarify that owners of hydroelectric facilities

between 30 and 80 MW in size, which are not presently exempt from

regulation under PUHCA as qualifying facilities, may apply for

exemption as EWGs.

Bald Eagle Power Company Inc. (Bald Eagle) states that the

Commission should grant qualifying facility status to EWGs that

use only renewable energy sources. Bald Eagle claims that it

makes no sense to grant qualifying facility status to

cogeneration facilities that have no production limits, while

denying qualifying facility status to generators who use

renewable energy sources if they exceed small power producer

limits.

2. Commission Ruling

The purpose of this rulemaking is to promulgate filing

regulations and ministerial procedures for EWG applications.

This proceeding is not intended to answer each and every question

29/ 16 U.S.C. # 2611 et seq. (1988). See 18 CFR Part 292.

Docket No. RM93-1-000 -29-

that may be presented concerning EWGs and PUHCA section 32.

Accordingly, the Commission declines to rule on these questions

in this proceeding. These questions can be addressed in

individual applications.

H. Exclusivity

1. Comments

Section 32(a)(1) of PUHCA requires that an applicant be

engaged "exclusively" in the business of owning and/or operating

one or more eligible facilities, including certain transmission

facilities, and in selling electric energy at wholesale. Section

365.3(a)(1)(A) of the proposed rule requires that the applicant

represent that it "is engaged directly, or indirectly through one

or more affiliates, and exclusively in the business of owning or

operating, or both owning and operating, all or part of one or

more eligible facilities and selling electric energy at

wholesale." [emphasis added]

American Paper and Enron state that the Commission should

clarify that a cogenerator that is not a qualifying facility may

be an EWG even though it also sells steam or heat. American

Paper states that this interpretation is consistent with the

public interest as recognized by the policies embodied in PURPA

with respect to cogenerators and qualifying facilities. American

Paper states that it would be unnecessarily burdensome for a

cogenerator to create separate subsidiaries for different

functions at the same facility.

Docket No. RM93-1-000 -30-

LG&E Energy asks the Commission to clarify whether

incidental business activities such as the sale of excess steam,

or the sale of transmission service along a radial line serving

the eligible facility, would violate the exclusivity requirement.

Enron Gas Services Corp. urges the Commission to clarify that the

sale of excess gas does not violate the exclusivity requirement.

American Paper states that independent industrial generators

who also engage in other non-electric utility business would be

excluded from EWG status by a literal interpretation of section

32(a)(1) of PUHCA. American Paper states that such a literal

interpretation would frustrate the purpose of the Energy Act by

inhibiting the growth of competition in the electric utility

industry. American Paper suggests that the Commission should

clarify that exclusivity applies only to the extent that an

applicant is engaged in business that would otherwise cause it to

be considered the owner or operator of an electric utility

company under section 2(a)(3) of PUHCA. American Paper states

that it is reasonable to conclude that Congress meant the

exclusivity prohibition to apply only to business activities that

would cause an entity to be subject to regulation under PUHCA.

American Paper also states that it would be unnecessarily

burdensome for industrial independent power producers to create

separate subsidiaries for different functions at the same

facility.

ELCON states that the Commission should interpret the

statute so that the exclusivity requirement applies to sales of

Docket No. RM93-1-000 -31-

electricity at wholesale, and does not apply to incidental

business activities such as the sale of steam or waste products

or the ownership of fuel handling facilities.

2. Commission Ruling

As with the preceding discussion concerning EWGs and

qualifying facilities, the matters raised by the commenters

concerning exclusivity are outside the scope of this proceeding.

The Commission will defer ruling on these questions until they

are presented in an EWG application.

I. Deficient Applications

1. Comments

Enron and Pentzer state that the Commission should provide

for reconsideration of denials of EWG status. In the

alternative, Pentzer states that the Commission should promptly

notify applicants of deficiencies and permit the applicant to

amend its filing. Enron states that the Commission should

clarify that denials of EWG status are without prejudice to

refiling with additional supporting information.

LG&E Energy asks whether the Commission will issue a

deficiency letter when an application fails to provide all of the

information necessary to make an EWG determination. If so, LG&E

Energy asks how the issuance of a deficiency letter will affect

the 60-day deadline for a determination.

NIEP suggests that if an application is considered

incomplete, FERC should inform the applicant within ten days. If

the applicant responds within another ten days, NIEP states that

Docket No. RM93-1-000 -32-

the 60-day clock should not be tolled. If the applicant does not

respond within ten days, NIEP states that the 60-day clock should

start over when a complete application is filed. Environmental

Action states that each deficiency requiring an amended filing

should toll the 60-day clock.

2. Commission Ruling

The Commission will not issue deficiency letters. The

absolute 60-day deadline for Commission action does not leave

adequate time for review of deficiency responses. 30/ The

Commission will either grant or deny an application within the

60-day time period. The 60-day time period will begin on the

date that an application, including any required filing fee, is

received by the Secretary. However, if the Commission denies an

application, the applicant may always refile with additional

information or explanation.

J. Judicial Review

1. Comments

Enron states that EWG determinations may not be subject to

judicial review under either the FPA or PUHCA. Enron states that

section 32 of PUHCA does not implicate the FPA and therefore an

EWG determination would presumably not be subject to FPA judicial

review procedures. See 16 U.S.C. # 825l (1988). Likewise, EWG

determinations would presumably not be subject to judicial review

under PUHCA because the judicial review procedures established

30/ For the same reason, the Commission will not permit
amendments to filings.

Docket No. RM93-1-000 -33-

for PUHCA refer only to judicial review of orders issued by the

SEC. See 15 U.S.C. # 79x (1988).

Enron states that EWG determinations may be subject to

review under the Administrative Procedure Act (APA). However,

Enron states that the APA contains no time limit for filing

petitions for review. Under these circumstances, Enron states

that an EWG applicant could never be certain that its EWG

determination is final and no longer subject to review. Enron

states that this lack of regulatory certainty could adversely

affect project financing.

Enron suggests that the Commission either: (1) interpret

PUHCA judicial review provisions (including the 60-day time limit

for filing a petition for review) to apply to EWG determinations,

or; (2) find that EWG determinations are not subject to judicial

review since the Commission's action is merely ministerial.

2. Commission Ruling

The Commission does not interpret section 24 of PUHCA, which

refers to orders issued by the SEC, as providing judicial review

of FERC EWG determinations. However, the Commission notes that

judicial review is provided under section 25 of PUHCA. Section

25 provides, in part, as follows:

The District Courts of the United States and
the United States courts of any Territory or
other place subject to the jurisdiction of
the United States shall have jurisdiction of
violations of this title or the rules,
regulations, or orders thereunder, and,
concurrently with State and Territorial
courts, of all suits in equity and actions at
law brought to enforce any liability or duty
created by, or to enjoin any violation of,

Docket No. RM93-1-000 -34-

this title or the rules, regulations, or
orders thereunder.

15 U.S.C. # 79y (1988).

K. Miscellaneous Issues

Section 365.3(b) of the proposed rule provides, among other

things, that an applicant must submit certain State commission

approvals if a retail rate or charge associated with the

construction of a generating facility, or for electric energy

produced by a facility, is a "rate or charge of an affiliate of a

registered holding company." The Cogeneration Partners Group

suggests that the Commission should clarify that this portion of

section 365.3(b) is only applicable to companies that are

registered holding companies by virtue of their ownership of

electric utility companies, and not solely by reason of their

ownership of gas utility companies.

The statute makes no distinction between entities that are

registered holding companies by virtue of their ownership of

electric utility companies and entities that are registered

holding companies by virtue of their ownership of gas utility

companies. Therefore, section 365.3(b) of the final rule applies

to any registered holding company.

Four commenters state that an entity that has attained EWG

status may wish to own or operate an additional facility. 31/

These commenters suggest that the Commission should identify

procedures for an existing EWG to apply for a determination

31/ EEI, Environmental Action, Pentzer, and Texas
Utilities.

Docket No. RM93-1-000 -35-

whether an additional facility is an eligible facility. EEI and

Texas Utilities state that the procedures for new facilities

should be abbreviated. Environmental Action states that a

separate filing should be required each time an EWG acquires a

new facility in order to determine whether the new facility is an

eligible facility. Pentzer states that the Commission should

clarify that an initial EWG determination is sufficient to cover

subsequent acquisition or operation of other eligible facilities.

As noted above, an EWG determination is based on the facts

presented to the Commission. Accordingly, if an EWG, for

example, wishes to own or operate additional facilities, but

seeks to maintain its status as an EWG, it must file another

application with the Commission. The Commission will review the

application on the same basis as it reviewed the initial

application.

LG&E Energy notes that section 365.3(a)(2) of the proposed

rule would require that each application include a brief

description of the facility or facilities which are or "will be"

eligible facilities. LG&E Energy asks whether an applicant could

obtain EWG status for a facility that is not yet planned as long

as the applicant properly attests that any such future facility

will be an eligible facility.

EGA states that developers of eligible facilities often must

obtain determination of EWG status prior to construction in order

to secure financing. EGA further states that when the Commission

grants a determination of EWG status for eligible facilities that

Docket No. RM93-1-000 -36-

are not yet built, it is reasonable to expect that the final

structure of the transaction may differ from that proposed in the

original EWG application. In this event, the Commission should

specify that an EWG need only file a revised application where

deviations from the original proposed transaction are material to

the applicant's EWG status.

Applicants may request a determination of EWG status for

facilities that have not been built. However, each determination

is based on the facts presented in the application. Any

subsequent material departure from the facts presented in the

original application may render a determination invalid.

EGA and ELCON suggest that the Commission should clarify the

definition of certain terms used in the statute. EGA states that

the Commission should clarify the meaning of "eligible facility,"

"exclusively in the business of," and "exclusively for sale."

ELCON states that the Commission should clarify the meaning of

"owning," "operating," and "facility . . . used for the

generation of electric energy exclusively for sale at wholesale."

As noted above, the purpose of this rulemaking is to

establish the filing requirements and procedures to be used for

EWG applications. The Commission does not intend to prematurely

rule on substantive issues relating to the definition of certain

terms, beyond what is necessary to permit the initial

administration of the statute.

Docket No. RM93-1-000 -37-

Section 365.3(a)(2)(B) requires an EWG applicant to submit a

brief description of any lease arrangements involving the

eligible facility and a public utility company.

Mission states that the specific terms of any lease

arrangements involving an eligible facility and public utility

companies are not relevant to the review of an EWG application.

Therefore, Mission states that section 365.3(a)(2)(B) should be

deleted.

EGA states that section 2(a)(5) of PUHCA defines public

utility companies as either electric utility companies or gas

utility companies. EGA suggests that the Commission should

review section 365.3(a)(2)(B) to apply only to leases involving

an eligible facility and electric utility companies.

The final rule retains section 365.3(a)(2)(B). The

information about leases required by section 365.3(a)(2)(B) of

the rule will provide assurance that the applicant has complied

with section 32(a)(2)(B) of PUHCA relating to facilities that are

leased to a public utility company. The Commission believes that

this information is appropriate regardless of whether the public

utility company is a gas utility company or electric utility

company in that Congress drew no distinction in the statute, but

rather used the term "public utility companies." 32/

BG&E and EGA state that the Commission should specify in the

final rule that no environmental assessment or environmental

32/ See 15 U.S.C. # 79b(a)(5) (1988).

Docket No. RM93-1-000 -38-

impact statement is necessary for EWG filings or Commission

determinations of EWG status.

The Commission agrees that its ministerial role under

section 32 of PUHCA does not require the preparation of

environmental assessments or environmental impact statements.

See Sugarloaf Citizens Association v. FERC, 959 F.2d 508 (4th

Cir. 1992) (qualifying facility certifications do not require

preparation of environmental impact statement).

In addition to the information required in the proposed

rule, several commenters 33/ state that the Commission should

also require that EWG applicants submit certain other information

with their filings, including: (1) a description of the eligible

facility, including location; (2) a description of wholesale

purchasers who will be served by the eligible facility; (3) a

description of the corporate structure of the applicant and any

affiliates; (4) whether the costs of the eligible facility are

reflected in retail rates; and (5) a description of all owners of

the eligible facility. Arizona Public Service and Allegheny

state that this information will be useful for the planning needs

of electric utilities in whose service areas eligible facilities

may be located.

The final rule will require that EWG filings include a brief

description of the eligible facility or facilities. The

additional information requested by several commenters does not

33/ Allegheny, Arizona Public Service, Destec and
Environmental Action.

Docket No. RM93-1-000 -39-

appear to be necessary for the Commission to determine whether an

applicant has satisfied the statutory criteria required for EWG

status.

Section 365.3(b) of the proposed rule requires certain State

commission approvals if certain retail rates or charges "for, or

in connection with the construction" of an eligible facility were

"in effect under the laws of any State on October 24, 1992."

Arizona Public Service states that the Commission should clarify

that this subsection applies only to existing facilities, as is

required by section 32(c) of PUHCA. The Commission agrees with

Arizona Public Service that this subsection applies only to

facilities that were reflected in retail rates on October 24,

1992.

Enron states that the Commission should clarify the

definition of when a facility has been included in retail rates.

For instance, Enron suggests that section 365.3(b) should apply

when system-wide rates include costs associated with the eligible

facility. The statute is clear in this regard. If any cost for

a facility was reflected in retail rates as of October 24, 1992,

whether in base rates, fuel adjustment charges, construction-

work-in-progress, or otherwise, State commission approval is

required. Enron states that the Commission should permit two or

more affiliates involved in the ownership and/or operation of the

same project to make a single application for EWG status. Such a

policy would avoid the unnecessary cost of duplicative

proceedings.

Docket No. RM93-1-000 -40-

The Commission addressed this issue in Costanera Power

Corporation, 61 FERC # 61,335 (1992) (Costanera). In Costanera

the Commission stated that section 32(a)(1) of PUHCA requires a

"person" seeking EWG status to apply for a determination by the

Commission. The Commission further stated that section (2)(a)(1)

of PUHCA defines "person" as an individual or company. 15 U.S.C.

# 79b(a)(1) (1988). Therefore, the Commission concluded that to

the extent that applicants are separate companies as defined by

section 2(a)(2) of PUHCA, 15 U.S.C. # 79b(a)(2) (1988), each must

file a separate application.

Section 32 of PUHCA states that an eligible facility

includes "interconnecting transmission facilities necessary to

effect a sale of electric energy at wholesale." Atlantic City

Electric states that additional clarification is necessary to

delineate interconnecting facilities owned by an EWG and

facilities owned by a transmitting utility. Atlantic City

Electric states that the Commission should only consider

transmission facilities owned by an EWG when reviewing an EWG

application.

The Commission agrees with Atlantic City Electric that

transmission facilities that are not owned by an EWG applicant

are not relevant to the Commission's determination.

V. REGULATORY FLEXIBILITY CERTIFICATION STATEMENT

The Regulatory Flexibility Act 34/ requires rulemakings

to either contain a description and analysis of the impact the

34/ 5 U.S.C. 601-612.

Docket No. RM93-1-000 -41-

rule will have on small entities or to certify that the rule will

not have a significant economic impact on a substantial number of

small entities. The final rule codifies the filing requirements

contained in section 32 of PUHCA. The filing requirements are

minimal and will not have a significant economic impact on small

entities. Moreover, persons that qualify for EWG status will

enjoy the substantial benefit of being exempt from regulation

under PUHCA. Consequently, the Commission certifies that the

final rule will not have a significant economic impact on a

substantial number of small entities.

VI. ENVIRONMENTAL STATEMENT

Commission regulations require that an environmental

assessment or an environmental impact statement be prepared for

any Commission action that may have a significant adverse effect

on the human environment. 35/ The Commission has

categorically excluded certain actions from this requirement as

not having a significant effect on the human environment. 36/

No environmental consideration is necessary for the promulgation

of a rule that is clarifying, corrective, or procedural or that

does not substantially change the effect of legislation or

regulations being amended. 37/ The final rule does not change

35/ Regulations Implementing National Environmental Policy Act,
52 FR 47897 (Dec. 17, 1987), FERC Stats. and Regs. # 30,783
(1987).

36/ 18 CFR 380.4.

37/ 18 CFR 380.4(a)(2)(ii).

Docket No. RM93-1-000 -42-

the effect of the underlying legislation. Accordingly, no

environmental consideration is necessary.

VII. INFORMATION COLLECTION STATEMENT

The Office of Management and Budget's (OMB) regulations

38/ require that OMB approve certain information collection

and recordkeeping requirements imposed by an agency. The

information collection requirements affected by the final rule

are FERC-598 (Determinations for Entities Seeking Exempt

Wholesale Generator Status) and FERC-582 (Oil, Gas and Electric

Fees and Annual Charges). (1902-0132).

The final rule requires that persons who voluntarily request

a determination of EWG status provide certain information to the

Commission. The Commission would use the information collected

from the applicant to determine whether the applicant meets the

statutory requirements for EWG status. The Commission's Office

of Financial Management would also use the data collected to

compute filing fees and annual charges.

The Commission is submitting notification of the final rule

to OMB. Interested persons may obtain information on the

reporting requirements by contacting the Federal Energy

Regulatory Commission, 941 North Capitol Street, N.E.,

Washington, DC 20426 [Attention: Michael Miller, Information

Policy and Standards Branch, (202) 208-1415]. Comments on the

requirements of the final rule can also be sent to the Office of

38/ 5 CFR 1320.12, as authorized by P.L. 96-511, 44 U.S.C.
Chapter 35, the Paperwork Reduction Act of 1980.

Docket No. RM93-1-000 -43-

Information and Regulatory Affairs of OMB [Attention: Desk

Officer for Federal Energy Regulatory Commission].

VIII.EFFECTIVE DATE

This final rule is effective [insert date that is 30 days

after the date of publication in the Federal Register].

List of Subjects

18 CFR Part 365

Electric power, Exempt wholesale generators, Reporting and

recordkeeping requirements.

18 CFR Part 381

Electric power, Exempt wholesale generators, Reporting and

recordkeeping requirements.

In consideration of the foregoing, the Commission is

amending Title 18, Chapter I of the Code of Federal Regulations

to add a new Subchapter T, Part 365, and to add a new Subpart H

to existing Part 381, as set forth below.

By the Commission.

( S E A L )

Lois D. Cashell,
Secretary.

Docket No. RM93-1-000 -44-

PART 365 --- EXEMPT WHOLESALE GENERATORS

1. A new subchapter T, part 365 is added, as follows:

SUBCHAPTER T - REGULATIONS UNDER SECTION 32 OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935

PART 365 -- FILING REQUIREMENTS AND MINISTERIAL PROCEDURES FOR
PERSONS SEEKING EXEMPT WHOLESALE GENERATOR STATUS

Sec.

365.1 Purpose.

365.2 Definitions.

365.3 Contents of application and procedure for filing.

365.4 Effect of Filing.

365.5 Commission action.

365.6 Notification of Commission action to the Securities and

Exchange Commission.

365.7 Procedure for notifying Commission of material change

in facts.

Authority: 15 U.S.C. 79; 106 Stat. 2776 (1992).

# 365.1 Purpose.

The purpose of Part 365 is to implement section 32 of the

Public Utility Holding Company Act of 1935, as added by section

711 of the Energy Policy Act of 1992.

# 365.2 Definitions.

(a) For the purpose of this part terms will have the same

meaning as defined in the Public Utility Holding Company Act of

Docket No. RM93-1-000 -45-

1935, as amended by the Energy Policy Act of 1992, except as

provided in paragraph (b) of this section.

(b) For the purpose of this part:

(1) "Commission" means the Federal Energy Regulatory

Commission; and

(2) "Receipt of an application" means the date that the

Commission receives the application and the applicable filing

fee, if any; and

(3) "Affected State commission" means the State commission

of each state in which a generating facility owned and/or

operated by the applicant is located; each State commission

regulating the retail rates of an electric utility that will

purchase power from the applicant, if known at the time of

application; and, each State commission regulating a retail

utility that is affiliated with the applicant.

# 365.3 Contents of application and procedure for filing.

(a) A person seeking status as an exempt wholesale

generator (applicant) must file with the Commission, and serve on

the Securities and Exchange Commission and any affected State

commission, the following:

(1) A sworn statement, by a representative legally

authorized to bind the applicant, attesting to any facts or

representations presented to demonstrate eligibility for EWG

status, including:

(A) A representation that the applicant is engaged

directly, or indirectly through one or more affiliates, and

Docket No. RM93-1-000 -46-

exclusively in the business of owning or operating, or both

owning and operating, all or part of one or more eligible

facilities and selling electric energy at wholesale; and

(B) Any exceptions for foreign sales of power at retail.

(2) A brief description of the facility or facilities which

are or will be eligible facilities owned and/or operated by the

applicant including:

(A) The related transmission interconnection components;

(B) Any lease arrangements involving the facilities and

public utility companies; and

(C) Any electric utility company that is an affiliate

company or associate company of the applicant.

(b) If a rate or charge for, or in connection with, the

construction of a facility described in paragraph (a)(2) of this

section, or for electric energy produced by a facility described

in paragraph (a)(2) of this section (other than any portion of a

rate or charge which represents recovery of the cost of a

wholesale rate or charge), was in effect under the laws of any

State on October 24, 1992, or if any portion of a facility

described in paragraph (a)(2) of this section is owned or

operated by an electric utility company that is an affiliate or

associate company of the applicant, the applicant must also file

a copy of a specific determination from every State commission

having jurisdiction over any such rate or charge, or if the rate

or charge is a rate or charge of an affiliate of a registered

holding company, a specific determination from every State

Docket No. RM93-1-000 -47-

commission having jurisdiction over the retail rates and charges

of the affiliates of the registered holding company, that

allowing the facility to be an eligible facility:

(1) will benefit consumers,

(2) is in the public interest, and

(3) does not violate State law.

(c) Applications for exempt wholesale generator status must

also include a copy of a notice of the application suitable for

publication in the FEDERAL REGISTER. The notice must state the

applicant's name, the date of the application, and a brief

description of the applicant and the facility or facilities which

are or will be eligible facilities owned and/or operated by the

applicant. The applicant must also submit a copy of its notice

on a 3 1/2" diskette in ASCII format. Each diskette must be

clearly marked with the name of the applicant and the words

"notice of filing."

The notice must be in the following form:

(Name of Applicant)

Docket No. EG-

NOTICE OF APPLICATION FOR COMMISSION DETERMINATION OF EXEMPT

WHOLESALE GENERATOR STATUS

On (date application was filed), (name and address of

applicant) filed with the Federal Energy Regulatory Commission an

Docket No. RM93-1-000 -48-

application for determination of exempt wholesale generator

status pursuant to Part 365 of the Commission's regulations.

[Brief description of the applicant and the facility or

facilities which are or will be eligible facilities owned and/or

operated by the applicant, including reference and citation to

any applicable State commission determinations.]

Any person desiring to be heard concerning the application

for exempt wholesale generator status should file a motion to

intervene or comments with the Federal Energy Regulatory

Commission, 825 North Capitol Street, N.E., Washington, D.C.

20426, in accordance with ## 385.211 and 385.214 of the

Commission's Rules of Practice and Procedure. The Commission

will limit its consideration of comments to those that concern

the adequacy or accuracy of the application. All such motions

and comments should be filed on or before _________________ and

must be served on the applicant. Any person wishing to become a

party must file a motion to intervene. Copies of this filing are

on file with the Commission and are available for public

inspection.

# 365.4 Effect of Filing.

A person applying in good faith for a Commission

determination of exempt wholesale generator status will be deemed

to be an exempt wholesale generator from the date of receipt of

the application until the date of Commission action pursuant to #

365.5.

Docket No. RM93-1-000 -49-

# 365.5 Commission action.

If the Commission has not issued an order granting or

denying an application within 60 days of receipt of the

application, the application will be deemed to have been granted.

# 365.6 Notification of Commission action to the Securities and
Exchange Commission.

The Secretary of the Commission will notify the Securities

and Exchange Commission whenever a person is determined to be an

exempt wholesale generator.

# 365.7 Procedure for notifying Commission of material change

in facts.

If there is any material change in facts that may affect an

EWG's eligibility for EWG status under section 32 of the Public

Utility Holding Company Act of 1935, the EWG must within 60 days:

apply for a new determination of EWG status; file a written

explanation of why the material change in facts does not affect

the EWG's status; or notify the Commission that it no longer

seeks to maintain EWG status.

PART 381 --- FEES

2. The authority citation for Part 381 continues to read as

follows:

Authority: 15 U.S.C. 717-717w; 16 U.S.C. 791-828c, 2601-

2645; 31 U.S.C. 9701; 42 U.S.C. 7101-7352; and 49 U.S.C. 1-27.

3. Part 381 is revised to add subpart H, as follows:

SUBPART H - FEES APPLICABLE TO THE PUBLIC UTILITY HOLDING COMPANY

ACT OF 1935

# 381.801

Docket No. RM93-1-000 -50-

The fee established for applications for exempt

wholesale generator status under section 32 of the Public Utility

Holding Company Act of 1935 and subchapter T, part 365 of this

chapter, applicable to applicants who will not become public

utilities as defined in section 201(e) of the Federal Power Act

upon the sale of electric energy at wholesale, is $ 1000. The

fee must be submitted in accordance with subpart A of this part.

Docket No. RM93-1-000 -51-

APPENDIX A

Commenters

1. Allegheny Power System

2. American Gas Association

3. American Paper Institute, Inc.

4. Arizona Public Service Company

5. Arkansas Public Service Commission

6. Atlantic City Electric Company

7. Bald Eagle Power Company Inc.

8. Baltimore Gas and Electric Company

9. City of Colorado Springs, Colorado

10. CMS Energy Corporation

11. Cogeneration Partners Group

12. Cogenerators of Southern California

13. Colorado Association of Municipal Utilities

14. Department of Energy

15. Destec Energy, Inc.

16. Detroit Edison

17. Edison Electric Institute

18. Electric Generation Association

19. Electricity Consumers Resource Council

20. El Paso Electric Company

21. Enron Gas Services Corp.

22. Enron Power Corp.

Docket No. RM93-1-000 -52-

23. Environmental Action Foundation, et al. (Consisting of
Environmental Action Foundation, Union of Concerned
Scientists, Geothermal Resources Association, American
Public Power Association, Toward Utility Rate Normalization,
Electric Consumers Resource Council, Consumer Federation of
America, Indiana Consumer Counsel, Missouri Office of the
Public Counsel, State of Ohio Office of the Consumer
Counsel, Commonwealth of Pennsylvania Office of the Consumer
Advocate and Utah Committee of Consumer Services)

24. Florida Power & Light Company

25. Idaho Public Utilities Commission

26. Imperial Irrigation District

27. LG&E Energy Corp.

28. Long Island Lighting Company

29. Michigan Public Service Commission Staff

30. Mission Energy Company

31. Missouri Basin Municipal Power Agency

32. Missouri Public Service Commission

33. National Association of Regulatory Utility Commissioners

34. National Independent Energy Producers

35. Natural Gas Supply Association

36. New England Power Company

37. New York State Department of Public Service

38. New York State Electric & Gas Corporation, et al.
(consisting of New York State Electric & Gas Corporation and
Niagara Mohawk Power Corporation)

39. Pennsylvania Power & Light Company

40. Pentzer Energy Services, Inc.

41. Public Service Commission of Nevada

42. Public Service Commission of Wisconsin

43. Public Utilities Commission of California

Docket No. RM93-1-000 -53-

44. San Diego Gas & Electric Company

45. Southern Company Services, Inc.

46. Southwestern Public Service Company

47. Texas Utilities Electric Company

48. Utah Municipal Power Agency

49. UtiliCorp United Inc.

50. Utility Working Group