Section R14-2-1609. Transmission and Distribution Access

A.      The Affected Utilities shall provide nondiscriminatory open access to transmission and distribution facilities to serve all customers. No preference or priority shall be given to any dis- tribution customer based on whether the customer is purchas- ing power under the Affected Utility’s Standard Offer or in the competitive market. Any transmission capacity that is reserved for use by the retail customers of the Affected Utility’s Utility Distribution Company shall be allocated among Standard Offer customers and competitive market customers on a pro- rata basis.

B.       Utility Distribution Companies shall retain the obligation to assure that adequate transmission import capability is avail- able to meet the load requirements of all distribution custom- ers within their service areas. Utility Distribution Companies shall retain the obligation to assure that adequate distribution system capacity is available to meet the load requirements of all distribution customers within their service areas.

C.      The Commission supports the development of Federal Energy Regulatory Commission-approved Regional Transmission Organization (RTO), an Independent System Operator (ISO) or, absent a Regional Transmission Organization or an Inde- pendent System Operator, an Arizona Independent Scheduling Administrator (AISA). The Commission believes that such organizations are necessary in order to provide nondiscrimina- tory retail access and to facilitate a robust and efficient elec- tricity market.

D.      Affected Utilities that own or operate Arizona transmission facilities shall form an Arizona Independent Scheduling Administrator that shall file with the Federal Energy Regula- tory Commission within 60 days of this Commission’s adop- tion of  final rules herein,  for approval of  an Independent Scheduling Administrator having the following characteris- tics:

1.        The Arizona Independent Scheduling Administrator shall calculate Available Transmission Capacity (ATC) for Ari- zona transmission facilities that belong to the Affected Utilities or other Arizona Independent Scheduling Administrator participants and shall develop and operate an overarching statewide OASIS.

2.        The Arizona Independent Scheduling Administrator shall implement and oversee the nondiscriminatory application of operating protocols to ensure statewide consistency for transmission access. These operating protocols shall include, but are not limited to, protocols for determining transmission system transfer capabilities, committed uses of the transmission system, available transfer capabilities, Must-Run Generating Units, energy scheduling, and energy imbalances.

3.        The Arizona Independent Scheduling Administrator shall provide dispute resolution processes that enable market

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participants to expeditiously resolve claims of discrimi- natory treatment in the reservation, scheduling, use, and curtailment of transmission services.

4.        All requests (wholesale, Standard Offer retail, and com- petitive retail) for reservation and scheduling of the use of Arizona transmission facilities that belong to the Affected Utilities or other Arizona Independent Scheduling Administrator participants shall be made to, or through, the Arizona Independent Scheduling Administrator using a single, standardized procedure.

5.        The Arizona Independent Scheduling Administrator shall implement a transmission planning process that includes all Arizona Independent Scheduling Administrator partic- ipants and aids in identifying the timing and key charac- teristics of required reinforcements to Arizona transmission facilities to assure that the future load requirements of all participants will be met.

E.       If not previously filed, the Affected Utilities that own or oper- ate Arizona transmission facilities shall file a proposed Ari- zona Independent Scheduling Administrator implementation plan with the Commission, through Docket Control, within 30 days of the Commission’s adoption of final rules herein. The implementation plan shall address Arizona Independent Scheduling Administrator governance, incorporation, financ- ing, and staffing; the acquisition of physical facilities and staff by the Arizona Independent Scheduling Administrator; the schedule for the phased development of Arizona Independent Scheduling Administrator functionality and proposed transi- tion to a regional Independent System Operator or Regional Transmission Organization; contingency plans to ensure that critical functionality is in place no later than three months fol- lowing adoption of final rules herein by the Commission; and any other significant issues related to the timely and successful implementation of the Arizona Independent Scheduling Administrator.

F.       Each of the Affected Utilities shall make good faith efforts to develop a regional, multi-state Independent System Operator or Regional Transmission Organization, to which the Arizona Independent Scheduling Administrator should transfer its rele- vant assets and functions and characteristics as specified in R14-2-1609(D) as the Independent System Operator or Regional Transmission Organization becomes able to carry out those functions. Absent Federal Energy Regulatory Commis- sion approval of an Arizona Independent Scheduling Adminis- trator, the functions and characteristics as specified in R14-2- 1609(D) will be assumed by the Independent System Operator or Regional Transmission Organization.

G.      It is the intent of the Commission that prudently-incurred costs incurred by the Affected Utilities in the establishment and operation of the Arizona Independent Scheduling Administra- tor, and subsequently the Independent System Operator or Regional Transmission Organization, should be recovered from customers using the transmission system, including the Affected Utilities’ wholesale customers, Standard Offer retail customers, and competitive retail customers on a nondiscrimi- natory basis through Federal Energy Regulatory Commission- regulated prices. Proposed rates for the recovery of such costs shall be filed with the Federal Energy Regulatory Commission and this Commission through Docket Control. In the event that the Federal Energy Regulatory Commission does not permit recovery of prudently incurred Independent Scheduling Administrator costs within 90 days of the date of making an application with the Federal Energy Regulatory Commission, the Commission may authorize Affected Utilities to recover such costs through a distribution surcharge.

H.      The Commission supports the use of “Scheduling Coordina- tors” to provide aggregation of customers’ schedules to the Independent Scheduling Administrator and the respective Control Area Operators simultaneously until the implementa- tion of a regional Independent System Operator or Regional Transmission Organization, at which time the schedules will be submitted to the Independent System Operator or Regional Transmission Organization. The primary duties of Scheduling Coordinators are to:

1.        Forecast their customers’ load requirements;

2.        Submit balanced schedules (that is, schedules for which total generation is equal to total load of the Scheduling Coordinator’s customers  plus appropriate transmission and distribution line losses) and North American Electric Reliability Council/Western Systems Coordinating Coun- cil tags;

3.        Arrange for the acquisition of the necessary transmission and ancillary services;

4.        Respond to contingencies and curtailments as directed by the Control Area Operators, Arizona Independent Sched- uling Administrator, or Independent System Operator or Regional Transmission Organization;

5.        Actively participate in the schedule checkout process and the settlement processes of the Control Area Operators, Arizona Independent Scheduling Administrator, or Inde- pendent System Operator or Regional Transmission Organization.

I.        The Affected Utilities and Utility Distribution  Companies shall provide services from the Must-Run Generating Units to Standard Offer Service retail customers and competitive retail customers on a comparable, nondiscriminatory basis at regu- lated prices. The Affected Utilities shall specify the obliga- tions of the Must-Run Generating Units in appropriate sales contracts prior to any divestiture. Under auspices of the Ari- zona Independent Scheduling Administrator, the Affected Utilities and other stakeholders shall develop statewide proto- cols for pricing and availability of services from Must-Run Generating Units. These protocols shall be filed with Docket Control for Commission review and, when appropriate, approval, prior to being filed with the Federal Energy Regula- tory Commission in conjunction with the Arizona Independent Scheduling Administrator tariff filing. Fixed Must-Run Gener- ating Units  costs are  to  be recovered through a regulated charge to end-use customers. This charge must be set by the Commission as part of the end-use customer distribution ser- vice charges.

J.        The Affected Utilities and other stakeholders, under the aus- pices of the Arizona Independent Scheduling Administrator, shall identify statewide services to be settled on and develop fair and reasonable pricing mechanisms to assure a consistent and fair settlement process.

Historical Note

Adopted effective December 26, 1996, under an exemp- tion as determined by the Arizona Corporation Commis- sion (Supp. 96-4). Amended by an emergency action effective August 10, 1998, pursuant to A.R.S. § 41-1026, in effect for a maximum of 180 days (Supp. 98-3). Emer- gency amendment replaced by exempt permanent amend- ment effective December 31, 1998 (Supp. 98-4). Section repealed; new Section R14-2-1609 renumbered from R14-2-1610 and amended by exempt rulemaking at 5

A.A.R. 3933, effective September 24, 1999 (Supp. 99-3). Amended by exempt rulemaking at 6 A.A.R. 4180, effec-

tive October 13, 2000 (Supp. 00-4).

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Note

Editor’s Note: The Arizona Corporation Commission has determined that the following Section is exempt from the Attorney General approval provisions of the Arizona Administrative Proce- dure Act (A.R.S. § 41-1041) by a court order (State ex. rel. Corbin

v. Arizona Corporation Commission, 174 Ariz. 216 848 P.2d 301 (App. 1992)).