Pennsylvania Power & Light Co. is reviewing the sweeping rule changes made by the Federal Energy Regulatory Commission Wednesday (4/24) that promote competition in the wholesale electricity market.

The plan finalizes what was referred to in the electric utility industry as the "Mega-NOPR," referring to a very large and significant notice of proposed rulemaking. The rules, which will take effect 60 days after they are published in the Federal Register, cover more than 1,000 pages.

"In the early reports we have seen, the rules appear to be consistent with what were proposed," said John Sipics, PP&L's general manager of Power Systems Support. "PP&L supported the concepts in the Mega-NOPR, with a few exceptions. We will, however, reserve final judgment until we are able to review the entire document."

The new rules will change the way electricity is sold at the wholesale level. The rules will require utilities to open their transmission lines to competitors and to share information about available transmission capacity.

The FERC said the new rules signal a "historic change in the way electricity is sold at wholesale and pave the way for lower prices for customers." The key provisions of the rules are:

-- Utilities must act like a "common carrier" of electricity, reserving capacity on their lines for other power suppliers and charging competitors no more than their own cost for use of the lines;

-- Establishment of electronic bulletin boards to share information about transmission capacity;

-- Utilities can recover "stranded costs" by charging large customers a fee for switching to a new supplier.

The final rule provides for recovery of all "legitimate, verifiable, prudently incurred stranded costs with a reasonable expectation standard." With respect to retail stranded costs, the FERC calls on utilities to first look to the state for recovery. An example of a stranded cost is debt from building a power plant which may not be recovered under competition.

The commission predicts that the rule changes will save $3.8 billion to $5.4 billion a year and affect electric rates for millions of customers. The rules will allow low-cost generators to move power across longer distances, putting downward pressure on electricity prices that could eventually translate into lower retail costs for consumers.

The rules, however, don't address competition at the retail level and don't allow retail customers to switch from one electricity supplier to another.

"Wholesale competition already exists in the electric utility industry," Sipics said. "It's part of life every day at PP&L. These rules will further advance that competition. PP&L embraces and welcomes competition at all levels of the business.

"We often focus on the challenges presented by competition, but we must look at the opportunity these rules will create by making it easier for PP&L to serve new wholesale customers outside our service territory. The key is ensuring that our prices are low enough."

PP&L started working on the issues in these new rules long before they were even proposed in the Mega-NOPR, Sipics said. And while the NOPR was on the table, PP&L was engaged in the debate, submitting comments to the FERC on the proposed rule.

"In general our comments were supportive, with the exception of some concerns we had about ensuring the continuation of reliable electric service," Sipics said. "That is one of the areas we will be looking at very closely."

In addition to working on the rules as a company, PP&L has been actively involved in the restructuring of the regional power pool, which will implement much of what the FERC proposed and help address concerns on reliability, Sipics said.

"The primary reason we are working with the power pool is to ensure that we maintain the benefits of power pooling within the rules the FERC has laid out," he said.