The Federal Energy Regulatory Commission approved accounting changes designed to provide greater transparency of power transmission costs. Regulators also proposed rate changes for natural gas storage facilities to create incentives for developing more storage capacity. Chair Joe Kelliher described the changes in transmission accounting as a "necessary but not final step" in FERC's efforts to develop "more transparency for transmission investments" by both traditional utilities and regional transmission organizations. Noting that regional organizations are taking over more transmission functions, commissioner Nora Mead Brownell wondered "why haven't we seen cost reductions on the utility side?" She added that the new rules may provide the answers. The California Independent System Operator will implement changes to its accounting system in the next few weeks "to ensure compliance with the new order," said Gregg Fishman, CAISO spokesperson. Introducing the changes in gas storage ratemaking, FERC staff said the proceeding takes a fresh look at the commission's policy establishing market rates. Kelliher described the changes as "one response to a winter of historically high gas prices." He explained that the changes are designed "to encourage greater investment in gas storage capacity" with the expectation that this will "reduce volatility in gas prices." He continued that gas storage has increased only 1.4 percent since 1998, while demand for natural gas has risen 24 percent. "Last year, we saw record levels of gas in storage, yet we also saw near-record levels of price volatility. That clearly indicates we need more storage capacity." Gas storage developers could have more pricing flexibility by demonstrating that a company's storage operations do not have significant market power. The decision expands the definition of "market" to include other gas delivery methods. FERC expressed concern that its current market-power analysis may be a disincentive to new storage because it does not consider products and services that may provide alternatives to storage services, mitigating storage providers' potential market power. The commission stated that it also proposes to implement changes in the Natural Gas Act mandated by the Energy Policy Act. These permit market-based rates for new storage capacity related to a specific facility put into service after the new law was implemented on August 8, 2005. In other actions at the December 15 meeting, the commissioners: ?\tApproved utility mergers, including MidAmerican's $5.1 billion acquisition of PacifiCorp from Scottish Power. ?\tProposed rule changes designed to help reduce the cost of resolving disputes resulting from changes in wholesale power and gas contracts. In addition to the PacifiCorp acquisition, FERC also approved Duke's plans to acquire Cinergy, pointing out that both were cleared under rules in effect before Congress approved the Energy Policy Act, which called for changes now being considered in FERC's merger test that do not apply to mergers pending when the law was enacted. FERC Approves Wind Open Access The Federal Energy Regulatory Commission approved the agreement that the American Wind Energy Association (AWEA) reached with the North American Electric Reliability Council (NERC) establishing open-access interconnection standards for large wind generators. The December 12 order granted in part and denied in part requests for rehearing and clarification of Order No. 661, FERC's final rule on interconnection for wind energy, which was issued June 2, 2005. "The goal of NERC and the goal of the wind energy industry - to set clear standards for wind turbines to keep producing and supporting the grid during voltage disturbances" - was met, according to AWEA executive director Randall Swisher.