Power Marketers Flex at FERC
Electric utilities beware. Power marketers are not only here to stay, but their ranks are growing. The Federal Energy Regulatory Commission (FERC) logged approximately 100 applications in 1994, compared to nine in 1993. About half have been acted on already.
The fledgling industry is also staking out its regulatory territory. Notably, on December 14, the FERC ordered the Tennessee Valley Authority (TVA) to provide nonfirm transmission service to AES Power Inc. of Atlanta, GA, a power marketing subsidiary of AES Corp.-to accommodate AES Power's current and future bulk-power marketing transactions (Docket No. TX94-7-000). This marks the first time the FERC has granted a power marketer's request to require wheeling from a federal power agency. As a power marketer, AES Power takes title to electric power that it purchases and sells for resale, thus qualifying as a public utility under the Federal Power Act. In its filing, AES Power sought nonfirm, point-to-point transmission service under an "umbrella agreement" that would establish the rates, terms, and conditions under which AES could request specific transactions without applying under Section 211 each time. AES Power also sought assurances that it would not be charged more than other parties, including TVA itself, for comparable service. The power marketer agreed to be subject to a postage-stamp ceiling rate that gives TVA the flexibility to quote any rate up to the ceiling.
TVA claimed unsuccessfully that such service would adversely impact its municipal, cooperative, and ultimate customers. It also argued that the TVA Act relieved it from complying with the FERC's comparability principle. That argument fell on deaf ears at the FERC: "We reject TVA's suggestions that its statutory responsibilities. . . somehow excuse it from wheeling power through the region under a Section 211 order." In other words, no exceptions. The comparability standard has become the FERC's mantra for electric industry cases, much as voluntary open access was its guiding principle in deregulating interstate natural gas pipelines in the 1980s. (Whether it was truly voluntary is debatable.) In a second still-pending case, Enron Power Marketing has asked the FERC to issue a wheeling order to Consolidated Edison of New York (TX95-1-000).
Power marketers are watching other cases as well. Michael Kutsch, president of Catex Vitol Electric Inc., a power marketer in the Northeast, said that power pools also will have to open up "so that all buyers and sellers have equal access to the transmission grid." Two pending cases at the FERC request wholesale wheeling from power pools: the New England Power Pool and the PJM Pool. In the PJM case (Duquesne Light Co., Docket No. TX94-8-000), pool members argue that the FERC must treat them as separate companies and force wheeling customers to submit section 211 requests to each of them rather than to the pool as a whole. Kutsch fears that "excluding marketers from the benefits of and membership in power pools will leave them far short of service comparability and at a distinct competitive disadvantage."
Power marketers are also at odds with the FERC over its requirements for quarterly informational reports from power marketing subsidiaries.