The profound changes now occurring in the electric industry will most directly affect those who are engaged in the enterprises of generation, transmission, and distribution of power. But...
Collision or Coexistence: The FERC, the CPUC, and Electric Restructuring
ISO Role. A grid operator, yes, but a marketmaker, too?*
. Pricing. Highest winning bid or lowest loser? (The so-called "second-price" auction.)
. Bid Rules. Allow a zero-price tender, or mandate a marginal-cost bid?
. Grid Constraints: Will bottleneck areas command economic rents? If so, what does the ISO do with the extra money?*Some equate the PoolCo/ISO model with "command-and-control" economies. But the natural gas experience doesn't prove that bilateral contracts are better. A 10-year study by the MD PSC (1983-93) shows a 40% cut in gas prices for industrial customers, but only 4% for residential. Meanwhile, the CPUC anticipates allowing retail, physical bilateral contracts two years after the pool begins operating--after solving issues involving the CTC, jurisdictional conflicts, nonpool transfers, and horizontal market power.
1 Re Proposed Policies Governing Restructuring California's Electric Services Industry and Reforming Regulation, Decision 95-05-045, R.94-04-032, I.94-04-032, May 24, 1995, 161 PUR4th 217.
2 Promoting Wholesale Competition Through Open Access Non-discriminatory Trans. Servs. by Pub. Utils., Dkt. RM95-8-000, Dkt. RM94-7-001, Mar. 29, 1995, 70 FERC (pp 61,357 (F.E.R.C.). Recovery of Stranded Costs by Pub. Utils. and Transmitting Utils., Dkt. RM94-7-001, Mar. 29, 1995, 70 FERC (pp 61,357 (F.E.R.C.).
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