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Collision or Coexistence: The FERC, the CPUC, and Electric Restructuring

Fortnightly Magazine - October 1 1995

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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