You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
The Federal Energy Regulatory Commission (FERC) has revised its policy on potential abuses by affiliated power marketers, lifting restrictions on marketing transactions involving affiliates that do not have captive customers. The changes stem from a case involving USGen Power Services, L.P., an affiliate of Pacific Gas & Electric Co. (PG&E) that sought to market power to and from affiliated and nonaffiliated entities, including exempt wholesale generators (EWGs) and power marketers, but not to PG&E (Docket No. ER95-1625-000).
In an earlier case, the FERC had imposed three conditions on a power marketer that sought to market and/or broker power from affiliated qualifying facilities and EWGs: 1) first offer power to the affiliated companies, 2) make the arrangement nonexclusive, and 3) simultaneously make publicly available to nonaffiliates any information that shared with the affiliates [Southern Co. Services, Inc., 72 FERC ¶ 61, 324 (1995), reh'g. pending]. USGen argued that the requirements should apply only when the affiliate it is providing with the service is PG&E.
The FERC agreed, saying that if a nontraditional affiliate like USGen does not market or broker the power of an affiliate with captive customers like PG&E, there is no potential to favor stockholders at the expense of captive customers. It enjoined USGen not to market or broker power to or from PG&E absent a future rate filing; if that occurs, the FERC would address the restrictions needed to protect captive customers at that time.
In a separate order, the FERC conditionally accepted the requests of Duke Power Co. and two of its power marketing affiliates, Duke/Louis Dreyfus L.L.C. and Duke Energy Marketing Corp., to sell power at market-based rates (Docket Nos. ER96-108-000 and ER96-109-000). However, the FERC added that Duke and its affiliates may not charge market-based rates for power transactions where contracts already have been signed. The FERC also required PG&E and Duke to modify their codes of conduct to permit sharing of information with affiliates only if the same information is simultaneously made public to nonaffiliates.
Commissioner Donald Santa, Jr. said he was pleased his colleagues were willing to revisit the affiliate abuse rules, because the FERC had cast its net too widely, inhibiting the ability to compete.
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