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Fortnightly Magazine - March 1 1996

and creating the England and Wales power pool. She recounts that the chairman of the London stock exchange was recently removed from office for suggesting that stock-trading software be brought in to make it easier for small players to bypass the established large-volume traders and marketmakers.

Betting the Company

SDG&E's Garber notes that serious disagreement still persists in California over the size of the node in "nodal pricing." (Measure prices down to the bus, or average them over a wide area?) Alex Henney (EEE Limited, London) will tell you that the settlement contract for the England and Wales pool is the most complicated civil contract in England (1,200 pages, with 300 variables and 200 equations). So don't expect miracles on the Power Exchange agreement.

Henney, speaking at the EXNET conference, noted a particular weakness of the England and Wales pool (em the inability of the participants to agree on changes (em and stressed that point for PoolCo planners: "In the United Kingdom, the RECs (regional electric companies) and the three GenCos each have 45 percent of the vote, with the remaining 10 percent divided among Scotland, France, and others. You can't get a consensus."

And, while Enron and NYMEX may have lost the battle against PoolCo, the war goes on over the independence of the ISO (which runs the grid) from the Power Exchange (which dispatches plants and makes the spot market). The debate emerged clearly during the recent technical conference at the FERC (January 24) on "ISOs and Reform of Power Pools Under the Federal Power Act."

Jeanine Hull, representing Louisville Gas & Electric Co., defined ISO independence as "something that you can bet your company on, which power marketers do from time to time." Market perceptions dictate whether traders will accept the integrity of a market, says Hull. She would give dispatch authority to the ISO only for plants under automated generation control, and sees the ISO only as an interim stage on the way to a regional or nationwide grid company: "The continent is not that big when you think about how fast electricity flows."

Perfect Equality

So which will come first, the pool agreement from California or a final rule in the Mega-NOPR?

On January 18, at the EXNET conference, I heard FERC Commissioner Massey predict an April release date for the Mega-NOPR. But a few days later, at the technical conference, the FERC questioned whether the Mega-NOPR's comparability rule will be enough, or whether it must integrate the rule with a federal mandate on ISOs.

William W. Hogan (Professor, Harvard University) makes it seem easy: "It's hard to imagine why the ISO would even be controversial." Fessler insisted, "Our decision gives perfect equality." After all, in Greek 'iso' means 'equal,' according to Alan Richardson, executive director and resident scholar at the American Public Power Association. But the FERC is afraid the Power Exchange might upstage the Mega-NOPR.

Commissioner Hoecker: "Should FERC use its authority under Federal Power Act section 206 to compel power pools to set up ISOs to remedy undue discrimination?" Chair Moler: "I am curious