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FERC To Address Market Power, Must-Run Plants

Fortnightly Magazine - March 15 1997

California's three largest investor-owned utilities have petitioned the Federal Energy Regulatory Commission to convene a technical workshop on market-power issues raised by electric deregulation. Although a workshop had been held on Jan. 17, the utilities say the need more guidance (Docket No. ER96-1663-000).

The utilities are most concerned with the issue of "must-run" plants, and how to minimize the market power of generating units that must run to maintain reliability. For example, Southern California Edison, which plans to sell all of its fossil-fueled plants, has proposed a system of "call contracts," which would allow the independent system operator to order must-run plants to sell electricity into the power exchange at cost.

The FERC replied that while it is willing to have another technical workshop, it would be premature to hold one prior to its receipt of the "Phase II" filings. The FERC on Dec. 18, 1996 requested additional information from the utilities to held it provide further guidance on proposals to sell power at market-based rates using a power exchange. The deadline for utilities to submit the information, which FERC termed the "Phase II" filings, is March 31, 1997.

In particular, the FERC said that a conference would be more productive if it occurred after the ISO and power exchange boards have been appointed and have had an opportunity to review the draft filings. The FERC added that the views of the boards are "critical" to its deliberations. The Commission said it prefers to hold the conference prior to the Phase II filing deadlines.

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