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Scheduling Coordinators: Market Fears and Profit Margins

Fortnightly Magazine - January 15 1998

PX operating charge is only 31 cents per megawatt hour instead of its true full cost of 62 cents¼ that means it's coming out of our hide. That's the competitive issue."

Elena Schmid of the Office of Ratepayer Advocates says the PX is in a difficult situation. "It does seem to have a greater advantage [over other SCs] because it can turn to the ratepayers and get these additional dollars," she says. "At the same time, the power exchange is the mechanism that the majority of the core ratepayers are going to depend upon."

All of the IOUs must buy from the PX and sell into it through 2001.

"So if the price is not low," Schmid adds, "the ratepayers are going to pay one way or another. And this seems to be¼ the most cost-effective way¼

"The power exchange [is] balanced by the fact that it has many more regulatory responsibilities than any scheduling coordinator."

The PX, meanwhile, insists its costs were unavoidable. John Flory, PX business strategy director says: "We have incurred a lot of cost as an institutional player. The FERC expects us to do extensive market power monitoring. We had to put into place a business system designed by committee that cost us $30 million. If we could have chosen whatever system we wanted we could have gotten something closer to $3 to $5 million¼ By the time we started adding in all the California requirements, it pushed it up to $30 million, which by the way, was what the original budget that the PUC approved."

Scadding has the last word on Section 376.

"For the utilities, the Big Three who have got the stranded cost recovery, there's not a guarantee but a reasonable opportunity to recover their stranded costs," he says. "The 376 treatment is¼ saying¼ these implementation costs are passed through in rates and you have to pay them¼ But since you can't change the total amount your customers are paying you, what happens? Well, it comes out of their ability to collect stranded cost.

"If that happens, and that does not allow you to recover your full stranded costs except in a transition period, then we may permit you to continue that CTC collection past the original deadline."

So to sum up, ratepayers won't pay for PX start-up costs in rates, but in an extended CTC¼ an "electric welcome" to 2002.

Any questions?

Application List

American International Group

Arizona Public Service Co.

Automated Power Exchange Inc.

California Department of Water Resources

California Polar Power Exchange

California Power Exchange

City of Anaheim

City of Riverside

City of Seattle, City Light Department

City of Vernon

Duke Energy Trading

Edison Source

Electric Clearinghouse

Enova Energy Inc.

Enron Energy Services

ENRON Power Marketing Inc.

Illinova Corp.

LG&E Energy Corp.

Northern California Power Agency

NorAm Energy Services Inc.

Pacific Gas & Electric Co.


PG&E Energy Services

Portland General Electric

Power Resource Managers

Salt River Project

San Diego Gas & Electric Co.

Southern California Edison

Southern Energy Marketing

The Bonneville Power Administration

The Montana Power Group

Vitol Gas & Electric