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FERC's Plan for Electric Competition

Fortnightly Magazine - July 15 1998

¶61,121 (1979).

2 That has been encouraged since 1935 under sec. 202 of the Federal Power Act, because it promotes economy and reliability in bulk power supply.

3 The author's examination of bulk power supply markets in Louisiana, Kansas and Missouri shows that RQ energy represents about 75-85 percent of all kilowatt-hours generated. These proportions likely hold true for the entire U.S.

4 In fact, no such route exists, since the path would span the Rocky Mountains, the approximate border between the Western and Eastern Interconnections, which offers limited interface capability.

5 In the few cases where there are more than four or five, the hub system will be found to be much larger than other entities in the geographic market and its retaliation to competition from the first tier will be a formidable threat.

6 Moreover, the advances in competition in the electric power market gained by the antitrust division's enforcement program under Section 104(c) of the Atomic Energy Act in the early 1970s may likely disappear under current FERC practice. See, for example, the case of Louisiana Energy & Pwr. Auth. v. Cent. La. Elec. Co., Opinion No. 420, 83 FERC ¶61,125 (1998), in which the dominant seller sold at its average cost to two small municipalities, about 26 mills per kWh, plus fuel costs, but at the same time sold power at 7 mills in competition with a new entrant to the market. Prior to the sale, CLECO's corporate model showed that its average cost was rising, so its incremental cost must have been above 26 mills. With an incremental cost of over twenty six mills, and selling at 7, it was losing at least 19 mills on each kilowatt hour. Municipal agencies and G&Ts have little hope remaining in business against that kind of competition. (The author represented LEPA in the case.)

7 See, LP&L Co., 16 FERC ¶61,019 (1981), 17 FERC ¶63,020 (1981), aff'd 17 FERC ¶61,230 (1981).

8 The author represented clients in many of these cases.

9 See Order 888 at p. 31,710.

10 Gainesville. Utils. Dept. v. Florida Power Corp., 402 U.S. 515 (1971) aff'g 40 FPC 1229 (1968).

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