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BPA, TVA, Salt River: Playing Fair in Power Markets?

Fortnightly Magazine - July 1 1998

by different administrative teams. Jensen describes the group of attorneys from DOI and DOE as "basically doing 'an archeological dig' on this thing." He says there has been no written announcement on a deadline for resolving the problems.

BPA:

Dominant in the California Pool?

As of April 1, the Bonneville Power Administration in Portland, Ore., began selling power into the California pool. Arguably, its task was made easier after the Federal Energy Regulatory Commission refused to approve a special rule that would have restricted the price at which BPA could sell electricity into the California PX.

In its order of July 30, 1997, the FERC rejected the so-called "Special Settlement Rule," proposed by the trustee for the ISO and PX. The rule would have placed a ceiling on certain power sales through the PX, linked to comparable bilateral sales at arm's length. The rule was proposed ostensibly to deal with the potential exercise of market power by large sellers - and the BPA in particular.

In a March 31, 1997 letter to FERC, the PX had explained its proposal. It would apply "to any entity within the Western Systems Coordinating Council that actually supplies 24 percent or more of the non must-take or must-run energy sold through the PX in a given hour, either through direct deliveries to the PX or through sales to intermediaries of energy which the intermediary then resells through the PX."

Several northwest entities, including Public Power Council, PacifiCorp, Public Generating Pool, Direct Service Industrial Customers and BPA objected to the rule.

FERC rejected it and required the PX to eliminate that section of the tariff. "The provision is primarily targeted at BPA," FERC writes. "And the Commission has addressed BPA's rates, including the rates that would be applicable to BPA sales through the PX, in other dockets¼" Docket Nos. ec96-19-003, et al., July 30, 1997, 80 FERC ¶ 61,128.

According to C.A. Ball, BPA spokeswoman, the California exchange thought BPA had the market power due to its low-cost hydropower.

"They were claiming that we had market power," she said. "We have said we have no market power. We sell our power at cost-based rates. We don't even make a profit. BPA is a participant. We're a bidder. It's not a BPA power pool. It's a California power pool."

Steve Oliver, BPA's bulk power and marketing manager, adds that there is no advantage for BPA.

"The price is all set to a marginal clearing price offered to everybody that bids," he says. "The way the bidding is set up, it's a West Coast-wide opportunity for all parties to bid in¼ we used to market directly to the investor-owned utilities in California. The system set up now is fairly similar.

"All power is bid in and taken. We're given a price based on market-current price. It's a blind bid. We bid in with everybody else - there were approximately 40 companies that signed the power exchange participation agreement."

Score one for BPA on commodity sales. Regarding transmission, however, BPA has proven unsuccessful in swaying the FERC or the power