FERC’s market-power screens have been tested and found wanting in some areas. The author examines the screens’ strengths and weaknesses, then proposes future solutions.
MIDWEST POWER PRICES. Federal Energy Regulatory Commission Chairman James Hoecker announced July 15 that as soon as the staff presents its findings, the FERC will deal with the complaints filed by Cinergy, Steel Dynamics Inc., and others asking for regulatory relief from the late June run-up in Midwest bulk power prices (as high as $7,500 per megawatt-hour), and for a price cap set at $100/MWh. Nevertheless, Hoecker advised that the FERC was in "no hurry," and that the remedies available to it were not entirely clear. Docket No. EL98-53 (Cinergy), filed June 29, 1998; Docket No. EL98-54 (Steel Dynamics), filed June 29, 1998 (F.E.R.C.).
LINE LOADING RELIEF. Detroit Edison Co. protested a petition filed by the North American Electric Reliability Council that seeks FERC certification for transmission line loading relief procedures which conform with the Commission's pro forma tariffs governing open-access to electric transmission.
NERC's "off-path" TLR rule would permit curtailment to relieve the impact of parallel (loop) flows on grid systems not located directly on the contract path of the curtailed transaction, but Edison contends that the rule will cause problems in systems located around Lake Erie. PECO Energy supports the protest, but NERC opposes any utility-by-utility approach to curtailment, defending its off-path rule as "curtailing those transactions most directly contributing to the overload." Docket No. EL98-52, petition filed June 5, 1998 (F.E.R.C.).
STRANDED COSTS. FERC Administrative Law Judge Bruce L. Birchman issued an initial decision allowing $30.4 million in stranded cost recovery in the long-standing dispute between the city of Las Cruces, New Mexico and El Paso Electric Co. over the proposal by Las Cruces to terminate power purchases from El Paso Electric but have the utility wheel alternative power purchased from Southwestern Public Service Co.
The ALJ found that El Paso had met the test under Order 888 of having a "reasonable expectation" of continuing to serve Las Cruces. The judge offered illustrative annual cost calculations, depending on when Las Cruces would leave the system, figuring $30.4 million on a departure date of July 1, 1998. Docket No. SC97-2-000, 83 FERC ¶ 63,017, June 25, 1998.
NEW YORK ISO. The FERC gave conditional approval to the New York Independent System Operator, provided the ISO members can negotiate modified committee governing procedures to alleviate concerns over its independence from participating utilities. The order calls for the dissolution of the New York Power Pool and its replacement by the New York ISO and the formation of two new entities: the New York State Reliability Council and the New York Power Exchange.
The FERC deferred action on rates, terms and conditions of the ISO's open access tariff. FERC Chairman James Hoecker observed that a single-state ISO has "inherent problems." Commissioner William Massey said he supported the order but would issue a concurring statement noting his fears that some transmission owners could dominate the ISO Reliability Council. Docket Nos. ER97-1523-000, OA97-470-000, June 24, 1998 (F.E.R.C.).
ELECTRIC RETAIL CHOICE. In a restructuring order involving Montana Power Co., the state public service commission approved an electric supply choice pilot for large-volume customers