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Fortnightly Magazine - February 1 1999

in a competitive market. It's much better than what they do in California, with the must-run plants."

So what's behind the high prices in PJM?

"I wasn't surprised by last summer's prices in PJM," Hogan explained. "I was surprised by the price spikes in ECAR and, given that, it was surprising that prices didn't go even higher in PJM. ¼ It was the prices bid in from outside the pool that caused the run up within PJM.

"When prices are high in ECAR, they [ODEC] want to build a wall. Then, when prices are low in ECAR, they want to take the wall down."

So I kept pushing. "Why isn't the FERC's bid cap seen to distort markets, just like any other artificial limit on markets is seen as distorting?" But Hogan wouldn't budge.

"No, the FERC's bid cap isn't a problem," Hogan insisted. "But if your objective is to keep prices artificially low, even when they're high somewhere else, then yes, you've got a problem, and you need something more radical - like what ODEC wants."

But then he gave in just a little:

"Perhaps the $999 cap is the market distortion."


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