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News Analysis

Fortnightly Magazine - February 1 2000

the Independent Energy Producers, agreed, and said that attempting to account for losses would introduce undue complexity and was not needed because the market would give due consideration to losses.

Meanwhile, the California Independent System Operator is reviewing how it calculates lines losses and assigns them to scheduling coordinators. On Dec. 1, the ISO submitted a 125-page report to the U.S. Federal Energy Regulatory Commission, comparing its current method to an alternative procedure that would assign the full marginal loss for actual scheduled transactions to each coordinator. (See FERC Docket ER00-703-000.)

Out-of-State Imports:

Unfair Discrimination?

In written comments submitted for the workshop, Dana Griffith of the Northern California Power Agency raised the issue of whether the method of calculation of net system power might discriminate against out-of-state power imports and the retailers that rely on such imports for their supply.

Such discrimination might occur because a retailer that offers no fuel-specific product must label its power as representing the fuel mix in the description of net system power, which makes broad (and perhaps misleading) claims on the attributes of power imported from out of state or through a power pool.

Griffith noted that some NCPA members were upset at having to disclose a fuel mix containing 16 percent nuclear power (the 1998 nuclear share in net system power), when their purchases from Pacific Northwest region consist of less nuclear and more hydropower. (See Sidebar, The Product Label.) Thus, Griffith advocates a system that would acknowledge the power mix in the Pacific Northwest as an acceptable generic alternative to net system power.

Lowell Watros, from the city of Redding, expressed similar concerns. Redding had voted in the early 1980s not to participate in nuclear-based power, and despite that vow, when the city purchases power from the Pacific Northwest, it must disclose the net system power numbers, which include nuclear. In disclosing net system power, customer confusion has been created, and Watros requested the CEC give an exception for long-term contracts with the Pacific Northwest region that would allow them to claim a different default power mix.

Ahead: Tagging Throughout U.S. West?

Staff members at the California Energy Commission believe that the certificate plan could mark the beginning of a tagging system for the entire western region. Their use would be voluntary, however. If a retailer should regard them as a threat to credibility, it could document its purchases in another way.

Energy commissioner and presiding member Michal C. Moore intends to move forward with a tradeable certificates program, and CEC will conduct a pilot program early this year. If specialized power marketing becomes more prevalent throughout the West in coming years, it is predicted that the certificates program may be turned over to a multi-state body.

Lori A. Burkhart is a contributing legal editor at Public Utilities Fortnightly.

The Product Label

Does the generic mix make a difference?

The Retailer. A California retailer will list the fuel sources for its electricity supply on its product label, and compare that against the generic fuel mix, known as "net system power."

The Generic Mix. State