A look at the issues that the Federal Energy Regulatory Commission must address concerning allocation of costs for certain high-voltage transmission lines 500kV or greater, planned for the PJM...
Mergers & Acquisitions
PECO + UNICOM. The Federal Energy Regulatory Commission OK'd the merger of PECO Energy and Commonwealth Edison, to form Exelon, though it admitted that the deal would boost the merged company's control of generation capacity in the ComEd destination market far above acceptable levels, as defined in the commission's Appendix A screen measuring market power.
The FERC explained that the merged company would have little potential to manipulate prices by withholding capacity from markets, since almost all of the merged company's economic generating capacity would be made up of low-cost but inflexible base-load nuclear plants, which would be difficult to ramp up or ramp down quickly.
Meanwhile, on March 24, PECO submitted a merger settlement agreement to the Pennsylvania PUC that set numerous benchmarks and performance standards for reliability and service quality in that state, but that would not apply in Illinois, which has no authority to review the deal, because essentially it represents a takeover of Unicom by PECO.
The settlement proposal in Pennsylvania prompted Illinois commission chairman Richard Mathias on April 17 to fire off letters to John Rowe, the president and CEO of ComEd, and to company executive Carl Croskey, asking whether the merged company would apply the Pennsylvania reliability standards in Illinois as well, and demanding an explanation of how ComEd would correct its "numerous power outages" and use common indexes such as SAIFI, CAIDI, and MAIFI to gauge reliability performance in Illinois.
The letter to Rowe showed that Mathias was clearly frustrated that Pennsylvania regulators were running the show: "It is interesting to note that if this transaction closes, Illinois electric utilities serving well over 90 percent of Illinois consumers will have been sold to out-of-state companies."
AEP + C&SW. To comply with the FERC's March 15 order approving their merger (which imposed conditions on membership in a regional transmission organization), American Electric Power and Central and South West signed an agreement authorizing the Southwest Power Pool to post data on AEP's OASIS node, showing SPP's independent calculations of short- and long-term ATC (available transmission capacity) on the AEP grid, and also to have SPP process all requests for transmission service under AEP's open-access transmission tariff.
In addition, AEP has hired Douglas R. Bohi of Charles River Associates to lead a team in developing a plan to monitor any anticompetitive effects stemming from the merger, until the merged utility joins a fully functional RTO. The team will monitor at least seven distinct indicators:
- . Hourly output of AEP generating resources;
- Transmission limits and deratings on AEP flowgates or other facilities showing constraints within the last two years;
- Hourly power flows over flowgates and constrained grid facilities;
- Generation redispatch actions by AEP to manage grid congestion;
- For both generation and transmission facilities;
- Comparisons showing the effects of AEP action to manage congestion or impose TLR curtailments (transmission loading relief) on wholesale power transactions involving AEP and its affiliated marketers; and
- . Effects of such AEP action (see previous item) on the level of transactions and prices in the market as a whole.