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Frontlines

Fortnightly Magazine - June 1 2000

even waiting for the case to be resolved. A few weeks after, the New York ISO proposed an absurdly complicated document setting standards for market monitoring, giving examples of what sorts of bids would be viewed as suspicious.

In New England, they were still waiting at this writing for the New England Power Pool to submit its plan for congestion pricing and management. In the absence of leadership from the top, the region has split into several factions - each attempting to get the jump on the others. One group of utilities called itself the "Anti-Subsidy Complainants." They seized the high ground, as if to box NEPOOL and the ISO into a corner, by advising the FERC that already there was a "clear consensus" in NEPOOL for locational marginal pricing, but that certain naysayers wanted to retain the current "socialized" method for assigning congestion costs during the two-year period that it would take to get LMP up and running. According to the ASC group, that would only perpetuate subsidies.

And then, if that weren't enough, go back and look at the New England power prices for May 8. If you do, you'll see that during the same afternoon that energy prices hit the ceiling, the price for 10-minute non-spinning reserves climbed above the price for spinning reserve during three of the four hours. That's the same upside-down pattern that prevailed in New York that led the ISO there to acknowledge possible price manipulation. (Logic would dictate that spinning reserve should carry a higher price.)

Amid the shouts, the ISOs and NERC were jockeying for position.

On April 13, the PJM ISO vice president (legal), Richard Drom, posed several questions on how it would fare if Congress were to crown the new North American Electric Reliability Organization (NAERO) as the unquestioned reliability czar. PJM showed particular interest in its installed capacity requirement (in its "Reliability Assurance Agreement"), which differs from other regions by giving the ISO the right to recall capacity to serve intra-ISO load during emergencies.

PJM:

These questions quickly elicited a 13-page letter from NERC general counsel David Cook, who must have worked hard to suppress his Cheshire Cat grin as he put pen to paper.

DEAR RICK:

ON MAY 11, THE DAY THE STORY BROKE IN that electric utilities had set up a secret fund to lobby some congressmen to block federal electricity legislation, I caught up with Oliver "Rick" Richard, the Columbia Energy CEO and former FERC commissioner, at a reception of energy lawyers and project developers in suburban Fairfax County, Va. After dinner he took several questions from the group. They went something like this:

  • Will deregulation mean more blackouts?
  • Will fuel cells make it big?
  • Why are customers so uninterested in electricity choice?
  • Why has Wall Street hammered the electric utility stocks so badly?

There, in a nutshell, is everything you need to know about electricity restructuring. The secretary of energy is warning about blackouts. As a remedy, the technicians continue to design these impossibly complicated corporate machines that seem only to make things worse. As Richard