News Digest

Fortnightly Magazine - September 1 2000
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News Digest


 

Power Markets

Price Cap Backlash. The Federal Energy Regulatory Commission granted "fast-track" processing to review the complaint filed by Morgan Stanley Capital Group to overturn the $500-per-megawatt-hour price cap imposed in late June by the California Independent System Operator (but see below), but saw no need to force the ISO to rescind the cap.

As the FERC explained, a cap sets the price at which the ISO will buy power, and does not restrict options for sellers, as they can choose to sell into other markets.

Commissioner Hébert concurred in the result, but called on the FERC to investigate the ISO. "Getting to the bottom of the problem, in my view, requires us to begin a proceeding to rescind our approval of the ISO as the operator of the California grid." .

Earlier, on July 26, the FERC had asked its staff to conduct an investigation of price volatility in wholesale U.S. power markets, and to report back by Nov. 1, so that the commission could use the findings in evaluating proposals due from utilities by Oct. 15, regarding FERC Order 2000 and plans for regional transmission organizations.

California. On Aug. 1 the board of governors of the California Independent System Operator voted 15-6 (two abstained) to lower the price cap from $500 per megawatt-hour to $250, effective from Aug. 7 to Oct. 15, in the real-time markets that it administers for ancillary services and congestion relief.

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