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Fortnightly Magazine - November 15 2000

of station power to the Dunkirk, Huntley, and Oswego plants.

The real issue here is setting power plants free.

With the entire industry bemoaning the high cost and shortage of generation capacity-from San Diego all the way to the East Coast-why not give competitive power producers every incentive available to cut costs and build more plants? Isn't that what the new regional transmission organizations (RTOs) are supposed to do?

"The FERC should encourage other RTOs to create cost-effective and flexible arrangements for generators to obtain station power," says Duke Energy. "The removal of artificial impediments to [reducing costs] should be supported, not only in the PJM region, but elsewhere in the U.S." (On Oct. 25, the FERC accepted the PJM filing and suspended it for five months. .)

The goal ought to be to encourage power producers to be as innovative as possible; to trim costs and boost efficiencies. Not only should power producers have an option to buy station power in wholesale spot markets, such as the real-time PJM Interchange Energy Market, but also, as Duke Energy suggests, to purchase station power "through forward contracts."

By contrast, the utilities seem oblivious to the real issue. One utility, for example, fears that PJM's proposal might encourage generators to change their behavior. Says Conectiv, "It would provide substantial incentives for generators to abrogate their contracts and make new arrangements."

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