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News Digest

Fortnightly Magazine - November 15 2000

New England Conference of Public Utilities Commissioners in endorsing the APS complaint, and said it would file its own complaint attacking ICAP prices.

But other power marketers see APS as attempting to escape its bad bargains. According to Select Energy, "APS took a risk by relying on the residual market." And Sithe New England Holdings put it more bluntly: "APS requests this relief solely because it went short into the ICAP market, hoping in vain to satisfy its capability responsibility free of charge. Granting the complaint would rescue APS from its own failed business decision not to hedge." .

New England Price Caps. The FERC clarified a prior order (issued July 26) by explaining that the temporary price caps of $1,000 per megawatt-hour that it set for ISO New England during certain system conditions of capacity deficiency must remain in effect for the entire day for which such conditions are forecasted, or for the remainder of the day on which they are declared. The cap affects markets for energy and automatic generation control whenever the ISO institutes its "Operating Procedure 4." Commissioner Curt Hébert dissented, arguing that the majority now allows the ISO to impose price caps when it expects a shortage, so that the ISO can predict an emergency and impose caps even if the emergency never occurs. .

Retroactive Price Relief. In a case similar to the complaint by APS over price spikes in ISO New England's ICAP market , many power marketers have intervened to protest three separate complaints filed by (1) Northeast Utilities and United Illuminating Co., (2) the Maine PUC, and (3) Bangor Hydro-Electric Co., all of which ask the FERC to compel ISO-NE to recalculate the unprecedented price peaks of $2,870 and $6,000 that occurred on May 8 during hours 13-17. The complaints allege that the prices violated New England rules and were based at least in part on New York prices that were later recalculated by the New York ISO.

The marketers argue that the requests for retroactive price relief violate FERC policy set earlier this year .

For example, in opposing the Bangor-Hydro complaint, FPL Energy notes, "BH completely ignores the numerous [protests] to the first two complaints, as if they never happened ... there [we] explain how the NEPOOL Market Rules and FERC's decisions and policies against retroactive rate making forbid revising energy clearing prices several months after the fact."

HQ Energy Services Inc., an affiliate of Hydro Quebec, distinguishes between fixing errors and second-guessing discretionary acts: "While the filed rate doctrine allows corrections of computational errors in calculating prices, it does not support BH's request for retroactive changes to decision making made in the course of dispatching generators."

HQ also adds, "The price change in New York is not authorized by the NY ISO's tariffs and will be the subject of proceedings at the FERC." .


State PUCs

Notice of Price Hikes. Massachusetts regulators OK'd final guidelines for pricing and procurement of default electric service, creating a three-step process requiring utilities to use direct mail (as opposed to bill inserts) to