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News Digest

Dynegy's David Francis, vice president for western power trading, testified on Dec. 21 on why he thought the ISO was bending the rules:
Fortnightly Magazine - February 1 2001

and also observed that in its recent investigation of bulk power markets in the Northeast, the FERC staff had found "significant seams issues that are inhibiting commerce in the region." .-B.W.R.

Arizona ISA. The Arizona Independent Scheduling Coordinator asked the FERC to rehear its November order accepting the ISA's tariff, saying that, contrary to the FERC's assumption, the unique electric restructuring plan in Arizona stipulates that retail customers taking standard offer service will not see an unbundling of their retail transmission service, as will customers dealing with a competitive retailer. .-B.W.R.

Wisconsin Transco. A group of Wisconsin industrial customers has protested rates proposed by American Transmission Co., the independent transco created by Wisconsin state law, complaining that ATC's proposed 12.2 percent return on common equity is "grossly" high and will hurt Wisconsin industry in competing on a national scale. As the group explained, "ATC is the first transco of its kind in the country and its formation should be handled with care." .-B.W.R.

Transco Divestiture Profits. Michigan regulators OK'd a request by Consumers Energy to award 50 percent of the net premium above net book value to shareholders on the sale of its transmission assets to its proposed for-profit Michigan Electric Transmission Co. (MET), with the remaining 50 percent of such proceeds used to reduce transition costs pertaining to the state's plan for retail supply choice.

Meanwhile, MET's first proposed open-access transmission tariff was pending before the FERC, where MET answered protests by saying it would continue to honor its existing transmission agreements. .-B.W.R.

ICAP Deficiency Charge. In a hotly contested dispute, the FERC rejected a proposed capacity deficiency charge of $0.17 per kilowatt-month to meet the installed capability (ICAP) requirement imposed in ISO New England to help maintain generating capacity reserves, and reinstated a 10-year-old, administratively determined charge of $8.75 per kW-month. The order fell under attack immediately by state regulators and industry players in the Northeast.

  • Central Maine Power asked for an emergency stay, comparing the FERC order to the Grinch in the Dr. Seuss book, and complaining that the FERC's order would force it to shop in a bilateral contract market "where ICAP costs are running three to five times greater" than before the FERC acted. The utility said the ICAP rate "has no relevance to current New England Markets." And at National Grid USA, senior vice president Robert McLaren complained that with his company's need to go to bilateral markets to buy ICAP supplies for standard-offer customers, "each one-dollar increase in the ICAP deficiency charge would increase costs paid by [company customers] by more than $14 million per year."
  • Adding its voice, the Maine PUC complained that the new interim charge would apply retroactively and thus would offer no incentive to solicit generation-instead, the PUC said it "would only benefit those generators who were already operating by providing them a windfall." The PUC added that the ICAP order, "coming on top of already high forward prices," had forced it to dismantle the standard-offer bid process in Maine. ()
  • The Massachusetts Office of Consumer Affairs also chimed in, calling