News Digest

 

Power Markets

California Market Rules. Calling current power prices "just unreasonable," the California Independent System Operator filed its long-awaited counterproposal for market stabilization (the FERC staff had filed its proposal in March). If approved by the FERC, the new market rules would take the place of price caps ("soft" and "hard"), breakpoints, benchmarks, and all the other artificial price ceilings and guidelines tried recently.

The ISO proposal offers three key features:

• An "availability payment" to all participating generators in lieu of imposing on them a strict obligation to meet all California power demand.
• A program of "resource-specific, cost-based bid caps" (RCBCs), plus a must-bid requirement, and
• Day-ahead and hour-ahead forward markets run the ISO to cover the portion of forecasted load traded through bilateral markets, for both energy and ancillary services, so that at least 90 percent of forecasted system load is scheduled through the day-ahead market, and at least 95 percent by close of hour-ahead trading (to reduce the real-time market share to 5 percent or less).

In the first round of comments, the Electric Power Supply Association suggested the need for a capacity reserve requirement and criticized the idea of bid caps and also the ISO's plan to curtail export schedules when faced with shortfalls, saying that California was "picking and choosing" isolated features of markets in PJM, New York and New England, in a "poorly thought-out and disconnected way."

Enron added that the ISO's proposed cost-based bid standard for importers would rely on an "arbitrary" heat rate that would not reflect current resource scarcity in the Pacific Northwest. And Dynegy saw the plan as unfairly focusing on generators located within California: "Any ... new generation in California automatically joins a target group that bears the brunt of market mitigation ... Out-of-state suppliers can simply decline to sell into California." .-B.W.R.

Load Pocket Prices. ConEd asked for authority to close "loopholes" in the New York ISO's plan to mitigate generation market power in the New York City load pocket, by extending the program to cover all plants, including must-run units (and not just the plants divested by ConEd), plus all transactions, including the real-time market, and then either to (a) replace the ISO's single-price auction with a pay-as-bid protocol, or (b) require cost-based bidding if the single-price auction is retained.

New York City called ConEd's plan "a step in the right direction," but said the changes still would not be enough to protect local electric consumers, and the state utility commission agreed. Transmission owners generally supported the move, but power producers objected. Some faulted ConEd for filing at the FERC instead of working through the ISO's established procedures, while others said the ISO's Market Monitoring Unit already had the problem covered. The state power authority (PASNY) said its plants should remain immune from the rule change, but added that it thought the tighter controls would discourage new plant construction in the New York City area. .-B.W.R.

State PUCs

Generation Adequacy. North Carolina asked its public staff to investigate and report on the availability and adequacy of