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News Digest

Fortnightly Magazine - May 15 2001

infrastructure (fuel supply and delivery capacity, transmission availability, etc.) needed to support development of new electric generating capacity in the state.

Earlier, North Carolina OK'd resource plans filed by the state's major electric utilities, finding existing generation resources to be adequate for the year, with reserve margins running from about 12 percent to 17 percent. -L.A.B.

Purchased Power Costs. Citing the magnitude of the utility's request for a purchased power adjustment, Wyoming launched an investigation of power procurement by Cheyenne Light, Fuel & Power, threatened with higher purchased power costs with the expiration of its requirements contract with its long-term supplier, PacifiCorp. Wyoming regulators said that Cheyenne's current level of wholesale power costs might well call for retail rate hikes running between 57 percent to 88 percent, depending on customer class..-P.C.

Transmission and ISOs

Capacity Reserve Obligation. At press time, PJM had drawn a flood of protests with its fast-track request to amend its Reliability Assurance Agreement to impose a season-long obligation on power producers (instead of day by day) to commit generation to the ISO's capacity reserves in its installed capacity (ICAP) market, and similarly to create a ratchet-like seasonal deficiency charge. Any generator found "short" on any day during the entire summer peak season would be denied any share of reallocated deficiency charge revenues, despite its capacity status on any other day. .-B.W.R.

Locational Marginal Pricing. Despite a raft of protests, the FERC OK'd a proposal by the New York ISO to pay locational marginal prices (three zones statewide) to power producers for generation reserves (spinning, nonspinning, and 30-minute operating), to reflect changing market values because of transmission congestion, but yet at the same time to bill the cost of such reserve generation to all customers across the state on a uniform socialized basis, without regard to location. .-B.W.R.

Credit Standards. Bowing to demands by power producers, the FERC reaffirmed that So. Calif. Edison and Pacific Gas & Elec. must meet credit requirements to buy wholesale power, and again told the ISO that it must deny scheduled transactions unless the two utilities meet credit tests or self-provide-i.e., supply their own generation and transmission.

Commissioner Massey found the issue troubling, citing an "irreconcilable conflict" in forcing the ISO to deny service and yet keep the system running. .-B.W.R.


California PX Markets. A federal appeals court ruled that when the FERC found that the day- of- and day-ahead markets operated by the California Power Exchange were unjust and unreasonable, it was justified to cancel them (which put the PX out of business), rather than to attempt to restructure the PX tariffs to cure the defects, as the PX had wanted.

The court acknowledged that the termination of tariffs was "perhaps unprecedented," but said the FERC action satisfied sec. 206(a) of the Federal Power Act. .-B.W.R.

California Oversight Board. Finding no evidence of concrete injury, a federal appeals court dismissed claims by out-of-state power producers that the California Electricity Oversight Board violated federal law by showing bias in favor of California residents and shifting costs to out-of-state companies. .-B.W.R.

Divested Power Plants.