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FERC's California plan needs pressing, to fix blatant gaffes on NOx, demand bids, and megawatt laundering.
Fortnightly Magazine - July 1 2001

Pacific Gas & Electric. "If marketers can justify their sales based on purchase price, then generators can sell to marketers for any price."

Yet the FERC defends its decision because of the inherent difficulty of tracking all the discrete plant heat rates and natural gas fuel costs bound up in the typical blended portfolio of a typical power marketer.

Meanwhile, the plan for demand-side bidding appears virtually indecipherable, as it calls for FERC to intervene in retail markets, where it has no jurisdiction. The rule forces California's investor-owned electric utilities to bid a price into the ISO for which they will be willing to blackout their ratepayers, even though the IOUs are no longer credit worthy, and now rely on the state's Department of Water Resources (DWR) to nominate schedules at the ISO. But the DWR is not a utility with an obligation to serve, so it also lacks authority to pledge a curtailment on behalf of retail electric customers. So that violates California state law, as Patrizio adds.

But the kicker is probably the FERC's suggestion for the ISO to impose a surcharge on ratepayers to fund an escrow account to recover money that the IOUs allegedly owe to power suppliers. The ISO is having none of it. It refuses to build the proposal into its compliance tariff. Sidney Jubien, chief counsel for the Electricity Oversight Board, thinks he knows why.

"A surcharge that might be considered 'reasonable' would take an absurd period of time to collect," he notes.

"If a $10-per-megawatt-hour surcharge were implemented, the collection period would last for 102 years."

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