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Frontlines

Carrots haven't worked. FERC needs to get tough on backing its SMD vision.
Fortnightly Magazine - February 15 2003

But consumer advocates say the stick should be even bigger. The Pennsylvania Office of Consumer Advocate, the Maryland Office of People's Counsel and the DC Office of People's Counsel, in filings under the Joint Consumer Advocates (Docket No. PL02-8-000) say the SMA should be applied to regions [or utilities] governed by RTOs despite the existence of market power mitigation remedies within such RTOs, as market power has been evidenced in some RTO and ISO markets such as PJM.

Repeal of market-based rate authority is politically feasible. The Federal Power Act mandates that FERC must ensure "just and reasonable" prices. FERC worries that Congress will take away its SMD plan. So FERC should just drop the other shoe and let Congress and state PUCs focus on the alternative-a return to cost-based rates-a "death penalty," according to some utility CEOs.

And given the current president's record in Texas on executions, regulated utilities may find that their political maneuvering in Washington against SMD will land them in the chair.

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