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Commission Watch

FERC faces a growing chorus of rebellion on earnings incentives.
Fortnightly Magazine - April 15 2003
  • opposition to plans for New Brunswick to develop more low-cost power by refurbishing nuclear capacity and converting coal plants to Orimulsion, which is the brand name given to a fossil fuel produced from natural bitumen mixed with water.
  • RTO Startup Costs. FERC denied automatic cost recovery for utility load-serving entities that fund startup costs for certain market operations for the Midwest ISO. Instead, it will require the utilities to file rate applications and prove that such costs otherwise will remain stranded.
  • Must-Offer Bidding. FERC rejected a proposal by the California ISO to pay only the market-clearing price (MCP) to power plants when the ISO dispatches a plant that bids into the real-time imbalance market under must-offer rules. Power producers had claimed the ISO rule would deny full cost recovery if the MCP fell short of generator bids.
  • ISO Credit Policies. The New York ISO proposed to limit the amount of unsecured credit offered to market participants based on each player's risk profile, as determined by measuring each player's tangible net worth and then applying a multiplier factor based on the party's credit rating (ranging from "BBB-" to "A+"). Member utilities faulted the plan for omitting other provisions for working capital contributions and allocating bad debt losses among ISO members.
  • Gas Price Spikes. The Texas PUC has moved to lessen the impact of natural gas fuel price spikes on retail electric customers who choose default service from a utility marketing affiliate. The PUC raised the minimum level of gas price increase that must occur before the supplier can include a new fuel cost adjustment in the regulated default price. -B.W.R.

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