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Power Measurements

Failing the Market-Power Test:
Fortnightly Magazine - October 2004

uncommitted capacity, and market uncommitted capacity.

  • Native load is defined as the minimum peak day for each of four peak seasons: summer (June, July, August), fall (September, October, November), winter (December, January, February), and spring (March, April, May).
  • Applicant uncommitted capacity and market uncommitted capacity are defined the same as in the pivotal-supplier test, except that hydro nameplate capacity is reduced by the lowest capacity factor in the past five years, and capacity values are reduced by planned outages for the season.
  • The applicant passes the test if the applicant's uncommitted capacity is less than 20 percent of the market's uncommitted capacity.

    Our Method of Analysis

    In applying the pivotal-supplier test, Energy Velocity included the following assumptions in its analysis. We used the hourly load data from FERC Form 714 to drive our native and wholesale load analysis. Our control area definition also came from the 714 form. We used 15 percent as our operating reserve. Since insufficient data are available from public sources to account for firm purchases and sales by the applicant in the month for which the test applies, that information was omitted. Requirement sales have been accounted for as they are reflected in the hourly load data. We also substituted total transfer capability between control areas for simultaneous import capability. In each case, the test applied by Energy Velocity should be easier to pass than the tests as defined by FERC. In the case of firm purchases and sales, 2003 FERC Form 1 filings show long-term firm purchases far outweighed long-term firm sales by IOUs. In the case of interconnected capacity, the total transfer capability between control areas will be somewhat higher than the simultaneous interconnect, which again would make it easier for an applicant to pass the test.

    In the market-power test, we used the same assumptions as in the pivotal-supplier test, with the exception of applying hydro capacity and planned outages as described in Figure 2. As in the market-power test, the limitations of available public data make the tests easier to pass than FERC's definition of the test. In aggregate, these methodological differences are unlikely to affect the outcome. Fewer than 10 companies were within a range of 5 percent of the 20 percent market-power threshold, and they were split evenly above and below the threshold.


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