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The Too-Perfect Hedge

Congress gives FERC an impossible task: Craft long-term transmission rights to save native load from paying grid congestion costs.

Fortnightly Magazine - May 2006

Oshinsky) reminds FERC that fared no better in the past:

“Customers that had a fixed-price, long-term physical transmission right in the past were not sheltered from congestion costs. They simply incurred those costs differently … through higher power rates.”

At San Diego Gas & Electric, attorney Paul Szymanski sees the quest for the perfect hedge as clearly unattainable:

“While long-term physical transmission rights might have theoretical advantages,” he notes, “it has yet to be demonstrated how physical rights can be effectively identified and deployed in a looped network configuration where the actions of each market participant instantaneously affect the fights of all other market participants.

“To date, the only practical way to address these interactions is through the exchange of money.”