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An Inconvenient Fact

Why the standard market design refuses to die.

Fortnightly Magazine - December 2006

Commission, asking FERC to compel Entergy to deploy merchant gen units to displace some of Entergy’s fleet of rate-based assets. (See FERC Docket EL06-76, filed June 7, 2006.)

Then there remains the enigma of “native load.” Many NOPR comments claim FERC’s redispatch would violate native-load rights, as redefined in EPACT sec. 1233, now codified at Federal Power Act sec. 217. These objections, however, seem far off base. Taken together, in fact, the hundreds of comments reveal considerable industry confusion about what is meant by native load.

One view sees two different types of load—merchant load and “utilities native load.” (N.M. Atty. Gen., initial comments p. 10) This view defines native load as that “distinct set of customers that are regulated at the state level.” (South Carolina Elec. & Gas, initial comments p. 6.) Yet FPA sec. 217 declares that a load obligation secured only by contract still will qualify as “native” load.

Another view sees the native-load protection extending to generating assets, arguing that open dispatch would undermine “the current dedication of an integrated utility’s generation to first meet its native load service obligation.” (Large Public Power Council, reply comments, p. 18) Yet again, FPA sec. 217 appears to protect only the transmission rights of native load. No mention is made of rights tied to power plants.

EPSA counters that native load as defined in EPACT 1233 and FPA 217 should apply to all obligations, “whether … served by a competitive supplier, an affiliate of the transmission provider, or by the transmission provider itself.”

This notion comports more fully with the Chandley/Hogan world, where “all … are treated as native loads; thus all loads receive all of the benefits and protections.”