The Federal Energy Regulatory Commission on June 11 approved the request of CSW Power Marketing Inc. to sell energy at market-based rates due to lack of market dominance.
The FERC in May 1996 had denied an application by CSW, an affiliate of Central and South West Corp., to sell power at market-based rates (Docket Nos. ER97-1238-000 and ER96-1348-001). The approval was based on lack of a comparable, open-access transmission tariff on the systems of CSW's public utility affiliates. The FERC only allows such sales if the seller and its affiliates do not have market power in generation and transmission and cannot erect other barriers to entry.
CSW had submitted an analysis of generation dominance using the traditional hub-and-spoke model, which treated the company as a single entity. The analysis showed the market shares of capacity owned or controlled by CSW and its affiliates will not exceed levels acceptable to the FERC.
The FERC disagreed with a protest by five transmission-dependent co-ops and munis that CSW improperly defined the relevant geographic market by including Tennessee Valley Authority as a competing seller. The protestors said the CSW analysis was insufficient because it does not take into account factors from the FERC's Merger Policy Statement, such as delivered price and transmission constraints (Order No. 592, Dec. 30, 1996).
The FERC found, however, that even if it excluded TVA from the analysis, CSW still would meet FERC's standards for market power in generation. Also, the TDU Systems' focus on delivered price related to the fact that CSW companies have not adopted a single-system pricing in their system open-access tariff. But FERC noted in Order 888 that such rates might be appropriated, if the same rates applicable for third parties were also applicable to CSW's wholesale transmission requirements.
Lori A. Burkhart is an associate legal editor with PUBLIC UTILITIES FORTNIGHTLY.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.