1 Worse, new institutions such as the California ISO seem to believe falsely that their actions will not have serious spillover effects outside their immediate jurisdictional concerns. Electric utilities in neighboring states know that they indeed are affected by Cal-ISO pricing policy and terms of service.

2 .

3 While emphasizing that it intended to be flexible in reviewing congestion pricing proposals, the commission reemphasized that "markets that are based on locational marginal pricing and financial rights for transmission provide a sound framework for efficient congestion management" . Again, reemphasizing its comments in the NOPR, the FERC stated that congestion pricing proposals should "ensure that the generators that are dispatched in the presence of transmission constraints must be those that can serve system loads at least cost, and limited transmission capacity should be used by market participants that value that use most highly" .

4 Recent FERC actions in the Northeast may prove this wrong. . These comments definitely apply to California, however.

5 . In this case, the administrative law judge was charged with ascertaining the appropriate charges for RMR service at three power plants in the San Francisco area. The ALJ recognized that the RMR plants were a hybrid, and that cost-based rates for the RMR services were a vestige of cost-based ratemaking. Nevertheless, the ALJ noted that RMR status was necessary to mitigate any locational market power the generator might have, and that net incremental cost compensation was adequate to reimburse the generator for all costs associated with RMR unit obligations.

6 .

7 FERC also refused to allow $23 million in administrative and general costs, reasoning that these costs were a CPUC issue. However, although the CPUC previously had allowed SCE to recover these costs, it stopped doing so April 1, 1998, assuming that these costs were now a FERC issue. SCE has requested that the CPUC allow these A&G costs, but as things stand, neither the CPUC nor FERC is assuming jurisdiction over the issue. SCE could lose more on the issue of A&G costs than it would have under the ruling for low ROE.

8 .

Recently, these cases were abated subsequent to the Florida Supreme Court ruling that the Florida PSC has exceeded its jurisdiction in granting the need petition in the Smyrna Beach docket. .

9 .

10 .