THE FEDERAL ENERGY REGULATORY COMMISSION met Aug. 14 in Chicago to address complaints filed concerning late-June electric price spikes in the Midwest, which saw prices climb a high as $7,000 per megawatt-hour.
Back in July, Commissioner James Hoecker had noted, "We need to know what led to the price spikes, and what ¼ this tells us about emergency market behaviors." He added: "We foresee a growing role for this commission in monitoring market performance."
But while the FERC debated, a shakeout loomed.
Debate at the Meeting
Charles E. Bayless, president, chairman and CEO of Illinova, parent company of Illinois Power Co., urged daily price caps on power trading to prevent huge price spikes during emergencies, similar to trading limits on commodity prices at the Chicago Board of Trade or circuit breakers used by the New York Stock Exchange.
Paul McCoy, senior vice president at Commonwealth Edison Co., disagreed. "I urge the commissioners to consider any corrective actions carefully. [W]e are dealing with a developing market, with some participants not properly hedging their portfolios.
"Let market participants deal with the credit risk," he added. "I would, however, recommend that those selling to a party that has defaulted be allowed to terminate new deliveries of electricity following a default, and not have to wait 60 days after making a filing with the commission."