Federal and state interests clash as the FERC battles California over the future of the state's power exchange.
The California Power Exchange will not outlive its four-year mandate because it cannot compete with lower-cost exchanges, such as the New York Mercantile Exchange, Automated Power Exchange and low-cost over-the-counter brokers. So says Edward Cazalet, chief executive officer at Automated Power Exchange and chief rival of the CalPX.
Yet price appeared far down the list of items to consider, as the Labor Day weekend wound down and the Federal Energy Regulatory Commission took up arguments bearing on the future of the California Power Exchange.
On the surface, the issue seems simple: Should the FERC grant the application filed by San Diego Gas & Electric Co. for authority to sell wholesale power outside the PX? Yet the case has deeper ramifications.
SDG&E's application, though rightly filed at the FERC as the agency with authority over interstate wholesale power markets, nevertheless puts federal regulators in the difficult position of managing California's retail power market. The CalPX acknowledged the problem in its comments responding to SDG&E's motion:
"San Diego's application to this Commission [the FERC] is appropriate, because [it] has jurisdiction over sales for resale by utilities through the CalPX ¼ . However, SDG&E's application raises broad public interest issues regarding the mechanics of the California restructuring program, the length of the transition period and the efficacy of California's nascent development of an efficient competitive energy marketplace.