Capacity Planning: The Good, the Bad, and the Ugly

Deck: 

Market-Power Tests: A review of FERC’s market-based rate (MBR) screens, from theory to application.

Fortnightly Magazine - July 2005
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On April 14, 2004, the Federal Energy Regulatory Commission (FERC) adopted new “interim” market-power screens for electric utility application and maintenance of authority to sell electric power at market-based rates (MBR).1  Since then, FERC has heard and ruled on requests for rehearing, provided a schedule for utilities to file updated market-power studies, and ruled on many applications. It is, therefore, now appropriate to examine the screens in light of FERC’s actual application.

FERC ordered two new screens: Pivotal Supplier Analysis (PSA) and Wholesale Market Share Analysis (WMSA). In the PSA, the commission examines whether the generation owned by the applicant is necessary to serve wholesale demand within a control area. The commission first calculates the total generation capacity for an area. This is the total of generation in the control area plus the potential imports.2

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