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Frontlines

Scare Tactics

The Wall Street Journal is goading Congress to act. And it might just work, if the warnings come to pass.

On May 8 ISO New England predicted it would have enough electricity to meet peak demand this summer. But how much demand are you gonna see at $6,000 per megawatt-hour, which was the ISO's prevailing price that day from 2 p.m. to 6 p.m?

A former state regulator notes serious problems in Northeast power markets, and offers remedies.

"Sensible Approach" or Misguided Meddling?

The proposal by Reps. Franks and Meehan to sell federal power at market rates provokes conflicting responses from readers.

I am writing in response to an article written by Reps. Franks and Meehan entitled, "The Sensible Approach: Federal Power at Market Rates," published in the Nov. 1, 1999 edition of Public Utilities Fortnightly (see pp. 44-47). I agree that it is outrageous that electricity services for people in the Northwest are subsidized (regardless of the customers' ability to pay) by the rest of the people in this country.

Shopping credits, capacity rules and other mistakes from California and PJM.

With retail electric markets opening rapidly, why are so many getting off to a slow start? Why do suppliers abandon some markets and consumers decline to participate in others? The answer may lie in a series of disconnections between wholesale trading patterns and retail opportunities.

Tales of bad faith, cold feet and price manipulation.

Lollipops"/fn1/ and "loopholes." "Islands" and "peninsulas." Utilities have invented a colorful new lexicon to explain what's happening at power pools and regional transmission groups. Yet the basic issue remains familiar: How to gain a competitive advantage.

Locational marginal pricing, even if "complex," is well worth the benefits.

In two recent issues, PUBLIC UTILITIES FORTNIGHTLY featured editorials %n1%n on restructuring of the PJM Pool. Those two articles described proposals by the so-called supporting companies, %n2%n seven members of the Pennsylvania-New Jersey-Maryland Interconnection, to use a "locational marginal pricing" model for congestion pricing for electric transmission and to continue PJM as a "tight" power pool.

The PJM Interconnection is what they call a "tight" power pool. As the Federal Energy Regulatory Commission has explained, tight power pools "extensively coordinate" their planning and operations, with central dispatch of generating plants. This coordination builds reliability--one of the long-term benefits, says the FERC, of a tight power pool.

Coordination also builds market power, however. And, as we all know from FERC Order 888, market power in transmission stands as "the single greatest impediment" to electricity competition.

More than a decade ago, working at the energy laboratory at the Massachusetts Institute of Technology, the late Fred Schweppe devised a novel scheme for pricing electric transmission. His solution? Do nothing. Simply ignore transmission.