NERC

Policymakers reflect on how it "coulda been." Nearly all insist "my state did it best."

California, Massachusetts, New Hampshire and Pennsylvania have deregulated their electricity markets. Yet they're all ironing out wrinkles. California at press time was bracing for a vote on the Proposition 9 recall petition. New Hampshire still faced federal lawsuits filed by Public Service of New Hampshire seeking to quash efforts to bring competition to the state. (See, U.S. District Court, Concord, Docket No. 97-97-JD; U.S. District Court, Providence, Docket No.

We are the world's experts on contingencies," boasted Michehl Ghent, president of the North American Electric Reliability Council, appearing in Houston on Sept. 17 at the Sixth Annual DOE/NARUC Electricity Forum. It was the very day day that NERC released its first comprehensive report on readiness in the electric utility industry in correcting computer software problems associated with the dawning the next century, which for the first time will require computers, software programs and embedded chips to the use four digits to identify the year beginning with turnover from 1999 to 2000.

ELECTRIC POWER SYSTEMS ARE HEAVILY DEPENDENT ON computers and communications. The electric power industry is reputed to be the third largest user of computers and communications, behind government and the banking industry. When regulators and legislators make decisions regarding the electric power industry, their decisions often carry implications for the industry's computer systems. However, it is rare for these implications to attract significant consideration or influence in the deliberative process.

State PUCs

ISO GUIDELINES. Marking a contrast with California, but lining up with states in the Northeast, the Iowa Utilities Board has urged that independent system operators should have authority to order redispatch to help fulfill service requirements for electric transmission. That rule came as part of a set of principles issued by the board to guide the formation of ISOs in managing electric transmission systems and preventing the exercise of market power.

No one has yet explained why the electric industry needs independent system operators to manage the transmission grid and a private institution to do essentially the same thing.

That question remains unanswered even now that the North American Electric Reliability Council has released its draft legislation showing how it would recreate itself as NAERO, a self-regulating electric reliability organization insulated from antitrust scrutiny by governmental oversight.

"Reliability does not exist in a vacuum," noted P.R.H. Landrieu, v.p.

FERC

MIDWEST POWER PRICES. Federal Energy Regulatory Commission Chairman James Hoecker announced July 15 that as soon as the staff presents its findings, the FERC will deal with the complaints filed by Cinergy, Steel Dynamics Inc., and others asking for regulatory relief from the late June run-up in Midwest bulk power prices (as high as $7,500 per megawatt-hour), and for a price cap set at $100/MWh. Nevertheless, Hoecker advised that the FERC was in "no hurry," and that the remedies available to it were not entirely clear. Docket No. EL98-53 (Cinergy), filed June 29, 1998; Docket No.

State PUCs

STRANDED COST RECOVERY. The Pennsylvania Public Utility Commission allowed Pennsylvania Power & Light Co. to recover $2.9 billion of a requested $4.5 billion in stranded costs, cutting a higher $4-billion allowance proposed earlier by an administrative law judge. The utility petitioned for reconsideration on June 26, after CEO William F. Hecht had called the decision "unacceptable," and noting that the PUC's written order, received June 15, appeared "even more injurious" to the company that the PUC's June 4 bench order.

THE PRICING TURMOIL THAT STRUCK MIDWEST POWER markets during the week of June 22, with allegations of price gouging and calls for a wholesale price cap imposed by the Federal Energy Regulatory Commission (see Docket EL98-53), made for good copy but has obscured what's really going on.

"In the pleadings to FERC, I saw no evidence of price gouging," says attorney Jeffrey Watkiss, who represents power marketers who have asked the Commission for wholesale market reform.

Power Pools & Reliability

SUMMER IN WISCONSIN. Responding to concerns about the electric shortages of the summer of 1997 and fears that they could happen again, Wisconsin PSC Commissioner Joseph P. Mettner has indicated that the state's energy supply outlook for the summer of 1998 appears much better in eastern Wisconsin than it did one year ago.

Mettner noted that Wisconsin's electric supply system is operating with expected reserve margins of 19.2 percent. But he cautioned that electric power flows do not respect borders.

WHY IS ELECTRICITY COMPETITION NOT WORKING? The principal reason is the failure of Order 888 to accommodate the economic and technological constraints of wholesale power markets.

Soon after Congress passed the Energy Policy Act of 1992, to give authority to the Federal Energy Regulatory Commission to compel electric utilities under its jurisdiction to wheel power for others, the FERC correctly recognized that piecemeal wheeling orders wouldn't work well without a tariff. A tariff would make the service quickly available to the user without the need for time-consuming negotiation.