No clear signal as yet from new chair James Hoecker.
The Federal Energy Regulatory Commission had a busy day on July 30, but observers will have to wait until the fall to learn of any new wide-ranging policy initiatives planned by incoming chair James Hoecker, who has now succeeded Elizabeth Moler in the top post.
The end-of-summer meeting (em and Commissioner Donald F. Santa Jr.'s last (em was marked largely by a lack of controversy.
Divide the grid by usage (em local vs. regional. Apportion costs accordingly, to energy customers by fixed charge, and power producers by flow and distance.
Traditionally, utilities have received transmission costs through an average, rolled-in access fee, or postage-stamp approach. In a deregulated environment, that approach will lead to distorted pricing.
And not just because of transmission-line congestion.
Much of the current debate over electric transmission pricing has centered on the various competing methods of congestion pricing, such as zonal vs.
Nine members of the Pennsylvania-New Jersey-Maryland Power Pool filed a revised plan at the Federal Energy Regulatory Commission to establish an independent system operator for the Mid-Atlantic power market.
The utilities have been battling with lone dissenter PECO Energy over the details of the ISO.
The nine utilities, dubbed the "supporting companies," agree on the form that an ISO should take. In November 1996, the FERC had rejected ISO proposals by both parties as having failed to comply with Order 888.
The Federal Energy Regulatory Commission on June 11 approved the request of CSW Power Marketing Inc. to sell energy at market-based rates due to lack of market dominance.
The FERC in May 1996 had denied an application by CSW, an affiliate of Central and South West Corp., to sell power at market-based rates (Docket Nos. ER97-1238-000 and ER96-1348-001). The approval was based on lack of a comparable, open-access transmission tariff on the systems of CSW's public utility affiliates.
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.
Feds prefer legislative solution for now, but warn of bid-rigging, cartel behavior later on, after deregulation.
One of the nation's top antitrust officials told the House Judiciary Committee in June that moves toward utility deregulation should focus first on open access to the transmission grid (em and then resolve that problem through rulemaking or legislation, not antitrust enforcement.
"Antitrust is probably not the best way to address access," said Robert Pitofsky, Federal Trade Commission chair.
With electric bills in Congress, and Moler bound for DOE, the Commission needs new vision.
Speaking in May at an informal press luncheon at the Washington International Energy Group in Washington, D.C., FERC Commissioner William L. Massey described the Federal Energy Regulatory Commission's role in an open-access electric industry as "nourishing" competition.
New York state's electric utilities in a joint filing at the Federal Energy Regulatory Commission have called for creation of an independent system operator, a power exchange and a reliability council, termed the "New York State Reliability Council."
The proposal stems from a collaborative process and is intended to complete the transition to full compliance with FERC Order 888. It includes numerous provisions:
• New York ISO. Would control state's bulk power transmission facilities;
• Transmission Pricing.
Speaking on June 11 in Washington, D.C., at a symposium sponsored by the Institute of Electrical and Electronics Engineers, Rep. dan Schaefer (R-Colo.) was heard to say that he would have his electric restructuring bill out of committee by the end of July. He said his bill would mandate electric competition by 2000--just the sort of deadline that Texas Public Utility Commission Chair Robert Gee likes to call a "Hong Kong" clause.
Will the millennium bring the dawn of customer choice? Here we are, halfway through 1997. Hong Kong is now Chinese, but in America we are still ratepayers.
Moody's Investors Service has released a report that finds the most significant long-term implication of Order 888 for investors is for potential divestiture of transmission assets by investor-owned utilities.
The Moody's study, FERC Order 888 and Wholesale Competition: Catalyst for a New Market Model, also finds that divestiture by a vertically integrated utility may leave bondholders secured by a lien on relatively risky generating assets of often questionable market value, as opposed to the presently more diverse and balanced asset portfolio.