FERC Filings
PETITION OF EPSA FOR REHEARING AND REQUEST FOR TECHNICAL CONFERENCE, ENTERGY SERVICES, INC.
I.
Pursuant to Rule 212 and 713 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission (Commission or FERC), 18 C.F.R. 385.212 and 713, the Electric Power Supply Association (EPSA) hereby petitions the Commission to rehear its May 18, 2000 Order in the above-captioned docket. Entergy Services, Inc., 91 FERC 61,151 (2000) (May 18th Order).
On May 26, 2000, Coral Power L.L.C., Dynegy Power Marketing, Inc., the Electric Consumer Resource Council (ELCON) and Enron Power Marketing, Inc. (Indicated Intervenors) filed a Petition for Rehearing and Motion for Expedited Clarification. In their request for rehearing, the Indicated Intervenors argue that the Commission should not have accepted Entergy's proposed "Attachment M," pointing out that Entergy's proposal is not consistent with or superior to the pro forma tariff and will, in fact, cause grave competitive and commercial harm. EPSA joins in the arguments made in that filing and urges the Commission to grant the relief sought.
EPSA shares the concern expressed by the Indicated Intervenors that the May 18th Order fundamentally misapprehends the impact of Entergy's proposals on the development of a competitive marketplace. In accepting Entergy's proposal, the Commission appears to have failed to appreciate the distinction between financial transactions, needed for liquidity and depth in a commercial market, and physical trading that actually impacts the transmission system. Financial transactions generally take the form of forward trading of physical products that may ultimately "book out" and never be transmitted. Since Order No. 888 was issued in 1996, wholesale power trading has grown dramatically, topping 2.6 billion megawatts in 1999. Clearly, only a fraction of this represents physical trading; the balance is valuable liquidity.
EPSA is concerned that the effect of the May 18th Order will be to significantly limit the ability of power marketers to participate in the wholesale electricity market in Entergy's service territory. While touted as improving reliability, Entergy's proposal is, in fact, designed to eliminate or restrict transactions that provide valuable products to the market place. Competitive markets need trading hubs, yet the May 18th Order will limit and undermine the ability of the market to develop the tools needed for success. EPSA members have already experienced decreased liquidity in trading of the "Into Entergy" product in the broker market due to Entergy's new restrictions on reserving transmission.
The reliability implications of dampening liquidity and market depth were not factored into the Commission's analysis. Requiring the designation, in advance, of specific source and sink locations will frustrate the ability of market participants to respond to market signals. Of course, successful competitive markets require both financial and physical trading. If liquidity in the financial markets is limited, investment in new generating resources will be curtailed as well, jeopardizing long-term supply adequacy.
EPSA members are also concerned that other transmission providers have begun to impose similar restrictions on point-to-point transmission service. For this reason, in addition to granting rehearing of the May 18th Order, EPSA urges the Commission to schedule a staff technical conference to address the range of issues raised by Entergy's proposal. Actions by Entergy or others to require specific sources and sinks for point-to-point transmission service and invalidate NERC-accredited control areas have complex and far-reaching implications that are neither acknowledged nor investigated in the May 18th Order. In fact, these new proposals have supply adequacy implications for the upcoming summer and will directly affect the successful development of robust and liquid wholesale power markets. Therefore, EPSA suggests that the Commission, in addition to granting rehearing of the May 18th Order, schedule a staff technical conference so that the full range of issues can be discussed and understood. Another option is for the Commission to grant rehearing solely to suspend Entergy's proposal for the summer 2000 peak demand season, during which a technical conference could serve to educate the Commission and the industry on the issues implicated by Entergy's proposal.
EPSA urges the Commission to grant the Petition for Rehearing filed May 26th by the Indicated Intervenors and to schedule a staff technical conference to understand the issues and their implications more fully.
June 19, 2000
Respectfully submitted,
_____________________________
Julie Simon, Director of Policy
Mark E. Bennett, Senior Manager of Policy
ELECTRIC POWER SUPPLY ASSOCIATION
1401 H Street, NW, Suite 760
Washington, DC 20005
202-789-7200