FERC Filings
MOTION OF THE ELECTRIC POWER SUPPLY ASSOCIATION-Docket No. EL01-1-000
E. CMUA’s Broad, Unsupported Claims of Market Power Fall Short of the Showing Required to Suspend Market-Based Rates
CMUA’s attack on sellers’ market-based rates in the California markets is premised on their view that those markets are not “workably competitive,” and their opinion regarding the relationship between price and operating costs (over the summer). Rather than making a real case that specific sellers are, or have engaged in the unlawful exercise of market power, CMUA’s allegation of market power is purely speculative. In light of the stakes involved, EPSA urges the Commission to closely scrutinize general allegations of market power. In its State of the Markets 2000, FERC described the difficulties in measuring market power:
Even with an understanding of the basic mechanisms of price formation and behavior in network industries, the interpretation of price data is extremely difficult and remains subject to uncertainty. The Commission is not in a position to create definitive or automatic procedures for the analysis and interpretation of price information.
Clearly, on behalf of its customers, CMUA finds high energy prices difficult to accept. However, a return to cost-based rates based upon broad allegations of dysfunctional markets and market power is the wrong response to the situation, and fails to address the underlying problems. Indeed, CMUA members could have protected themselves from wholesale price volatility, as many did, by accepting the numerous offers to hedge its commodity price risks. Failure to do so, and the impediments to utilities engaging more actively in bilateral, forwards markets and other hedging strategies, are the real problems that must be addressed.