FERC Filings
EMERGENCY MOTION OF THE ELECTRIC POWER SUPPLY ASSOCIATION FOR AN IMMEDIATE CEASE AND DESIST ORDER
THE REQUESTED EMERGENCY CEASE AND DESIST AND STANDSTILL ORDER RESTORES THE PRIMACY OF THE COMMISSION’S PROCEEDINGS TO BE CONDUCTED PURSUANT TO THE OCTOBER 19TH ORDER
The Commission must reassert its jurisdiction over the CAISO as regards purchase price caps. The CAISO has asserted recently that it need not bring its own purchase price caps before the Commission for approval and that it has inherent authority as a buyer to establish price caps of its own choosing. EPSA disputes this view, but believes that the Commission need not even reach the issue of the CAISO Board’s inherent authority in approving the requested emergency motion. Whatever inherent authority it may claim to have, the CAISO has clearly submitted for Commission review both its proposed load differentiated price cap and its requested extension of its Tariff authority to set price caps after November 15, 2000. The CAISO Board’s motion approving the load differentiated price cap expressly contemplates that the Commission, on its own initiative, could order removal of the cap. That being so, EPSA’s instant motion should be approved. The Commission need not hesitate to exercise its jurisdiction to order that the CAISO cease and desist from implementation of the load differentiated price cap, as the CAISO Board has effectively submitted to such jurisdiction even in the absence of a formal filing to the Commission seeking approval of its proposal. <sup> (5)The Board’s actions were approved by the barest of margins (on a 13-10 vote), after limited debate, in the absence of management recommendations, as had been requested by the Board at it previous meeting on October 4, 2000, without the imprimatur of either the CAISO’s Market Surveillance Committee or Department of Market Analysis, and over the dissenting vote of the CAISO’s President. The CAISO Board’s adopted proposal is attached to this Motion.
(6)See Submission of Counsel to the CAISO and accompanying Offer of Settlement, Oct. 20, 2000, in Docket Nos. EL00-95-000 and EL00-98-000. EPSA expresses no views in this motion on the advisability of any elements of the submitted Offer of Settlement.
<sup>(7)
Although deceptively simple, the price cap formula incorporates assumptions that are highly arbitrary and capricious. The formula takes account only of natural gas prices for futures contracts at the Henry Hub in Louisiana, which can vary significantly from gas prices in California markets. Compounding that arbitrariness, the cost-based formula makes no provision for other necessary components, such as gas transportation costs, environmental emission reduction and allowance costs, start-up costs, and variable O&M costs, and places all risks associated with managing volatile futures prices and deviations of actual load from forecasted load on generators, since the caps will be adjusted once a month. The heat rates used to establish load cap ranges are also arbitrarily based upon 1999 market conditions, which differed dramatically from 2000 market conditions. 2000 has been a much drier year, making hydropower less available and forcing the use of more thermal generation, meaning that the marginal unit for any given load level would be higher up on the heat curve. </sup>