FERC Filings
MOTION OF EPSA FOR LEAVE IN OPPOSITION TO THE COMPLAINT, SDG&E
II. Introduction
A.
Background
The Cal ISO’s experience with bid caps began in 1998 when, pursuant to Commission approval<sup>2</sup>, the Cal ISO implemented a $250/MWh bid cap in the Ancillary Services and Imbalance Energy (real-time) markets. A subsequent Commission Order afforded the Cal ISO the discretion to establish purchase price caps for imbalance energy at any level it deemed appropriate until November 15, 1999<sup>3</sup>.
In August 1999, the Cal ISO Board raised the bid caps in the Ancillary Services and Imbalance Energy (real-time) markets to $750/MWh, effective September 30, 1999. The Board action also provided that it would lower the caps to $500, effective June 1, 2000, if it determined that (1) the markets are not workably competitive; (2) there are not effective demand-side management options in place; or, (3) the local utilities have not sought and obtained practicable options to self-provide ancillary services and applicable hedging products in the CalPX. The tariff amendment also gave the Cal ISO the discretion to lower bid caps if it determined that the markets were not workably competitive. On November 12, 1999, the Commission issued an Order<sup>4</sup> approving a tariff amendment that extended the Cal ISO’s authority to impose bid caps until November 15, 2000.
On March 22, 2000, the Cal ISO’s Board unanimously voted to extend the $750 bid caps through November 15, 2000. However, political opposition was unleashed at an emergency Board meeting on June 28, 2000, leading to a further reduction of the bid caps to $500. After two unsuccessful votes in July, on August 1, 2000, the bid caps were reduced even further to $250/MW.
B.
SDG&E’s Complaint
In its Complaint, SDG&E alleges that “design and structure” problems of the California markets indicate that they are “fundamentally flawed and inherently incapable of producing workable competition.” Complaint at 1. SDG&E notes that these alleged flaws have directly affected the residents of the San Diego area since retail electricity prices were uncapped in June, 1999. SDG&E seeks amendments to the market-based rate schedules of all sellers into California’s energy and ancillary services markets by capping their bids at $250/MWh.
SDG&E relies on price information from a limited, two-month time frame -- June and July of 2000 -- and vague assumptions regarding “competitive equilibrium,” as the basis for its general contention that the California markets are “dysfunctional” and in calling for the extreme action of unilaterally suspending existing market-based rate authority. As explained below, SDG&E’s presentation and “analysis” of price and operating cost information, as well as its blanket allegations of “market power,” are misleading and provide an insufficient basis for strangling free-market forces.
1. The comments contained in this filing represent the position of EPSA as an organization, but not necessarily the view of any particular member with respect to any issue.
2. California Independent System Operator Corp., 83 FERC 61,209 (1998).
3. California Independent System Operator Corp., 89 FERC 61, 059 (1999).
4. California Independent System Operator, 89 FERC 61,169 (1999), reh’g pending (the “November 12 Order”).