FERC Filings
MOTION TO INTERVENE AND PROTEST OF ELECTRIC POWER SUPPLY ASSOCIATION-Desert STAR, Inc.-Docket No. RT01-44-000
E. The DSTAR Proposal for “Local Generation Resources” Is Confiscatory, Unreasonable, and Would Distort Incentives for Grid Expansion, Generation Expansion and Demand-Side Elasticity.
EPSA agrees that DSTAR must put into place appropriate procedures to mitigate against the exercise of locational market power. It is imperative that such procedures send the correct price signals for both short-term uses of the grid and for long-term grid expansion. Such procedures also should allow for consideration and balancing of grid expansion vs. alternatives to grid expansion (including the development of new load pocket generation, distributed generation and/or demand-side elasticity).
Finally, the day-to-day mechanics of the DSTAR locational market power mitigation procedures should incite Scheduling Coordinators (“SC”) to self-acquire load pocket resources rather than rely on DSTAR to play a “big brother” role by acquiring load pocket resources on the SCs’ behalf.
DSTAR’s Local Generation Resource (“LGR”) proposal would not meet any of these objectives. By imposing “must-offer” obligations on new resources, it would prejudice the grid expansion process (through which DSTAR should be soliciting competitive alternatives to the transmission upgrades that are needed to meet load growth in existing or potential load pockets). The current LGR proposal would require DSTAR - which should not be in the forward market energy business - to establish a daily “fair market price for energy.”
The DSTAR LGR proposal’s pricing mechanics would result in load pocket prices that could perversely be less than, rather than greater than, the prices outside the load pocket. The DSTAR LGR proposal’s pricing mechanics would discourage the establishment of demand-side elasticity inside load pockets. And finally, the DSTAR LGR proposal would push SCs’ procurement decisions away from the forward markets and into the new day-ahead LGR markets that DSTAR would operate.
For these reasons, EPSA believes that the current DSTAR LGR proposal is fatally flawed and urges that DSTAR work with the stakeholders to develop a revised LGR proposal.