FERC Filings
COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION-San Diego Gas & Electric Company Complainant v. Sellers of Energy and Ancillary Services;Into Markets Operated by the California; Independent System Operator and the California Power Exchange Respondent
I. EPSA Supports Certain Aspects of the Staff Recommendations
EPSA lauds certain aspects of the Staff’s recommendations. First, the Staff notes that ”ultimately the real solution to California’s problems lies in increased investments in infrastructure.” It is certainly true that new generation and transmission infrastructure is, ultimately, the best solution to the problems plaguing the California markets.
Second, EPSA supports the Staff’s recommendation that its mitigation measures be severely limited by 1) applying only to approximately five percent of the market that remains in real-time and not to the bilateral and forward markets, 2) using price mitigation only during Stage 3 emergencies, and 3) “sunseting” mitigation efforts within a year. EPSA concurs that the application of market monitoring and mitigation should be limited, in scope as well as time. If adopted, this aspect of the Staff proposal will help provide much needed regulatory certainty and market confidence. To date, “transition periods” or “temporary procedures” have often been renewed and extended repeatedly and indefinitely. The Report’s inclusion of a date-certain “sunset” and limited scope for any price mitigation will provide the regulatory certainty needed for the future growth and viability of the industry.
Finally, EPSA agrees with Staff’s recommendations of the use of a single price auction in the real-time market. A single market clearing price sends appropriate price signals to the market and is best suited to encourage the long-term development of healthy regional markets. In January, a panel of economists commissioned by the California Power Exchange, including Alfred E. Kahn, Peter C. Cramton, Robert H. Porter, and Richard D. Tabors, produced a Report titled "Pricing in the California Power Exchange Electricity Market: Should California Switch from Uniform Pricing to Pay-as-Bid Pricing?" The Report concluded that a shift from uniform to as-bid pricing would not provide purchasers of electric power substantial relief from the soaring prices of the electric power, finding that such a switch “would do consumers more harm than good." EPSA welcomes this Staff recommendation, particularly as an improvement over both the as-bid auction and the price break approach in the December 15th Order.