FERC Filings
COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION-New York Independent SystemOperator, Inc.-Docket Nos. ER01-1489-000, ER01-181-000, ER00-181-001, and ER01-1517-000, not consolidated.
I. Approving the NYISO’s TEP and Bid Cap Extensions Will Not Mitigate New York Market Imperfections
In separate filings, the NYISO requested again to extend its Temporary Extraordinary Procedures (TEP), in addition to the current bid caps in certain NYISO markets. EPSA strongly urges the Commission to reject these additional 18-month requests. The extensions would, in fact, delay the development of robust competitive markets and continue to allow the NYISO and other market participants to impose adverse corrections on the developing market.
While such measures may provide short-term comfort, market interventions such as bid caps have profoundly more serious consequences for energy prices and the long-term viability of the markets. As EPSA has said in previous filings, the use of price caps or bid caps may adversely affect the market by limiting market entry, slowing the development of risk mitigation tools, and undermining demand-side response. These are not trivial considerations; each is critical to the successful development of competitive markets. At a time when capital is needed to attract new generation and to expand and improve the electric system infrastructure, the NYISO’s proposed actions would create uncertainty that will discourage and delay this much-needed investment. Indeed, the NYISO’s proposals are counterproductive to its own recommendation that substantial new investment – 8,600 MW of new installed capacity by 2005 – is needed in New York if that market is to operate as intended.
EPSA supports Chairman Hébert’s dissent to the Commission’s November 21, 2000 Order extending the TEP to April 31, 2001, in which he noted that such retroactive price changes indeed create market uncertainty, in turn forcing suppliers from the market – an action that ultimately undermines competition and harms consumers. In a similar vein, Commissioner Massey has expressed his awareness “that any sort of cap or intervention risks a watering down of the price signals we need for bringing about new supply and for hedging.”
For market control measures that have been extended under the guise of “temporary” labels, the NYISO’s layering of market control mechanisms is completely contrary to the needs of competitive markets. If such measures are deemed necessary by the Commission, EPSA recommends that they only be implemented for time periods that are indeed “temporary,” and expressly limited.