FERC Filings
COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION ON THE INVESTIGATION OF PUBLIC UTILITY RATES IN WHOLESALE WESTERN ENERGY MARKETS
II. The WSCC Markets Are Not Inherently Flawed and Do Not Require California-Designed Mitigation
The Commission’s impetus for imposing pricing mitigation on the California markets is due to a set of factors that is unique to that state’s flawed market design. It should not be applied to the entire WSCC. There is no evidence that the problems created by the flawed market rules in place in California exist within the West. In addressing concerns about high prices in the West, the Commission’s Staff Report concluded that “[t]he data clearly show that a general scarcity of power in the West and increased costs to produce power were factors causing high prices.” This is consistent with the findings of the Northwest Power Planning Council, which found that prices are an indicator of scarcity.
As documented in earlier Commission Orders, several factors contributed to the imposition of mitigation measures in California. These include the requirement of the three investor-owned utilities to purchase and sell all of their electricity through the Power Exchange (PX), the after-the-fact prudence reviews on purchases made outside of the PX, impediments to the use of forward contracts, state retail policies that prevented customers from seeing and responding to market prices, and ISO and PX rules that contributed to the underscheduling of load and generation in forward markets.
None of these conditions exist on a WSCC-wide basis. In fact, the Commission found in its December Order that, “[it] may establish new rates only it if first has a record to determine that the existing rates are unjust, unreasonable, unduly discriminatory or preferential”….and that “once such a finding is made as to existing rates, the Commission must have a record to support the new rates it established as just and reasonable.” Such a finding should precede any decision to extend the market mitigation procedures to the WSCC.
Further, in that same order the Commission concluded that:
<sup>…no commenter has submitted evidence that conclusively demonstrates that the adoption of the regional price cap would beneficially influence the availability of supplies in California. In addition, no commenter has documented a single instance of a seller outside of California exercising market power during times of scarcity. In sum, the commenters have not met the burden of showing that a price cap on all sellers supplying energy and ancillary services in the Western region is justified and in the public interest. </sup>
Nothing has changed since December, 2000. To date, this burden has still not been met.