FERC Filings

SUPPLEMENTAL COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION re: INVESTIGATION OF TERMS AND CONDITIONS OF PUBLIC UTILITY MARKET-BASED RATE AUTHORIZATIONS

SOLUTIONS SHOULD BE TAILORED TO IDENTIFIED PROBLEMS

EPSA also welcomes the Commission’s emphasis on identifying and remedying abuse of market power. Abuse of market power is antithetical to competitive markets and prevents consumers from seeing the benefits of those markets. Thus, it is important that market power abuse be identified and remedied. However, market power issues do not take a single form and, as the testimony at the conference indicated, the identification of the exercise of market power is a very difficult task. Market power issues can arise from market concentration, dysfunctional market rules, barriers to entry, transmission constraints, gaming of market rules or inappropriate bidding strategies. Furthermore, because market power issues can manifest in different ways, there is no single “magic bullet” that can adequately address all market power impacts.

The November 20th Order appears to be directed at a limited form of market power abuse that occurs in the context of inappropriate bidding behavior. As EPSA and others have pointed out, there is no evidence that this is a widespread problem, and testimony at the conference indicated that it will be very difficult for the Commission to determine the right market price. Rather than imposing draconian and legally indefensible remedies by conditioning the market-based rate authority for certificated public utilities, it would be preferable for targeted action by FERC to investigate complaints as appropriate and then impose remedies upon only that entity which is found to have abused market power.

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