FERC Filings
Comments of EPSA, Colorado Independent Energy Association, Independent Energy Producers of California, IPPNY and WPTF re: Public Utility Market-Based Rate Authorizations
Introduction
Investigation of Terms and Conditions of Public Utility Market-Based Rate Authorizations
Dockets No. EL01-118-000
EL01-118-001
Pursuant to the Commission’s June 26, 2003, Order Seeking Comments on Proposed Revisions to Market Based Rate Tariffs and Authorizations (June 26 Order) in the above-captioned proceeding, the Electric Power Supply Association (EPSA), Colorado Independent Energy Association (CIEA), Independent Energy Producers of California (IEP), Independent Power Producers of New York, Inc. (IPPNY) and Western Power Trading Forum (WPTF) (herein, Competitive Suppliers) hereby file comments on the Commission’s proposal.
Competitive Suppliers support the general direction of the Commission’s proposal as outlined in the June 26 Order. Competitive Suppliers recognize that it represents an improvement over the initial Commission proposal to condition existing and future market-based rate tariffs and authorizations on not engaging in prohibited anticompetitive conduct and the exercise of market power (November 20 Order). In the November 20 Order, the tariff condition included an open-ended, ongoing refund condition for all market-based rate tariffs and authorizations. That proposed condition would have caused significant damage to the integrity of the competitive bulk power market in the form of decreased liquidity, reduced price transparency and increased risk premiums for those engaged in generation and merchant sales.
The instant proposal improves upon the November 20 Order by focusing on the following:
• identifying and addressing specific behavior, although greater specificity is required;
• making a good first step towards removing an open-ended refund condition by instituting an appropriate time limitation for complaints; and,
• requiring the disgorgement of ill-gained profits, rather than mitigating all market prices.
Competitive Suppliers agree with the Commission that an important attribute of proper market behavior rules is to put market-based sellers “on notice,” so that parties clearly know what unacceptable market behavior is and can comply appropriately. This, then, promotes certainty, thereby bolstering markets by reinforcing the confidence of energy buyers and sellers and, in turn, helping to restore the capital markets’ confidence in energy infrastructure investment and stabilizing consumer confidence in wholesale competitive markets. Hence, in developing good behavioral rules, the Commission must ensure that it does not proffer rules or standards that may result in additional uncertainty in the markets, or unwittingly create or enhance barriers to entry for new market participants.
Properly designed and implemented behavioral rules can improve wholesale market functioning and establish the certainty needed by all market participants going forward. The key is that any market-wide behavioral rules must provide proper notice to parties as to what constitutes acceptable and unacceptable behavior consistent with Commission-approved market structures.