FERC Filings
Comments of EPSA, Colorado Independent Energy Association, Independent Energy Producers of California, IPPNY and WPTF re: Public Utility Market-Based Rate Authorizations
Well-Designed Markets Offer the Best Solution to Questionable Market Behavior
As Competitive Suppliers have stated in numerous proceedings before the Commission, the solution for most of the alleged and actual inappropriate market behavior is well-functioning markets with clear and efficient rules that foster efficient investment and competitive behavior. In fact, much of the behavior that these rules seek to prevent occurred as a result of poorly designed and poorly functioning markets in California. Independent transmission administration, centralized short-term markets, and good market rules are the key to eradicating many opportunities for questionable market practices – by supply resources, transmission owners, independent transmission providers and/or load-serving entities. Hence, the Commission should continue its progress towards competitive wholesale markets – focusing on those markets that are not yet meeting the Commission’s goals – and develop well-designed rules that are sufficiently clear to all market participants.
A recent example of the role well-designed market rules should play in curbing unacceptable behavior is the Commission’s July 25, 2003 agreement with CLECO Corporation and various of its affiliates. This agreement imposed a civil penalty and refunds on the companies for alleged violations of the Federal Power Act and Commission regulations between 1999 and 2002. In the news release issued by FERC, several behaviors are listed as alleged violations, including sales to affiliates without Commission authorization, rates that give undue preference or advantage to an affiliate, and improper disclosure of information to an affiliate. In a well-designed, independently administered RTO with an independent market-monitoring unit, these types of behaviors would not have been possible.
In addition to developing functional RTO markets nationally, the Commission appropriately desires to clearly define acceptable and unacceptable behavior so that companies, their employees and their affiliates are on proper notice. The Market Behavior Rules, as clarified in the Competitive Suppliers’ red-lined Attachment B, should help the Commission to achieve this goal.