FERC Filings
EPSA's Motion For Leave to Protest Out of Time and Protest PJM Interconnection, LLC. Compliance Filing
PROTEST
On July 16, 2004, PJM filed compliance tariff revisions (PJM Compliance Filing), proposing to add a new provision to its market rules to suspend offer caps when competitive conditions exist in a load pocket, as directed by the Commission’s May 6, 2004 Order on Tariff Filing (May 6 Order). PJM proposes that the test for competitiveness would be that there are not three or fewer jointly pivotal suppliers available for redispatch in the load pocket. The no-three jointly pivotal suppliers test is supported in the PJM filing by Market Monitor Joe Bowring in an attached Declaration (Bowring Declaration) outlining the economic theory which underpins PJM’s proposal.
EPSA is concerned that implementation of and justification for the no-three jointly pivotal suppliers test is unreasonable and will perpetuate the designation of all load pockets as non-competitive, barring the possibility that mitigation measures will be lifted even in areas that exhibit competitive characteristics. In sum, no area in PJM will ever be deemed competitive based on the jointly pivotal suppliers test as set out in the Compliance Filing. This is of particular concern because PJM is held up as the nation’s most functional market and often serves as the model for a competitive market that relies on competitive market forces rather than cost-based regimes. Hence, PJM market rules may function as a template for other developing regional markets. If the Commission gets it wrong in PJM, the error may be perpetuated across the country.
The attached Affidavit, prepared for EPSA by Jonathon A. Lesser, Ph.D., and Guillermo Israilevich, Ph.D., of Bates White, LLC, is a detailed economic analysis of the PJM proposal and the evidence proffered by PJM to support the no-three jointly pivotal suppliers test. The Affidavit shows that the PJM proposal requires an unreasonable number of suppliers in any load pocket in order to pass the proposed test, and such a regime will hinder market development and discourage market entry in those areas most in need of additional generation capacity. The Affidavit states that PJM should rely on a combination of a pivotal supplier test and a market share analysis as outlined in AEP Power Marketing, Inc., et al., 107 FERC 61,018 (AEP Power Marketing II), the Commission’s current screens for generation market power.