FERC Filings
EPSA's Motion for Leave to Comment on Southern Company Services, Inc (SCS) Compliance Filing
COMMENTS
A. The Commission Should Initiate a Section 206 Proceeding
Having proclaimed the interim indicative generation market power screens fatally flawed, Southern Companies proposes its own modified pivotal supplier screens, which it asserts it passes. Southern Companies fails the Commission’s market share screen.
Southern Companies’ compliance filing is a bold attempt to flout the Commission’s guidelines, to deflect attention from its failure of the market power screens, and to continue to operate with unmitigated market power in its market area. The Commission must deem the screen failed and find that Southern Companies has a rebuttable presumption of market power. With this finding, the next step is the initiation of a Section 206 proceeding and a Delivered Price Test (DPT) analysis by the Commission so that a more comprehensive examination of Southern Companies’ market situation may ensue. This process allows for the scrutiny of Southern Companies’ analysis by market participants, which is particularly important in a case such as this where Southern Companies has previously been found to have market power that has not been mitigated since that determination.
The Commission first acted on Southern Companies’ market-based rate authority triennial update in November, 2001, finding that Southern Companies did have market power. Since that time, Southern Companies has retained its market-based rate authority without mitigation. To attest to the ongoing market power problems in the Southern Companies’ market, there have been several recent cases brought to the Commission that stem from and evidence the impacts of Southern Companies’ market power, including complaints on supply procurement processes. It is clear to all market participants that there are real barriers to entry in the Southern Companies market area. All of this information must be considered within the context of a Section 206 proceeding on Southern Companies market power. As Southern Companies has a rebuttable presumption of market power due to failure of the indicative screens, a Section 206 proceeding will allow the Commission to examine and consider all four prongs of its market power test.
B. Southern Companies’ Market Power Must Be Mitigated
The ultimate solution to Southern Companies’ generation market power is participation in a well-functioning RTO. There are various mitigation measures that could be imposed now to address Southern Companies’ ongoing unmitigated market power while organized markets are developing in the South. EPSA has consistently supported structural solutions to market power issues rather than behavioral solutions. Interim structural remedies are appropriate in Southern Companies’ case as a means of inhibiting the potential for the undue exercise of market power while organized markets are developing in the South.
EPSA urges the Commission to focus on structural mitigation tools to protect the market from Southern Companies’ market power. Such tools are outlined in the attached EPSA white paper, “Essential Elements of Well Functioning Competitive Power Markets.” While a well-functioning RTO is the ultimate goal, the white paper includes a number of transitional elements designed to facilitate competitive markets and mitigate Southern Companies’ generation market power during the RTO development process. These elements include competitive solicitation for supply procurement, economic dispatch, independent OASIS administration and independent market monitoring. While such measures implemented on a piecemeal basis may not provide complete assurance of fairness and access to all market participants, taken together, these elements can serve as interim mitigation measures to protect against market power abuse.