FERC Filings
EPSA's Post-Technical Conference Comments on Market-Based Rates for Public Utilities
Introduction
Since the 1980s, the Commission has allowed companies to sell power at market-based rates if the seller and its affiliates have demonstrated that they: 1) do not have, or have adequately mitigated, generation market power; 2) do not have, or have adequately mitigated, transmission market power; 3) lack an ability to create barriers to entry to the wholesale power market; and 4) do not engage in affiliate abuse or reciprocal dealing. Compliance with this four-prong analysis, which comprises the Commission’s review of market-based rate authority, helps ensure that market-based rates are just and reasonable.
In the last several years, the Commission has focused its attention largely on generation market power when assessing or reviewing a public utility’s potential for market power, without according equal weight to the other three prongs. Yet, as numerous panelists have reiterated at all four days of technical conferences, these other three prongs can have an equally pernicious effect on consumers and on competitive markets. Clearly, the interplay of generation and vertical market dominance allows some utilities to effectively foreclose competition, thus undermining the Commission's goal of promoting effective competitive wholesale markets. This foreclosure may be evidenced in any number of ways, including:
• delaying or precluding access to transmission services;
• delaying transmission upgrades or expansions;
• refusing to provide network access to competitors;
• providing discriminatory access to information;
• preferential dispatch of utility or affiliate-owned generation;
• providing preferential and less costly transmission or dispatch services or opportunities to affiliates.
Accordingly, it is essential to fully consider and clarify each of the four analytic prongs during this generic rulemaking proceeding, conveying to each equal weight in the assessment of market power. Hence, EPSA urges FERC to expedite the issuance of a comprehensive rule addressing and codifying the full range of market power considerations to be assessed and reviewed by the Commission when granting electric market-based rate authority. If FERC does so, EPSA believes that this rulemaking will advance the Commission’s effort to promote competitive markets and nondiscriminatory transmission access.