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EPSA SEEKS FERC REHEARING OF MISO ORDER THAT UNDERMINES WHOLESALE COMPETITION

WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) today filed a request with the Federal Energy Regulatory Commission (FERC) that the Commission grant rehearing of its September 18, 2007 "Order Granting Extension of Broad Constrained Area Mitigation" (BCA Order) for the Midwest Independent System Operator (MISO). A copy of the filing is available at www.epsa.org.

EPSA's request states that the Commission erred in permanently extending the BCA mitigation on the basis that the MISO market intends to make progress regarding resource adequacy in the near term. Further, the cost-benefit analysis MISO filed and on which FERC relied to support a permanent BCA mitigation mechanism was fatally flawed in its conclusions. Hence, the EPSA filing argues, "The permanent extension of this mitigation at such a critical time, before resource adequacy constructs are in place and in the nascent stages of demand resource initiatives, is counterintuitive and will hurt the market sufficiently so that the Commission must reconsider its permanent extension."

"FERC was wise to previously keep MISO on a short leash by granting only temporary extensions of this intervention in market-based pricing. MISO's request and FERC's initial approval of a permanent extension do not explain what has changed to justify a permanent extension," said EPSA President and CEO John E. Shelk.

"The permanent institution of excessive mitigation leads to one result - less competitive markets which create higher market costs for consumers. At this critical time, the Commission must heed its goals for the wholesale markets and support the development of greater competition rather than institutionalize fundamental structural barriers to competitive markets," said Shelk.

"Currently, MISO is not a market that allows prices to reflect true market value, nor does it have capacity requirements. In such a case, the proposed BCA mitigation as a permanent market element is detrimental to future supply additions and enhanced demand response during times when supply and demand conditions would otherwise produce higher incentive prices. Market signals and pricing need to be as accurate as possible given that even MISO has reported that prices are not supporting new entry," Shelk added.

EPSA's filing, supported by an economic analysis by Dr. Jonathan Lesser of Bates White L.L.C., concludes, "The permanent inclusion of BCA mitigation in the MISO market will protract problem[s], likely reducing market entry, creating additional costs to market participants, lowering system reliability and raising the long-term costs of new generation to consumers. Dr. Lesser's affidavit makes it clear that MISO did not meet the Commissions initial requirement of proving that BCA mitigation is necessary and useful to the marketplace."
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CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660

EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.