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EPSA Submits Round-up of State Competitive Procurement Case Histories to NARUC-FERC Competitive Procurement Group
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) today submitted a round-up of case studies on state competitive procurement of electricity to a joint dialogue on state competitive procurement formed by the National Association of Regulatory Utility Commissioners (NARUC) and the Federal Energy Regulatory Commission (FERC). The paper is titled, "State Competitive Procurement: Model Success Stories and Lessons Learned."
EPSA President and CEO John E. Shelk said, "The nation is facing the need for an unprecedented number of new power generation facilities. How states go about procuring the generation they require to meet consumer needs will have profound economic and environmental consequences for decades." According to a 2007 Cambridge Energy Research Associates study, as much as $900 billion in new infrastructure must be built over the next 15 years to meet growing demand, at least one-third of which is for generation.
"We offer this round-up of real-world examples of state competitive procurement processes to the joint task force so that members can consult these as they form their own opinions and recommendations on promoting competitive procurement," said Shelk. He said, "The paper's purpose is to present each state's story and identify those practices that have been particularly successful - or unsuccessful - in achieving fair, robust and transparent competition."
In "State Competitive Procurement: Model Success Stories and Lessons Learned," EPSA classifies the state case studies into two categories: "model success stories" and "lessons learned." The paper offers examples of successful competitive procurements in Arizona, California and Maryland as well as examples of lessons learned from selected utility solicitations in Georgia, Colorado, Oklahoma, North Carolina and Louisiana.
Among the model successes: the Arizona Corporation Commission's vigilant enforcement of its competitive procurement rules, which an Arizona Commissioner stated had saved Arizona Public Service customers $70 million; California's robust competitive sector and its aggressive approach to climate change using mostly market-based mechanisms; and the success of Maryland's transparent bidding process, overseen by an independent monitor.
Among the lessons learned: Georgia Power Company's attempt for exemption of competitive procurement for all baseload coal and nuclear; Colorado Public Service Co.'s attempt to disregard the competitive bidding process and change its agreed-upon resource acquisition period; a lack of transparency and fairness in the competitive procurement process in a joint utility self-build proposal in Oklahoma; in North Carolina, Duke Power's attempt to meet its resource needs through self-build and no competitive bidding process, and the ensuing dramatic increases in projected construction costs to be passed through to ratepayers; and finally in Louisiana, a case study underscoring the need for better governance over utility cost updates and "refreshed bids."
EPSA strongly urges all state utility commissions to adopt and enforce fair and open competitive procurement rules for utility resource needs and to do so promptly, before further costly power resource decisions are made without the benefit of competition and the innovation it fosters.
This is the third paper EPSA has presented to the NARUC/FERC Joint Dialogue. In November 2007, EPSA submitted recommended elements of a model state rule to the joint dialogue members. In July 2007, EPSA released a white paper making the case for competitive procurement in states with vertically-integrated utilities. The complete papers, "Competitive Procurement: Model Success and Lessons Learned" and "The Case for Competitive Procurement in States with Vertically-Integrated Utilities," are available on the <href=http: www.epsa.org="">EPSA web site</href> under "Studies and Reports."
EPSA Competitive Procurement Best Practices and Model Rule
State Competitive Procurement: Model Success Stories and Lessons Learned
The Case for Competitive Procurement in States with Vertically-Integrated Utilities
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.