ferc restructures cal - iso ferc ' s action here appears to be the appropriate remedy . you know it ' s a
good fix if the utilities and senator feinstein don ' t like it !
ferc restructures california power market
responding to a california power market gone haywire and teetering on the
brink of operational and financial disaster , ferc friday issued a series of
remedial measures , virtually stripping the cal - px and cal - iso of their
control of the market and calling market stakeholders together to negotiate
bilateral forward contracts .
the commission ' s main action , effective with the issuance of the order after
the friday afternoon meeting , removes the requirement that california
utilities buy and sell exclusively through the california power exchange
( cal - px ) and clears the way for bi - lateral contracts in the forward market .
ferc scheduled a settlement conference for dec . 19 in washington of parties
in the state ' s power market to negotiate those contracts .
" california does [ not ] have the benefit of a competitive market , " chairman
james hoecker said , noting he had heard the state ' s power market called
" crisis by design . " the design was " an unworkable state law , the product of
command and control that described in detail " exactly how the market should
function . " it wasn ' t competition , " hoecker said . " it ' s time to get serious
about saving the future of competitive markets . . . competition did not fail in
principle at either the wholesale or retail level because it was never
well - conceived or tried . this version of competition was a disaster . "
commissioner william massey defended the federal energy regulatory
commission ' s backing away from price caps . " rather than cap the spot market
created by the state of california , the order would simply shrink its size
and diminish its influence . " this will " give back participants ' ability to
find the right price ; this ability is what california has taken away from
that market . "
massey said the action would allow bilateral transactions , support forward
contracts , and allow the parties to manage risk . he urged the california
public utilities commission to " step up to its responsibilities " in
supporting the ferc - directed activities .
massey said the transfer of wealth in what he described as the " apocalypse "
in california " is absolutely staggering . the two largest utilities are
virtually bankrupt . " he predicted a court , acting on accepted law and
precedent , would eventually rule the utilities are entitled to recover the
costs from customers , spreading the costs out over the entire state .
pg & e corp . officials lambasted the commission ' s actions , saying they left
california ' s electric customers " exposed to price gouging and future electric
supply reliability uncertainty . "
" the california wholesale market is broken . and we are extremely disappointed
by the insufficiency of today ' s ferc order , " pg & e officials said in a
statement . " the remedies outlined in the order do not go nearly far enough to
provide a solution that ensures reliability of the state ' s electric supply
and equally importantly , provides relief from future price gouging , " the
northern california utility company said . pg
_ elimination of the requirement that california ' s three investor - owned
utilities - - - pacific gas and electric , san diego gas and electric and
southern california edison - - - sell all of their power into the cal - px , and
buy all of their power from the cal - px . this took effect friday ;
_ return 25 , 000 mw of generation to state regulation ;
_ termination of the cal - px wholesale rate schedule effective the close of
the trading day on april 30 , 2001 ;
_ create a benchmark price for wholesale bilateral contracts to assess prices
of five - year energy supply contracts ;
_ create penalties for underscheduling power loads ;
_ a requirement that market participants schedule 95 % of their load prior to
real time . violators will incur penalties for scheduling deviations exceeding
the greater of 10 mw or 5 % of their hourly load ;
_ begin market monitoring and price mitigation for the cal - iso and px spot
markets . ferc will hold a technical conference to develop a monitoring an
mitigation program . a proposed plan is to be submitted by march 1 so that the
measure can be in place by may 1 ;
_ a single - priced auction to be used only for bids at or below $ 150 / mw . bids
above $ 150 / mw will not set the market clearing price , although they will be
subject to ferc reporting requirements ;
_ replacing the current cal - iso stakeholder governing board with a
non - stakeholder board . on jan . 29 , 2001 , the cal - iso governing board members
will be required to turn over their decision - making power and operating
control to the management of the cal - iso . the members will be permitted to
function in an advisory capacity until the new board is selected . ferc to
discuss with california representatives a process for selecting new cal - iso
board members ; and
_ modify interconnection procedures . the iso and utilities must file
generation interconnection procedures .
ferc restructures cal - iso
ferc ' s action here appears to be the appropriate remedy . you know it ' s a
good fix if the utilities and senator feinstein don ' t like it !
ferc restructures california power market
responding to a california power market gone haywire and teetering on the
brink of operational and financial disaster , ferc friday issued a series of
remedial measures , virtually stripping the cal - px and cal - iso of their
control of the market and calling market stakeholders together to negotiate
bilateral forward contracts .
the commission ' s main action , effective with the issuance of the order after
the friday afternoon meeting , removes the requirement that california
utilities buy and sell exclusively through the california power exchange
( cal - px ) and clears the way for bi - lateral contracts in the forward market .
ferc scheduled a settlement conference for dec . 19 in washington of parties
in the state ' s power market to negotiate those contracts .
" california does [ not ] have the benefit of a competitive market , " chairman
james hoecker said , noting he had heard the state ' s power market called
" crisis by design . " the design was " an unworkable state law , the product of
command and control that described in detail " exactly how the market should
function . " it wasn ' t competition , " hoecker said . " it ' s time to get serious
about saving the future of competitive markets . . . competition did not fail in
principle at either the wholesale or retail level because it was never
well - conceived or tried . this version of competition was a disaster . "
commissioner william massey defended the federal energy regulatory
commission ' s backing away from price caps . " rather than cap the spot market
created by the state of california , the order would simply shrink its size
and diminish its influence . " this will " give back participants ' ability to
find the right price ; this ability is what california has taken away from
that market . "
massey said the action would allow bilateral transactions , support forward
contracts , and allow the parties to manage risk . he urged the california
public utilities commission to " step up to its responsibilities " in
supporting the ferc - directed activities .
massey said the transfer of wealth in what he described as the " apocalypse "
in california " is absolutely staggering . the two largest utilities are
virtually bankrupt . " he predicted a court , acting on accepted law and
precedent , would eventually rule the utilities are entitled to recover the
costs from customers , spreading the costs out over the entire state .
pg & e corp . officials lambasted the commission ' s actions , saying they left
california ' s electric customers " exposed to price gouging and future electric
supply reliability uncertainty . "
" the california wholesale market is broken . and we are extremely disappointed
by the insufficiency of today ' s ferc order , " pg & e officials said in a
statement . " the remedies outlined in the order do not go nearly far enough to
provide a solution that ensures reliability of the state ' s electric supply
and equally importantly , provides relief from future price gouging , " the
northern california utility company said . pg
_ elimination of the requirement that california ' s three investor - owned
utilities - - - pacific gas and electric , san diego gas and electric and
southern california edison - - - sell all of their power into the cal - px , and
buy all of their power from the cal - px . this took effect friday ;
_ return 25 , 000 mw of generation to state regulation ;
_ termination of the cal - px wholesale rate schedule effective the close of
the trading day on april 30 , 2001 ;
_ create a benchmark price for wholesale bilateral contracts to assess prices
of five - year energy supply contracts ;
_ create penalties for underscheduling power loads ;
_ a requirement that market participants schedule 95 % of their load prior to
real time . violators will incur penalties for scheduling deviations exceeding
the greater of 10 mw or 5 % of their hourly load ;
_ begin market monitoring and price mitigation for the cal - iso and px spot
markets . ferc will hold a technical conference to develop a monitoring an
mitigation program . a proposed plan is to be submitted by march 1 so that the
measure can be in place by may 1 ;
_ a single - priced auction to be used only for bids at or below $ 150 / mw . bids
above $ 150 / mw will not set the market clearing price , although they will be
subject to ferc reporting requirements ;
_ replacing the current cal - iso stakeholder governing board with a
non - stakeholder board . on jan . 29 , 2001 , the cal - iso governing board members
will be required to turn over their decision - making power and operating
control to the management of the cal - iso . the members will be permitted to
function in an advisory capacity until the new board is selected . ferc to
discuss with california representatives a process for selecting new cal - iso
board members ; and
_ modify interconnection procedures . the iso and utilities must file
generation interconnection procedures .