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FERC Eliminates Underscheduling Penalty (my title)
Dow Jones Newswires ^ | December 19, 2001 | Campion Walsh and Bryan Lee

Posted on 12/20/2001 1:53:29 AM PST by snopercod

US FERC Alters Power-Price-Mitigation Plan in US West

WASHINGTON (Dow Jones)--The Federal Energy Regulatory Commission approved Wednesday a new method for mitigating power-price spikes in the U.S. West Coast market.

The commission voted 3-1 in favor of a new West Coast power-price mitigation procedure that will raise the ceiling price for power during emergencies to $ 108/MWh from the previous ceiling of $92/MWh.

In June, FERC adopted the earlier price-mitigation procedure to help address supply shortages in California and the rest of the West Coast.

Commissioner William Massey dissented Wednesday, arguing that the sharp decline in natural-gas prices in recent months and more adequate West Coast power supplies indicate that changes to the previous method are unnecessary.

However, Commissioner Linda Breathitt, voting with the majority, said the new methodology better addresses continuing power market concerns in light of still- low water levels for hydropower in the Northwest.

-By Campion Walsh, Dow Jones Newswires; 202-862-9291; campion.walsh@ dowjones.com

In a companion order, FERC largely upheld its rulings in the past year establishing power price controls in California and 10 other western states while offering certain changes and clarifications.

The commission clarified that municipal utilities, the federally owned Bonneville Power Administration and rural electric cooperatives aren't subject to the price-mitigation plan for bilateral contracts entered into outside of spot markets administered by the California Independent System Operator.

The order also clarified that these governmental power sellers don't have to comply with the must-sell requirement outside of California.

The order eliminated an underscheduling penalty established in a Dec. 15, 2000, order.

The commission also offered an opportunity for power marketers, load-serving utilities and hydropowered units selling into California spot markets to offer evidence that FERC's refund methodology would result in a total revenue shortfall for their transactions. This would apply during the October 2000- through-June 2001 refund period after the conclusion of an ongoing refund hearing before a FERC administrative law judge.

FERC further clarified that generators subject to the must-offer requirement be able to recover their costs for complying with the California ISO's instructions regardless of whether the ISO purchases the power.

The order clarified that generating units operating outside California may set the mitigated market clearing price for the western region.

The order directed the California ISO to develop a plan to create a day-ahead spot power market for California by May 2002 and encouraged the development of a transmission congestion management plan.

-By Bryan Lee, Dow Jones Newswires; (202) 862-6647; bryan.lee@dowjones.com


TOPICS: News/Current Events
KEYWORDS: calpowercrisis
For buraucrats, forgiving over a billion dollars in penalties is a "clarification"?
1 posted on 12/20/2001 1:53:29 AM PST by snopercod
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To: *calpowercrisis
Order Temporarily Modifying the West-wide Price Mitigation Methodology, issued December 19, 2001 [pdf, 24K]

This link won't work for me. It came from Bulk Power Markets page.

2 posted on 12/20/2001 2:00:48 AM PST by snopercod
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To: snopercod
Confuscius say: In a political system where the legality of contracts is not upheld, shortages will appear.
3 posted on 12/20/2001 4:00:47 AM PST by meenie
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To: Ernest_at_the_Beach;Robert357;randita;Dog_Gone;okie01;SierraWasp;Grampa Dave;White Rose...
comments?
4 posted on 12/20/2001 1:55:55 PM PST by snopercod
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To: snopercod
I have cobwebs remembering all of this stuff!
5 posted on 12/20/2001 5:35:25 PM PST by Ernest_at_the_Beach
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To: snopercod
I would say that Gov Davis owes FERC and G W a really big one! I wonder if there was any kind of discussion over the impact of this on California and what FERC/Bush expected as a quid pro quo???? Inquiring minds want to know.

Even if there was a promise, I would not trust Davis to keep his end of the bargin under any circumstances.

6 posted on 12/20/2001 5:37:04 PM PST by Robert357
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To: snopercod
Thank you for placing the correct title on this story as it was really two stories, one much larger than the other and the media didn't get it. It is nice to know that some people did get it. I guess we now know what happened to this issue.
7 posted on 12/20/2001 5:38:27 PM PST by Robert357
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To: snopercod
Am I the only one who gets the distressing feeling that none of those people know what in hell they are doing?
8 posted on 12/20/2001 6:12:48 PM PST by white rose
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To: white rose
Am I the only one who gets the distressing feeling that none of those people know what in hell they are doing?

No. F.A. Hayek coined the phrase which describes the mental state of politicians and bureaucrats in general: He named their attitude The Fatal Conceit.

These self-styled modern 'realists' have only contempt of the old-fashioned reminder that if one starts unsystematically to interfere with the spontaneous order there is no practicable halting point and that it is therefore necessary to choose between alternative systems. They are pleased to think that by proceeding experimentally and therefore 'scientifically' they will succeed in fitting together in piecemeal fashion a desirable order by choosing for each particular desired result what science shows them to be the most appropriate means of achieving it.

...how completely overlooked is the fundamental fact that by our political actions we unintentionally produce the acceptance of principles which will make further action necessary.

...more than eighty years ago, W. S. Jevons pronounced that in economic and social policy 'we can lay down no hard and fast rules, but must treat every case in detail upon its merits.' Ten years later Herbert Spencer could already speak of 'the reigning school of politics' by whom 'nothing less than scorn is shown for every doctrine which implies restraints on the doings of immediate expediency' or which relies on 'abstract principles'.

This 'realistic' view which has now dominated politics for so long has hardly produced the results which its advocates desired. Instead of having achieved greater mastery over our fate we find ourselves in fact more frequently committed to a path which we have not deliberately chosen, and faced with 'inevitable necessities' of further action which, though never intended, are the result of what we have done.

So I would say that people like Davis are not stupid or incompetent in the usual sense, but what they are trying to do is fiddle with the economy of electric power generation and distribution - an impossible task even if they were honestly interested in making things "better" for Californians.

9 posted on 12/21/2001 2:12:31 AM PST by snopercod
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Comment #10 Removed by Moderator

To: abwehr
Yes, it's incomprehensible to us mere mortals. We can only hope the people who generate and distribute the electric power understand all that mumbo-jumbo.

There is a pretty good glossary of these terms at the National Electric Reliability Council website, and another one at the California Energy Commission website.

Neither of the above discuss "must-sell" contracts.

11 posted on 12/21/2001 1:59:29 PM PST by snopercod
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