FERC Mitigation Measures Expire (FERC to Cal-ISO-trick or treat!)

On Halloween, the California Independent System Operator offered the Federal Energy Regulatory Commission only a few treats, putting in place some parts of the market redesign. It also warned FERC it cannot meet the deadline for having the day-ahead market revamp in place.

"Happy Halloween and remember to increase your price cap. Or so the Federal Energy Regulatory Commission might have said to trick-or-treaters last week, as the California ISO's new market rules went into effect Oct. 31. One element of the FERC's order, which previously provoked angry responses from California politicians, increased the bid cap to $250/MWH." --snip--

In an Oct. 29th filing submitted to FERC, Cal-ISO asked for more time to remove its balanced-schedule requirements and ease its market-separation rule to allow for a viable day-ahead market, because of complexity of the matter. It also requested that FERC set up a technical conference to discuss a realistic implementation date and to ensure that Cal-ISO's market design complements the neighboring regional transmission organizations in the Pacific Northwest and Desert Southwest: RTP WEST and WestConnect.

Cal-ISO, which could not estimate how long it would take to develop a temporary forward-market overhaul, would prefer to focus on a comprehensive day-ahead market re-design instead of having to deal with interim actions. "We would rather implement MD02 as a whole instead of in pieces," said Fishman.

In an Oct 11, order, FERC gave the ISO until Jan. 31, 2003, to create hourly and day-ahead markets. But Cal-ISO said it was impossible to meet that deadline. In an Oct. 29 compliance filing, it warned FERC that pushing ahead to comply with the date could lead to "mistakes, design flaws, ultimately higher prices for consumers" and greater liability.

You have to subscribe to the magazine to get the full story, so I posted a summary of the hot parts of the article.

I really don't fully understand what is going on at FERC. They seem to be both trying to find some scapegoats for California on the energy crisis issue and concurrently "playing some hardball payback" for all the badmouthing California officials did of FERC during the crisis.

I expect that FERC will continue to squeeze the Cal ISO until they get their act together and embrace the authority of FERC.

Happy $250/MWh price caps!

Maaaaann, what a downer. Like, you know, those FERC dudes are just being so negative. I wish they'd mellow out and get in touch with their inner selves, you know. Are they on some kind of a bad trip or something? We're doing our best, you know, you can't ask for more than that, can you?

Aside: FERC is holding an en banc hearing on El Paso Natural Gas on Dec. 2nd. Each side gets 1.5 hours to state their case.

We're doing our best, you know, you can't ask for more than that, can you?

How Democratically stated! Sorry, I know that you were using sarcasm. Yes, I and others should expect results not just effort.

As to the FERC ElPasco hearings, I hope that FERC either has some really great smoking guns to provide or that they back off. The safety aspects of this FERC ALJ ruling scare me from a public policy perspective.

FERC still wants Cal-ISO to disappear entirely and be replaced by a regional market. This is essentially war.

It appears that with this $0.25/KWH cap they are holding California hostage. They can do it because California is a price-taker. Lack of generating and delivery capacity is what is putting the State in this position. Davis will do anything to get us to pay more while he is appearing like he cares about consumers. It's the RICOnut/Slave Party way and always has been. Gotta pay off those donors you know.

It's a feeding frenzy on an emaciated corpse. The problem is that in this spat while both sides are taking down California they are taking down the whole US economy. We represent both the bulk of national unemployment, and capital losses. I sure hope all those bond issues on our ballot tomorrow go down in flames, but I am not hopeful.

I saw recently a news piece that has FERC backing off on their regional plans as a result of alot of political heat from states and Congress. Of course the source of that report may very well be a mouthpiece for the regulated side, hoping to "suggest" what tact FERC should take.

I see states and municipalities are looking at losing a cash cow of a business in their regulated utilities. With competition, it's hard to measure the loss of raidable funds that cities, counties and states can divy up. In any event, there's an almost incestuous association of interests among local governments and their piggy bank utilities.

Here in Seattle, City Light is $1.7B in the hole for no other reason than imcompetent management. A recent outside audit found that the director and the execs don't even have a utility background. Adding insult to injury, this utility ranks second in number of workers per customer. The first ranked utility is in New York and has the excuse of maintaining a very old outdated coal burning plant. In Washington State, most power is derived from dams.

Some of the posters here appear very knowledgeable about FERC issues. Any indications what the Bush Administration is on the future of deregulation and regional power networks?

The new price cap doesn't do anything in the short term, because there is ample supply of power right now. It certainly does put California in the position of getting squeezed in the future.

BTW, what is you personal guess as to the odds of a Simon victory tomorrow?

I didn't see the article you are referring to. Everything I've seen has indicated that FERC and Pat Wood are moving toward the establishment of RTOs. I know that they held an industry meeting in July to discuss moving the process along.

I can't imagine that they've abandoned their plans, although there certainly is resistance from some groups, especially the Davis Administration.

I think Simon has a good chance. It honestly depends upon the amount of fraud. In that regard there is NO systematic effort to combat it on the part of the GOP. In fact every effort my friends (including two past congressional candidates) or I have made to get involved in poll watching has been rebuffed by BOTH the Party and Simon's campaign.

I am afraid the fix is in, and it comes from the CRP Chair Carl Rove shoved down our throats: Gerry Parsky.

My read is that Carl and Gerry are out to prove that conservatives can't win in the name of going pro-choice and attracting more women to the GOP. What they don't understand is that they are killing the GOTV troops by doing so. I think it's both a political and an ideological mistake.

The reason your City Light utility is so burdened with overhead is likely to be the need to comply with environmental lawsuits over salmon. I'll bet they've got a whole raft of biologists and paperpushers on staff just to deal with it all. It is the RICOnut objective to make dams non-economic. Of course, it has NOTHING to do with the foundation dollars they get from the fossil fuel industry.

The reason they are buried in debt is because they invested in marketable securities in 2000 and 2001 without setting stops. They had ample opportunity to do so and warnings to take action. The recent report faults them for this as they still don't have a qualified risk management plan.

As far as being buried in econutty regs, that has no influence. The salmon issues are related to fishing between Canada and the USA; the only effect it has on local industry is in bolstering no-growth policy.

The dams continue to work just fine although they need maintenance and repair, it's nothing like an old coal fired plant.

There are too many workers at City Light. People I know who have worked there say it is the proverbial sit-on-your-arse work culture replete with 2-hour lunch breaks, 1-hour potty breaks and 1-hour read the newspaper breaks.

But it's Ok, Seattle just recently concluded they can't close their budget gap with increased parking meter fines, although it won't deter them from raising them just the same.

Too bad for them they didn't get the latte tax. Now they're banking on Ref. 51 to refill their piggy banks.

Those Boeing execs were smart.

People I know who have worked there say it is the proverbial sit-on-your-arse work culture replete with 2-hour lunch breaks, 1-hour potty breaks and 1-hour read the newspaper breaks.

Someone I know from PG&E tells a story of five engineers spending two weeks turning an empty floor full of cubes into a labyrinth of cube walls and then just leaving it that way for maintenance to deal with. Public monopolys are just as bad as government. I don't really fault the engineers, they had nothing to do and were bored.

Slightly on topic. I'm optimistic that any ISO changes will require software updates and generate billable hours for me.

The problem is that in this spat while both sides are taking down California they are taking down the whole US economy.

All this could have been avoided if our green freak-geeks had let CA build clean, green, efficient and cheap nuke plants.

They're causing economic hardship in the US & California, they've burnt the West, are flooding my area and generally causing disaster wherever they set foot. Seems every damn thing they do causes a scourge somewhere.

I think these scumf***s would release locusts on us if they thought they could get away with it.

As far as being buried in econutty regs, that has no influence. The salmon issues are related to fishing between Canada and the USA; the only effect it has on local industry is in bolstering no-growth policy.

The BPA alone has spent over $3 billion in lost generation because of bogus spill regulations for the fish.

Cal-ISO to disappear entirely and be replaced by a regional market. This is essentially war.

You have to understand that FERC in its heart of hearts believes that an ISO just covering the state of California can never meet the requirements and provide the benefits that FERC believes an ISO should.

Let me say that again. FERC believes that there is not enough generation nor transmission within the Cal ISO to have a functioning organization.

In 25+ years of electric utility related work I tend to agree. California utilities have traditionally relied upon the PNW as a source of power and on the neighboring states to the east. A lot of California utilities have shares of powerplants in Wyoming, Nevada, etc.

An ISO is suppose to be a regional market. If you go to FERC NOPR 2000 that was a big part of what an RTO (aka ISO) was suppose to be. If you look at the current FERC NOPR on Standard Market Design and Electric Deregulation, the RTO is a key focal point for FERC's grand plan.

In another post I will make tonight in this thread, I will tell you why I think FERC is right and why I think this is not a Bush Administration thing, but something much deeper and tied more closely to democrats.

I sure hope all those bond issues on our ballot tomorrow go down in flames, but I am not hopeful.

ARF!

If a bond measure title has the word "school", "children", or "clean water" in it the rubes in this state would vote for it even if the body text read ..."To provide the devil with comfortable living quarters, plenty of fresh souls, and nubiles for his demon minions to ravish"...

The BPA actions are blurred. By that is meant they made decisions in their interest, not King County's. They forcasted such losses based on breaking the dams.

The BPA sold their power last year to California at a premium. As a result our power rates here in the Northwest (especially Seattle) spiked. The local media blamed it on deregulation, but it was (and this is now undisputed) the CPUC's policy to cap rates on state regulated utilities while halting new power plant construction (until the 11th hour) that caused the spot market prices to go to the moon. Hence, BPA saw a nice juicy profit in that spot market and diverted their power down south. So it wasn't deregulation that ripped off Washington State power consumers, it was CA politics.

But City Light's debt is not the result of salmon issues. They just pass along rate increases.

I work in this industry.
$250/MW-hr is a steep price for electricity, to be sure. But as a price cap it's not very high. And low caps can't stay there forever, either, if CA ever hopes for a better supply to develop.
FERC isn't the bad guy here. FERC just insisted on independent transmission system operators, not the absolutely ridiculous, doomed-from-the-start market instituted in CA. The CAISO mess was engineered by Grey-out Davis.

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