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FERC Revokes Market-Based Rates for Duke Power in Control Area

FERC last week revoked market-based rates for Duke Power in its control area and required the company to provide default cost-based rates. The action came after a "careful review" of generation market power issues, noted outgoing FERC Chairman Patrick Wood.

"We haven't seen the order yet because it hasn't been issued yet, so we can't really fully comment on the order or our next steps," Duke Power spokesperson Tom Williams told NGI. He did, however, underscore the point that "what was at issue was for wholesale sales within our control area."

Duke Power first sells power "to our native [load] customers and then we sell excess power, if we have it, at competitive rates to customers outside of our control area or wholesale customers within our control area who are not part of our native load. So what was at issue was sales within our control area."

Williams said "the financial impact of this is expected to be not material to our revenue." Duke Power's control area involves 20,000 square miles covering upstate South Carolina and Central North Carolina.

The Commission also took action in market-based rate cases involving Entergy and Southern. In the case of Entergy, FERC set for hearing a delivered price test submitted by the utility.

"In the Southern Companies order we also set for trial-type evidentiary hearing issues related to the company's delivered price test as submitted to the Commission earlier this year," noted Wood, serving at his last meeting as chairman and commissioner at the agency (see related story).

FERC recently issued orders laying the groundwork for expanded probes into potential market power-related issues for Entergy and Southern.

In late 2004, FERC said that several electric power companies were unable to pass interim generation market power tests adopted by FERC. Those companies failing screens were given 60 days to file a delivered price test, propose case-specific market power mitigation or accept default cost-based rates and file cost support for those rates.

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