FERC Chairman James Hoecker announced last week that aCommission staff team has been formed to closely monitordevelopments in the electric market in an attempt to identify earlyand possibly prevent price aberrations similar to those thatoccurred in the Midwest last summer.

“We can’t assure you…that price spikes won’t recur during thistime of transition to competitive markets especially, but we willmaintain a grasp and current understanding” of the power market tohelp “identify trouble spots” before they arise, he said atWednesday’s Commission meeting. Last summer spot power prices inthe Midwest briefly shot up to $5,000 per MWh from $40 MWh, causinghavoc in the market.

As the summer peak period draws near, Commission staff “[will]engage in a dialogue with state regulators, with ISOs, with theNERC regions, with marketers and utilities and transmissionproviders to determine whether there are lingering problems thatthe public and the industry and we need to know about,” Hoeckernoted.

“They will monitor such issues as generation capacity, reservemargins, transmission constraints, pricing trends, [and] weatherconditions, obviously.”

Some in the power industry already are bracing for another tightgeneration situation in the market this summer. “It’s going to beextremely tight [generation wise] because there’s still a number ofnuclear plants that are [down]” in the Midwest, said PatrickHemlepp, a spokesman for American Electric Power (AEP) in Columbus,OH.

In fact, he noted that AEP’s Cook nuclear plant in Michigan,which has been off-line since September 1997, will remain downthroughout the summer months. The power company had hoped to haveit back on line by late summer, Hemlepp said.

Even ECAR (East Central Area Reliability CoordinationAgreement), which includes much of the Midwest, is predictingtighter generation capacity at the peak period, particularly ifdemand outstrips forecasted levels and the weather soars abovenormal.

On the plus side, however, Hemlepp said the power industry hasgone through a “shakeout” of its less-experienced traders, whichwere blamed for much of the market turmoil last June. “So we’ve gotmuch more experienced traders this year,” he told NGI.

Susan Parker

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