FERC Team to Monitor Power Market
FERC Chairman James Hoecker announced last week that a
Commission staff team has been formed to closely monitor
developments in the electric market in an attempt to identify early
and possibly prevent price aberrations similar to those that
occurred in the Midwest last summer.
"We can't assure you...that price spikes won't recur during this
time of transition to competitive markets especially, but we will
maintain a grasp and current understanding" of the power market to
help "identify trouble spots" before they arise, he said at
Wednesday's Commission meeting. Last summer spot power prices in
the Midwest briefly shot up to $5,000 per MWh from $40 MWh, causing
havoc in the market.
As the summer peak period draws near, Commission staff "[will]
engage in a dialogue with state regulators, with ISOs, with the
NERC regions, with marketers and utilities and transmission
providers to determine whether there are lingering problems that
the public and the industry and we need to know about," Hoecker
"They will monitor such issues as generation capacity, reserve
margins, transmission constraints, pricing trends, [and] weather
Some in the power industry already are bracing for another tight
generation situation in the market this summer. "It's going to be
extremely tight [generation wise] because there's still a number of
nuclear plants that are [down]" in the Midwest, said Patrick
Hemlepp, a spokesman for American Electric Power (AEP) in Columbus,
In fact, he noted that AEP's Cook nuclear plant in Michigan,
which has been off-line since September 1997, will remain down
throughout the summer months. The power company had hoped to have
it back on line by late summer, Hemlepp said.
Even ECAR (East Central Area Reliability Coordination
Agreement), which includes much of the Midwest, is predicting
tighter generation capacity at the peak period, particularly if
demand outstrips forecasted levels and the weather soars above
On the plus side, however, Hemlepp said the power industry has
gone through a "shakeout" of its less-experienced traders, which
were blamed for much of the market turmoil last June. "So we've got
much more experienced traders this year," he told NGI.
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