Hebert Says FERC Ruling 'Coddles' New York ISO
The FERC majority's ruling rejecting Morgan Stanley Capital
Group Inc.'s efforts to participate in bidding in the New York bulk
power market "coddles" the New York Independent System Operator
(NYISO), Commissioner Curt Hebert Jr. said last week.
He charged that the Commission majority had "passed up an
opportunity to hold the New York Independent System Operator's feet
to the fire to overcome price increases in that state in time for
Rather than ordering "a change in the rules restricting [bidding
in] the market" by non-physical entities, mostly power marketers,
the Commission merely required the New York ISO to submit a
progress report by Jan. 1 outlining a plan to implement bidding
changes, Hebert said, adding this will cause "unnecessary delay" in
providing price relief to New York electric customers by next
summer. The majority's decision is "paralysis by analysis."
Currently, New York ISO rules limit bidding in the day-ahead and
real-time markets to only entities capable of supplying power, such
as generators, and entities that consume electricity, such as
load-serving entities. But non-physical entities (power marketers)
are prohibited from participating directly in the bidding process.
Morgan Stanley, a power marketer itself, wants the restriction
"I refuse to take this path of timidity," Hebert said in his
dissent. Instead, "I think we should require the New York ISO to
file an amendment on Jan. 1. for the new market rules to become
effective next summer."
Chairman James J. Hoecker countered that the position taken by
the Commission majority was one of "practicality, not timidity."
Moreover, he noted, "I think that we are all [in] fundamental
agreement here that non-physical entities need to be part of this
market." But he doesn't think the New York ISO should be rushed
into making the changes.
"We are concerned that the changes necessary to accommodate
bidding by non-physical entities, especially with regard to the
NYISO's software, be carefully conceived. It is imprudent to
introduce sudden overrides and quick fixes that could serve to
disrupt efforts to correct the market flaws already identified or
create new problems," said the FERC order.
In its complaint, Morgan Stanley asked FERC to order the New
York ISO to change its market rules and software by Aug. 1 to
permit bidding by non-physical entities (power marketers) in the
electric market there [EL00-90]. However, the Commission said
Morgan Stanley had failed to show an "overriding immediate need"
for the bidding changes to become effective Aug. 1.
In requiring a progress report by Jan. 1, FERC believes the New
York ISO will have ample time to remove the bidding restrictions
for power marketers to participate during the peak demand period
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