Con Ed Seeks to Prevent Abuses Up Front
Consolidated Edison Inc. called on FERC last Tuesday to enact
mechanisms to limit the potential for price spikes in the New York
wholesale power market this summer.
It also urged the Commission to correct market flaws that allow
power generators to exercise market power, and to penalize those
generators that are found to be gaming the market to their own
The utility's "major concern" is the exercise of market power by
generators during periods of tight supply in the New York market,
said Michael Forte, general manager for energy trading. Current
mechanisms for dealing with market power are "after the fact," he
said, adding that Con Ed is advocating identifying market power in
advance. It wants to "proactively prevent" the high bids of
generators from setting the market-clearing prices.
Con Ed also held a teleconference last Tuesday to assure
investors that, while the New York power market has its share of
problems, it's far from the crisis situation plaguing California.
For one, Con Ed and other New York utilities aren't facing a severe
supply crunch, and they are allowed to pass through their wholesale
power costs to their customers.
More importantly, "policymakers in New York understand that you
can't correct those [market] problems by taking it out of the
financial strength of the distribution companies," said Joan
Frielich, executive vice president and chief financial officer.
Con Ed called for the changes in New York during a FERC
conference last week addressing the New York Independent System
Operator's (NYISO) handling of the electric wholesale market there.
Included in the proposed changes was a new "circuit breaker"
mechanism to hold prices down when the bulk power market is not
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