American Electric Power (AEP) last week provided documentation to FERC that it says shows that it passes both market screens proposed by FERC earlier this year — a pivotal supplier test and a market share test — in the control areas to which AEP is directly connected.

But Southern Co. and Entergy Corp. both said that they were unable to meet the Commission’s market share test.

AEP on Tuesday said that its filing at FERC supports the company’s authority to continue to sell wholesale power at market-based rates, AEP said on Tuesday.

AEP said that it also passes the screens in its East Central Area Reliability Council/PJM and Electric Reliability Council of Texas “home” control areas, based on availability of centralized energy markets. In addition, AEP provided documentation to FERC, including historical purchase and sales data, demonstrating that the company does not possess market power in its Southwest Power Pool control area. Based on this information, the company said its market-based pricing authority should be retained.

A Southern Co. spokesperson on Tuesday told NGI that the utility fell short of the market share test in its control area, but passed the pivotal supplier test.

“Our feeling is that the market share screens are flawed,” Southern spokesperson Terri McCullough said. “They measure market share or market size, but they certainly do not measure market power and so we have proposed that FERC eliminate the market share screens because they do not measure market dominance.” She also noted that Southern has proposed a modified pivotal supplier screen.

Morgan Stewart, an Entergy spokesperson, reported that the utility passed the pivotal supplier test, but failed the market share test. “So we concurrently submitted the delivered price test analysis and that confirmed that when native load obligations are properly reflected, Entergy does not have market power in any relevant market, including its own control area.”

Entergy believes that the market share test is flawed “and does not accurately represent the native load obligations of an integrated utility or the ability of a utility such as ours to exercise market power within its control area because of those native load obligations,” Stewart said.

“We said [in the filing] that we believe that the market share analysis produces false positives because it’s not reflecting our native load obligations,” Stewart added. “We believe the test gives our less efficient units more market share credibility than exists in reality” because the market share testing during off-peak periods “again creates false positives because it’s testing a period when Entergy has maximum supply during a period of minimum demand.”

FERC in July issued an order affirming the interim market power screens adopted in April, but the Commission also sought to clarify implementation issues regarding the screens and the associated market-based rates process.

Failure of either screen sets up a presumption that generation market power exists and the applicant for market-based rates may rebut the presumption with additional information through the “Delivered Price Test,” or historical data. The Delivered Price Test is a well-established analysis that has been used in over 100 cases for evaluating market power effects of utility mergers, FERC has noted.

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