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Tampa Electric, Empire District Get FERC Scrutiny Over Possible Market Power

FERC last week launched Federal Power Act Section 206 investigations of Tampa Electric Co. and the Empire District Electric Co. after filings made by the two utilities indicated that they had failed a FERC wholesale market share screen. The Section 206 proceedings will examine whether the utilities have market power in generation.

At its regular agenda meeting, the Federal Energy Regulatory Commission acted on 13 market-based rate cases involving generation market power screens. The orders found that 11 of the studies filed by various power entities passed indicative screens and on that basis satisfy the Commission's generation market power standard.

Of the 11 cases that passed, six were requests for new market-based rate authority and five were triennial review filings. The new filings involved both power producers and power marketers.

The following six entities made requests for new market-based rate authority that were granted by FERC: (1) Bear Swamp Power Co. LLC; (2) Bellows Falls Power Co. LLC; (3) Mendota Hills LLC; (4) Trimont Wind I LLC (accepted market-based rates, as modified); (5) Telemagine Inc.; and (6) Westbank Energy Capital LLC.

The five power companies or entities for which the federal agency accepted updated market power analyses were Avista Corp., Idaho Power Co., Millenium Partners L.P., Rainbow Energy Marketing Corp. and Great Lakes Hydro America LLC.

A FERC staff member noted that with respect to the triennial review cases that passed the indicative screens, the orders involving Avista and Idaho Power were of particular note. Those orders involved investor-owned utilities that are outside of a regional transmission organization (RTO) but, nevertheless, passed the indicative screens and have otherwise been found to satisfy the Commission's standards for market-based rate authority.

At a press briefing following the open meeting, FERC Chairman Pat Wood said that the showings of a lack of generation market power in the cases of Avista and Idaho Power "were, I guess, pleasant surprises." He noted that the transmission infrastructure in the regions where the two utilities operate is "stronger" and where "you have stronger transmission, that tends to make the markets bigger."

That's why FERC is "so adamant for transmission infrastructure," he noted. "That tends to broaden the market." FERC Commissioner Suedeen Kelly recently said that she expects the federal agency at some point to hold a technical conference that will address issues tied to beefing up the nation's electric transmission infrastructure.

Avista Utilities, an affiliate of Avista Corp., serves more than 325,000 electric customers in eastern Washington and northern Idaho and provides natural gas service to nearly 300,000 customers in eastern Washington, northern Idaho, parts of Oregon and in northeastern California. Idaho Power serves a 20,000-square-mile service area in southern Idaho and eastern Oregon.

FERC last year adopted interim generation market power screens to be applied to market-based rate bids by power companies. A reporter quizzed FERC officials as to whether the results to date in terms of the pass-fail rates for market-based rate bids is coming out as expected.

FERC Commissioner Nora Brownell said that "I'm quite adamant, actually, that there was no preconceived notion and the process that has been set up, as you've heard me say before, is more than fair." She said that it is FERC's "responsibility to determine market power, whatever the outcome is, and we didn't and don't have any idea what those outcomes are going to look like."

In December, FERC said that several electric power companies were unable to pass the interim generation market power tests and those companies failing screens would have 60 days to file a delivered price test, propose case-specific market power mitigation, or accept default cost-based rates and file cost support for those rates (see NGI, Dec. 20, 2004).

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