New England regulators and market participants said they supportan investigation by FERC into the operation of the installedcapacity (ICAP) market in the New England Power Pool (NEPOOL)during this past April-July period.

In a complaint filed earlier this month, Alternative PowerSource Inc. (APS), a small Massachusetts power marketer, called onthe Commission to order the suspension of all ICAP capacity chargesbilled to participants in NEPOOL during the April-July period untilFERC and the Department of Justice (DOJ) have completed separateinvestigations into alleged gaming charges in the market.

The Maine Public Utilities Commission (PUC) “shares theconcerns” of APS, and has asked the New England Independent SystemOperator (ISO) to investigate the ICAP bids for the April-Julyperiod and to “consider mitigating the bids for May through July,”the regulators told FERC [EL00-109]. The Maine commission alsoplans to submit a complaint to FERC “addressing the unjust andunreasonable market-clearing price resulting from the operation ofthe ICAP auction.” It asked for fast-track processing of APS’srequest.

The New England Conference of Public Utilities Commissionersalso supported APS’s complaint, saying it “reinforced” its earlierrequest for termination of the ICAP market in New England.

All load-serving entities (LSEs) in NEPOOL are required topurchase sufficient ICAP to meet their electric loads “plus a shareof the reserves ” in order to maintain reliability in the NewEngland market. Critics contend the ICAP requirement is outdated ina competitive market.

APS filed its complaint at FERC after it received a billcharging it over $700,000 for an ICAP deficiency last April. TheICAP charge was based on a market price that “purportedly” clearedat $3,240/MW/month, even though NEPOOL reported there was 2,522 MWof excess ICAP last April, according to the marketer.

APS said it is now faced with a “Hobson’s choice” of either 1)paying the $700,000 into escrow, pending resolution of the billingdispute through the ADR process; or 2) being declared in default ofits contract obligations, it told FERC. It has asked the Commissionto suspend its payment of $700,000 into escrow until aninvestigation is completed.

Northeast Utilities Service Co. and Select Energy Inc. haveurged FERC to dismiss APS’s complaint, saying it is “all smoke andmirrors.” APS is “simply seeking to devalue ICAP as a way to avoidits responsibilities under the Restated NEPOOL Agreement.

The APS complaint is the “latest in a series of attacks on atime-tested mechanism for maintaining reliability of electricservice in New England,” Northeast Utilities and Select Energysaid. Moreover, they said APS’s request for mitigation of the ICAPbids in the April-July period is “tantamount to a unilateraltermination of the ICAP requirement” — a requirement that FERChas upheld.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.