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FERC Team to Monitor Power Market

FERC Team to Monitor Power Market

FERC Chairman James Hoecker announced last week that a Commission staff team has been formed to closely monitor developments in the electric market in an attempt to identify early and possibly prevent price aberrations similar to those that occurred in the Midwest last summer.

"We can't assure you...that price spikes won't recur during this time of transition to competitive markets especially, but we will maintain a grasp and current understanding" of the power market to help "identify trouble spots" before they arise, he said at Wednesday's Commission meeting. Last summer spot power prices in the Midwest briefly shot up to $5,000 per MWh from $40 MWh, causing havoc in the market.

As the summer peak period draws near, Commission staff "[will] engage in a dialogue with state regulators, with ISOs, with the NERC regions, with marketers and utilities and transmission providers to determine whether there are lingering problems that the public and the industry and we need to know about," Hoecker noted.

"They will monitor such issues as generation capacity, reserve margins, transmission constraints, pricing trends, [and] weather conditions, obviously."

Some in the power industry already are bracing for another tight generation situation in the market this summer. "It's going to be extremely tight [generation wise] because there's still a number of nuclear plants that are [down]" in the Midwest, said Patrick Hemlepp, a spokesman for American Electric Power (AEP) in Columbus, OH.

In fact, he noted that AEP's Cook nuclear plant in Michigan, which has been off-line since September 1997, will remain down throughout the summer months. The power company had hoped to have it back on line by late summer, Hemlepp said.

Even ECAR (East Central Area Reliability Coordination Agreement), which includes much of the Midwest, is predicting tighter generation capacity at the peak period, particularly if demand outstrips forecasted levels and the weather soars above normal.

On the plus side, however, Hemlepp said the power industry has gone through a "shakeout" of its less-experienced traders, which were blamed for much of the market turmoil last June. "So we've got much more experienced traders this year," he told NGI.

Susan Parker

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