A small Massachusetts power marketer last week called on FERC toorder the suspension of all installed capacity (ICAP) chargesbilled to participants in the New England Power Pool (NEPOOL)during the April-July period until the Commission and Department ofJustice (DOJ) have completed separate investigations into gamingcharges in the market.

The DOJ’s antitrust division already has initiated an “extensiveinvestigation” into the New England ICAP market, said AlternatePower Source Inc. (APS) of Westwood, MA, adding that FERC should”step in, investigate and mitigate prices” as well.

“It’s our firm belief that there is gaming going on out in themarketplace with these ICAP numbers.” said APS President Stephen M.Tuleja. In addition to cooperating with the DOJ, his company haspetitioned a federal court in Massachusetts for an injunctionagainst billing of the ICAP charges until the market is”thoroughly” reviewed by federal investigators, he told GPI Daily.

ICAP charges essentially are the fixed charges associated withbuying of electricity in the New England wholesale market,according to Tuleja. All load-serving entities are required to payICAP charges on a certain percentage of their load, with thecharges going to generating companies in New England for makingtheir facilities available to the market, said a spokeswoman forthe New England ISO.

The charges are a “hold-over from the regulated world. They’re atool that was put in place to ensure that utilities had adequatecapacity to serve their native loads. But in the unregulated world,many would argue there’s no reason to have this [ICAP charge] inplace any longer,” Tuleja said.

FERC terminated the monthly ICAP auction market in New Englandeffective Aug. 1 at the request of the ISO, but that didn’t easethe high ICAP costs that some marketers – especially small oneslike APS – have been saddled with during the past year.

“Competitive companies shouldn’t be entitled to bill youanything they want for the electricity [the commodity], and thenhit you with an up-charge for what they consider to be their fixedcosts,” said Tuleja.

APS filed a complaint at FERC last week 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 now is faced with a “Hobson’s choice” of 1) either payingthe $700,000 into escrow, pending resolution of the billing disputethrough the ADR process; or 2) being declared in default of itscontractual obligations, it told FERC.

“Either choice would result in dire and irreparable financialconsequences to APS – either an extensive and crippling loss ofcash flow, or a potential fatal series of chain reaction defaultsin APS’s contractual obligations with its customers and supplies,”APS noted.

APS, which sells about 1.6 million MWhs of electricity a year,contends it is the “victim of gaming of the ICAP ‘markets’ by largesuppliers of ICAP, who apparently manipulate the ICAP supply tomaximize their revenue of the expense of smaller companies.”

Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.