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Cut in NE Power Clearing Price Panned

Cut in NE Power Clearing Price Panned

Power sellers have urged FERC to reject two complaints that seek to void a $6,000/MWh bid for imported electricity that was used to set the market clearing price in the New England Independent System Operator for five hours last May 8.

Extremely high temperatures that day, combined with a high level of generation outages due to maintenance, forced the New England ISO to import the high-priced power during the five-hour period in order to maintain reliability in the region on May 8, electric marketers said in protests filed at the Commission [EL00-100]. The $6,000/MWh bid was not the result of market power or market flaws in the region, they argued.

United Illuminating Co. (UI) and the Maine Public Utilities Commission, which brought the complaints separately, called on FERC to order the recalculation of energy prices in the New England ISO to exclude the $6,000/MWh bid, and to provide refunds based on the adjusted prices. But power sellers argued that the market selling price was "legitimately established" by the $6,000/MWh bid, and that any move by the Commission to interfere would destroy market confidence and further hamper competition.

"In an era which was to be heralded as the one which opened and deregulated the energy markets - but which is instead making news for its imposition of price or bid caps in every Commission-approved market - the Commission should resist the invitation by UI to begin down the road of clearing-price recalculations," said the wholesale power marketing affiliates of PG&E National Energy Group.

Any move by FERC to retroactively adjust prices in the New England ISO would "only act to undermine confidence and discourage participation in the energy markets," concurred PPL Energy Plus LLC, Kennebec Water District, Sparhawk Hydro and Small Hydro East.

Enron Power Marketing Inc. called UI's complaint "misguided" for several reasons. First, it pointed out that even if the New England ISO failed to properly administer the region's energy market under the market rules by accepting the $6,000/MWh bid, "the Commission's policy is to correct those rules prospectively, not to recalculate prices and impose refunds on a retroactive basis."

Susan Parker

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