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Hebert Says FERC Ruling 'Coddles' New York ISO

Hebert Says FERC Ruling 'Coddles' New York ISO

The FERC majority's ruling rejecting Morgan Stanley Capital Group Inc.'s efforts to participate in bidding in the New York bulk power market "coddles" the New York Independent System Operator (NYISO), Commissioner Curt Hebert Jr. said last week.

He charged that the Commission majority had "passed up an opportunity to hold the New York Independent System Operator's feet to the fire to overcome price increases in that state in time for next summer."

Rather than ordering "a change in the rules restricting [bidding in] the market" by non-physical entities, mostly power marketers, the Commission merely required the New York ISO to submit a progress report by Jan. 1 outlining a plan to implement bidding changes, Hebert said, adding this will cause "unnecessary delay" in providing price relief to New York electric customers by next summer. The majority's decision is "paralysis by analysis."

Currently, New York ISO rules limit bidding in the day-ahead and real-time markets to only entities capable of supplying power, such as generators, and entities that consume electricity, such as load-serving entities. But non-physical entities (power marketers) are prohibited from participating directly in the bidding process. Morgan Stanley, a power marketer itself, wants the restriction lifted.

"I refuse to take this path of timidity," Hebert said in his dissent. Instead, "I think we should require the New York ISO to file an amendment on Jan. 1. for the new market rules to become effective next summer."

Chairman James J. Hoecker countered that the position taken by the Commission majority was one of "practicality, not timidity." Moreover, he noted, "I think that we are all [in] fundamental agreement here that non-physical entities need to be part of this market." But he doesn't think the New York ISO should be rushed into making the changes.

"We are concerned that the changes necessary to accommodate bidding by non-physical entities, especially with regard to the NYISO's software, be carefully conceived. It is imprudent to introduce sudden overrides and quick fixes that could serve to disrupt efforts to correct the market flaws already identified or create new problems," said the FERC order.

In its complaint, Morgan Stanley asked FERC to order the New York ISO to change its market rules and software by Aug. 1 to permit bidding by non-physical entities (power marketers) in the electric market there [EL00-90]. However, the Commission said Morgan Stanley had failed to show an "overriding immediate need" for the bidding changes to become effective Aug. 1.

In requiring a progress report by Jan. 1, FERC believes the New York ISO will have ample time to remove the bidding restrictions for power marketers to participate during the peak demand period next summer.

Susan Parker

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