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Uniform Price Caps Sought in CA, Northwest Power Markets

Uniform Price Caps Sought in CA, Northwest Power Markets

Puget Sound Energy Inc. has called on FERC to levy price caps in the Pacific Northwest bulk electricity markets that are equal to what it ultimately decides to establish for the California wholesale market. Last week, the Commission proposed a "soft" $150/MWh price cap on wholesale sales of electricity in California.

"Generally, we do not favor price caps since they do not allow a wholesale market to work competitively. But in this case, the only thing worse than a price cap is a price cap on only part of the market," said William A. Gaines, Puget Sound Energy's vice president of energy supply.

Specifically, the Bellevue, WA, utility has asked FERC to impose price caps on wholesale sales of power and capacity into the Pacific Northwest equal to the lowest price cap on prices for wholesale purchases in, or wholesale sales of power or capacity "to or through" markets operated by the California Independent System Operator (Cal-ISO) or the California Power Exchange Corp. (Cal-PX). FERC did not address Puget Sound Energy's request in the major order on the California power market that it issued last week [EL00-95 et al].

In a complaint filed before FERC issued its California decision last week, Puget Sound Energy said it believes such action is warranted since "the Pacific Northwest is an integral part of the California market, and needs to be treated the same way the California market is treated at the wholesale level so that you don't create an imbalance," said Puget Sound Energy spokesman Grant Ringel.

"Price caps of the kind requested for sales to the Cal-PX and Cal-ISO and those instituted by the Cal-ISO for purchases are --- absent equivalent price caps on wholesale sales of energy and capacity into the Pacific Northwest - fundamentally unfair to Pacific Northwest public utilities such as [Puget Sound] and are antithetical to the development of a fair competitive wholesale power market in the Western interconnection," Puget Sound Energy told FERC [EL01-00].

It is "unfair and discriminatory to protect wholesale purchasers in California with a price cap and yet deny similar protection to wholesale purchasers in another part of essentially the same market, i.e. the Pacific Northwest." The effect of this "disparate treatment" is that California is able to buy Pacific Northwest power at "artificially low prices" when it needs it during the summer, while Pacific Northwest customers are left paying higher costs when the need is reversed in the winter, said Puget Sound's Gaines.

Susan Parker

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