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
"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
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