Florida is on its way toward a competitive power market, andTampa-based TECO Energy has some suggestions for a successfultransition.

The recent formation of a Florida regional transmissionorganization (RTO) and heavy merger and acquisition activity in thestate are signs that competition has arrived on the scene, saidRichard Lehfeldt, TECO Energy’s senior vice president at a recentmeeting of the Florida 2020 Commission.

As evidence of thriving competition, the executive also pointedtoward indicators such as competing proposals from natural gaspipelines to supply the state, and the “fierce competition” forbuilding new power plants to serve growing demand.

“The question before this commission is not whether to embark ona competitive model for the state, but what structural changes arenecessary to accommodate the competition that has already arrived,”said Lehfeldt.

To accomplish this task, Lehfeldt focused his testimony on thetopics of RTO development, generation issues and fiscal concerns.

“The heart of a viable wholesale market is its transmissionsystem,” said the executive. “Without an open-access, independent,market responsive transmission system that facilitates the deliveryof accurate market signals to market participants, the rest of thestructure is virtually irrelevant, and merchant plants will die onthe vine.” To get past the “natural monopoly” on transmission, afair system with rules and pricing signals governing its use and anincentive system to help its maintenance an expansion arenecessary, he said.

Whereas Lehfeldt believes the Oct. 16 joint-filing for RTOstatus was important, he forecasts a difficult, yet obtainable roadto implementing a PJM-style, fully competitive wholesale market.

Other recommendations include:

State legislation mandating 100% RTO participation onceimplemented; guaranteeing the state’s capacity needs includingreserve margins will be met; establishing an environmental ceilingto avoid over-utilization of Florida’s natural habitat; movingexisting generation out of regulatory scheme to enhancecompetition; ensuring the state does not suffer from a revenueshortfall through restructuring; and guaranteeing all competitorsare treated equally in the new market.

“We applaud the Commission’s efforts in moving Florida toward awholesale competitive market, and we believe that if properlydesigned, this market structure will comfortably meet thesubstantial supply and economic needs of Florida’s consumers,” saidLehfeldt.

Alex Steis

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