Con Ed Seeks to Prevent Abuses Up Front
Consolidated Edison Inc. called on FERC last Tuesday to enact mechanisms to limit the potential for price spikes in the New York wholesale power market this summer.
It also urged the Commission to correct market flaws that allow power generators to exercise market power, and to penalize those generators that are found to be gaming the market to their own advantage.
The utility's "major concern" is the exercise of market power by generators during periods of tight supply in the New York market, said Michael Forte, general manager for energy trading. Current mechanisms for dealing with market power are "after the fact," he said, adding that Con Ed is advocating identifying market power in advance. It wants to "proactively prevent" the high bids of generators from setting the market-clearing prices.
Con Ed also held a teleconference last Tuesday to assure investors that, while the New York power market has its share of problems, it's far from the crisis situation plaguing California. For one, Con Ed and other New York utilities aren't facing a severe supply crunch, and they are allowed to pass through their wholesale power costs to their customers.
More importantly, "policymakers in New York understand that you can't correct those [market] problems by taking it out of the financial strength of the distribution companies," said Joan Frielich, executive vice president and chief financial officer.
Con Ed called for the changes in New York during a FERC conference last week addressing the New York Independent System Operator's (NYISO) handling of the electric wholesale market there. Included in the proposed changes was a new "circuit breaker" mechanism to hold prices down when the bulk power market is not competitive.
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