Given the recent price spikes in the Midwest and Californiaelectricity markets, a California power agency has called onCongress to take the necessary steps to rein in unleashed marketpower when it takes up restructuring legislation next year.

“In early July, the California independent system operator(Cal-ISO) was forced to accept bids for certain ancillary servicesneeded for system reliability that were more than 3500% above thenormal cost of providing those services,” the Northern CaliforniaPower Agency (NCPA) said in a July 28th letter to Rep. ThomasBliley (R-VA), chairman of the House Commerce Committee.

“It appears that excessive market concentration, insufficientmarket participants, and a flawed market analysis are responsiblefor this non-functioning market. Further complicating the problem,the state’s publicly owned electric utilities have, for the mostpart, been purposefully excluded from participating in the ISO’sancillary services market,” said NCPA, which provides generation,transmission and distribution services on behalf of 15 cities inthe state.

A “Band-Aid” has been applied to prevent a repeat of the pricespikes: FERC has imposed a price cap on these ancillary servicesand requested a report by the Cal-ISO and Power Exchange on themarket structure, it noted. But NCPA questions whether this will besufficient.

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