The Federal Energy Regulatory Commission Wednesday generally re-affirmed key earlier decisions on price mitigation measures for California and the West, making minor modifications in a sweeping clean-up order encompassing a number of dockets in its year-and-a-half long battle to subdue the western power crisis.

Voting at its last open meeting of the year the commissioners endorsed earlier policy calls putting in place price mitigation measures during emergency periods to tame the runaway California power market, and then extending the price caps 24/7 across California and the Western Systems Coordinating Council (see Power Market Today, June 19 ). The “large book” issued by the Commission Wednesday disposes of rehearing orders and clarifications in a series of cases beginning in August of 2000.

In a separate order the federal agency modified its previously instituted westwide price mitigation methodology for electricity during the winter months, establishing a mitigated price starting point of $108, but requiring a recalculation of this price according to a formula tied to fluctuations in gas prices.

The clarifications in earlier orders:

Commissioner William Massey said he agreed with 90-95% of the order, but was dissenting in part on a few specific items.

Commissioners Nora Brownell and Linda Breathitt emphasized the call for new ISO management plans to get the western power house in order. Breathitt noted the Commission’s mitigation measures run out next September. And Chairman Pat Wood commented they wanted “to make sure this large book has no sequel.”

Wednesday’s winter price mitigation order arises from an Oct. 29, 2001 technical conference in which parties suggested possible changes to the mitigation methodology that FERC currently has in place.

FERC’s order “makes changes in current methodology to aid in ensuring continued stability through winter in California and the West,” a FERC staffer said.

Specifically, the order establishes a mitigated price starting point of $108, but requires a recalculation of this price that is tied to fluctuations in gas prices. The mitigation measures in the order will be effective through April 30, 2002. At that time, the current summer methodology will be reinstated.

But the Commission’s decision did not sit well with Commissioner Massey, who dissented from the order. “The primary reason that I’m dissenting is that I cannot conclude at this point that any adjustment to the current mitigation price method is necessary,” he said.

“If the concern is that gas prices will rise above the current formula ceiling, such that fossil generators won’t offer into the market, I just would not expect this problem to arise under the projections over the next year,” he went on to say. Massey noted that “gas prices are reasonable now.”

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