NGI The Weekly Gas Market Report
Power sellers have urged FERC to reject two complaints that seekto void a $6,000/MWh bid for imported electricity that was used toset the market clearing price in the New England Independent SystemOperator for five hours last May 8.
Extremely high temperatures that day, combined with a high levelof generation outages due to maintenance, forced the New EnglandISO to import the high-priced power during the five-hour period inorder to maintain reliability in the region on May 8, electricmarketers said in protests filed at the Commission [EL00-100]. The$6,000/MWh bid was not the result of market power or market flawsin the region, they argued.
United Illuminating Co. (UI) and the Maine Public UtilitiesCommission, which brought the complaints separately, called on FERCto order the recalculation of energy prices in the New England ISOto exclude the $6,000/MWh bid, and to provide refunds based on theadjusted prices. But power sellers argued that the market sellingprice was “legitimately established” by the $6,000/MWh bid, andthat any move by the Commission to interfere would destroy marketconfidence and further hamper competition.
“In an era which was to be heralded as the one which opened andderegulated the energy markets – but which is instead making newsfor its imposition of price or bid caps in everyCommission-approved market – the Commission should resist theinvitation by UI to begin down the road of clearing-pricerecalculations,” said the wholesale power marketing affiliates ofPG&E National Energy Group.
Any move by FERC to retroactively adjust prices in the NewEngland ISO would “only act to undermine confidence and discourageparticipation in the energy markets,” concurred PPL Energy PlusLLC, Kennebec Water District, Sparhawk Hydro and Small Hydro East.
Enron Power Marketing Inc. called UI’s complaint “misguided” forseveral reasons. First, it pointed out that even if the New EnglandISO failed to properly administer the region’s energy market underthe market rules by accepting the $6,000/MWh bid, “the Commission’spolicy is to correct those rules prospectively, not to recalculateprices and impose refunds on a retroactive basis.”
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