FERC Friday dealt Duquesne Light Co. a major blow when it denied the company’s complaint request to be excluded from PJM Interconnection capacity auctions, which are scheduled to begin Monday. The Pittsburgh, PA-based utility saw its request as the first step in carrying out its plans to withdraw from the PJM and join the Midwest Independent System Operator (MISO).

In a complaint filed in early September, Duquesne Light asked that the utility’s load be excluded from the Preliminary PJM Peak Load Forecast that underlies the auction for 2009-2010 capacity that is scheduled to take place between Oct. 1 and Oct. 5. The utility said the request was based on its plan to exit the PJM, which oversees the flow of electricity in 13 states and the District of Columbia.

But the Federal Energy Regulatory Commission (FERC) ruled that Duquesne Light had not provided sufficient information to decide the issue, particularly on an expedited basis. It also said the utility had not addressed what the economic impacts of excluding customers in the Duquesne zone from the auction would have on other PJM market participants.

Nor did Duquesne Light address the question of how reliability would be maintained if its load is removed from the auction, but the company does not withdraw from PJM on its proposed schedule.

Duquesne Light’s plan to exit the PJM and join the MISO evoked widespread criticism, with suppliers concerned that the abrupt departure of the utility could disrupt PJM markets and others worried that retail electric customers could be harmed.

The utility “is attempting to flee the very market that it helped create…[It] is effectively engaged in forum-shopping,” protested the NRG Companies, many of which are active in PJM. “An entity such as Duquesne should not be able to avoid a capacity resource obligation that has been determined to be just and reasonable, at a rate that has also been determined to be just and reasonable, simply by switching regional transmission organizations (RTOs),” they said.

“The request, submitted only two weeks before the auction takes place and with notice to stakeholders only one day prior to that submission date, requires serious investigation and careful consideration by PJM market participants, PJM and the Commission regarding the impact of this disruptive last-minute change to the auction,” said the Electric Power Supply Association, which represents power suppliers, including generators and marketers.

In effect, Duquesne Light sought “injunctive relief on an emergency basis that could have significant consequences on other market participants and the RPM [Reliability Pricing Model] market as a whole,” noted the PJM Power Providers Group.”The parameters for this capacity auction were fixed in February 2007. Duquesne failed to act in a timely fashion. While [the PJM Power Providers Group] does not suggest that PJM participants should not be allowed to make a reasoned business decision to leave the RTO, the exit must be accomplished with sufficient care so as not to unnecessarily harm other market participants.”

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