Coral Power LLC, a power marketer in the Southeast region, has called on FERC to “act quickly to bring the southeastern U.S. electric power market back in line” with the agency’s pro-competitive policies.

In comments filed at the Commission, Coral Power voiced concerns that recent actions by Southern Power Co., a unit of Atlanta-based Southern Company, are threatening competition in the region. After failing to win quick approval at FERC to sell generation output to affiliates Georgia Power Co. and Savannah Electric Power Co. from its McIntosh Combined Cycle Units 10 and 11, Southern Power took its case to the Georgia Public Service Commission, Coral said.

Last month, the Georgia PSC directed Georgia Power and Savannah Power to buy the generation units, which were not operational, from Southern Power. As part of the deal, the two Southern Power affiliates are to complete construction, and operate and maintain the facilities.

Southern Power now has filed to withdraw from FERC its pending application to sell power from the McIntosh Units to its two affiliates at market-based rates, claiming that the action by the Georgia PSC makes its request moot. It further noted that no third party would be adversely affected by the cancellation and withdrawal of the pending application.

But Coral Power begs to differ. “Coral is concerned that Southern Power’s actions in this proceeding are yet another attempt to usurp the Commission’s policies regarding the development and maintenance of a vibrant and competitive wholesale electric power market in the southeastern United States,” the power marketer told FERC [ER03-713-003].

“In this proceeding, Southern Power first sought Commission approval of the [affiliate] agreements and, when approval for the agreements was not immediately received [from FERC], transferred consideration of the matter to a more receptive local regulator and then requested the Commission to withdraw the agreements from consideration,” Coral Power said.

FERC staff, in comments filed last week, agreed with Southern Power that the issue of its affiliate power agreements was now moot and that it should be permitted to withdraw its application. But staff urged the Commission not to terminate the proceeding because “serious questions have been developed in this case as to whether Southern Power’s remarkable good fortune in securing power sales to its affiliates is the benefit of good bidding strategies or some measure of affiliate abuse.” It recommended that FERC institute a Section 206 investigation into Southern Power’s relationship with the operating utilities in the Southern Company family.

Coral Power said FERC previously ruled that Southern Company, which owns Southern Power, Georgia Power and Savannah Electric, has both generation market power and transmission market power in the region. “Adding two new generating units to the Southern Company portfolio of assets will clearly exacerbate the existing problem. If left unabated, Southern Company, through its affiliates, will continue to frustrate the development of a well-functioning, competitive wholesale power market to the detriment of consumers in the Southeast U.S.”

Coral Power said it believes the Commission should conduct an investigation into competitive conditions in the Southeast, possibly taking steps to implement additional market power mitigation, and appoint a full-time independent market monitor in the region.

“The transfer of the McIntosh Units 10 and 11, coupled with the collapse of the development of SeTrans [as a regional transmission organization], will clearly have a material negative impact on the Southeast region by negatively reducing the value of generating assets in this region, as well as damaging the psyche of most market participants in the region,” it noted.

Duke Energy North America recently announced plans to exit the Southeast power market by selling its 5,300 MW of merchant generation located in the region. “Duke’s exit from the Southeast market follows announcements by TECO Power Services, Panda, Congentrix, NRG, Dynegy and Calpine to substantially write down the value of each company’s generation assets in the Southeast U.S. and/or sell or restructure some or all of these assets in the Southeast U.S. due to the failure of a real generation market to develop,” Coral Power said.

“Now, the southeastern market is left with Southern Company becoming an even larger more dominant player, with the transfer of the McIntosh Units 10 and 11, and still no hope of having an independent entity operate the transmission system in the Southeast U.S.”

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