FERC last week broadened the bid-cap authority of the NewEngland Independent System Operator (ISO) to the chagrin of largepower marketers and utilities operating within the New EnglandPower Pool (NEPOOL).

The New England ISO asked the Commission to clarify a July 26order allowing it to temporarily cap at $1,000/MWh transactions inelectric energy and automatic generation control markets duringsevere capacity shortages that trigger NEPOOL’s Operating ProcedureNo. 4 (OP4). OP4 specifies the types of actions to be taken duringshortages, such as load interruption and curtailment procedures.

Specifically, the New England ISO asked FERC to clarify that notonly could the bid cap be levied during the hours that an OP4condition is in effect, but that it could be imposed throughoutthat entire day. It said the clarification was needed to shield themarket from the effects of non-competitive bids prior to an OP4condition being declared and after it is lifted.

“We agree with ISO New England and disagree with interveners,”such as PG&E Generating and FPL Energy LLC, which argue thatthe clarifications sought stray beyond the scope of the Julydecision, FERC said in last week’s order [EL00-83-002].

New England ISO asked FERC for the authority to levy bid capsafter regional energy prices rose to $6,000/MWh between 2 p.m.-5p.m. on May 8. The bid that set this price was scheduled prior toan OP4 condition being implemented, the ISO said, adding that thebid could have easily been dispatched after an OP4 conditionexpired as well.

FERC’s decision to impose the bid cap “was intended to preventfurther price spikes in these situations. ISO New England’sproposed clarifications would achieve this,” the order noted. “Wewill also approve the imposition of the bid cap on bids withminimum run times that extend beyond the period of an OP4condition.” New England’s bid cap authority will expire Oct. 31.

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