The Independent Power Producers of New York, Inc. (IPPNY) calleda recent complaint to FERC by New York State Electric & Gas(NYSEG) an attempt at “market mugging” in the New York retailelectric market. IPPNY condemned NYSEG’s complaint and saidsuggested changes to the New York ISO were “an attempt to stranglefledging competitive electricity markets in the state before theybecome fully viable.”

NYSEG filed the complaint last week, calling for the Commissionto remove market-based pricing June 1-Oct. 31 and to replace itwith cost-based bidding. “The confluence of severe implementationproblems to date, including extra-tariff pricing rules, softwareproblems and communications failures (collectively ‘market flaws’)have strained the NYISO market to the point that a short-termsafety net is the only prudent course to avert a potential disasterthis summer,” NYSEG said.

NYSEG said energy imports from outside New York have been”unworkable” because of ISO software malfunctions and otherfactors. Energy prices have fluctuated substantially over shortperiods in “inexplicable fashion,” and there has been a”significant lack of convergence in day-ahead and real-time energyprices.” The administration of fixed block generation has resultedin inefficient resource allocations, and customer paymentobligations not covered by the ISO’s tariff, the New York utilityadded.

NYSEG suggested the Commission “create a safety net” bytemporarily shutting down market-based rates and adoptingcost-based bidding subject to the ISO’s review and oversight.

However, Carol E. Murphy, IPPNY executive director, said, “NYSEGhas placed its boot across the neck of New York’s infant market andwith this filing is begging the FERC’s permission to step down andcrush it.” IPPNY is a trade association representing New York’selectric generators. “If we are to grow strong, healthy andefficient electricity markets in New York that reward customerswith low prices over the long term, then we must let the marketstake root. NYSEG’s outrageous behavior must be repudiated by allsectors of the market — including the FERC.”

Nevertheless, IPPNY acknowledged that these problems do exist.It said NYSEG already had opportunities to help the ISO correctthese problems but did not act. IPPNY said it prefers to workthrough the market problems rather than “trashing the marketaltogether as NYSEG proposes.”

IPPNY suggested that NYSEG’s complaint was based on theutility’s fear that it will be impacted severely by summer pricevolatility because of defects in its generation divestiture plan,which was completed last year. However, a NYSEG spokesman said theutility’s concerns are purely altruistic. He said NYSEG is wellprepared for any price volatility this summer and has more thanadequate load to meet summer peak demand.

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