A small Massachusetts power marketer has called on FERC to orderthe suspension of all installed capacity (ICAP) charges forparticipants in the New England Power Pool (NEPOOL) duringApril-July until the Commission and Department of Justice (DOJ)have completed separate investigations into gaming charges in themarket.
The DOJ’s antitrust division already has initiated an “extensiveinvestigation” into the New England ICAP market, said AlternatePower Source Inc. (APS) of Westwood, MA, adding that FERC should”step in, investigate and mitigate prices” as well.
“It’s our firm belief that there is gaming going on out in themarketplace with these ICAP numbers.” said APS President Stephen M.Tuleja. In addition to cooperating with the DOJ, his company haspetitioned a federal court in Massachusetts for an injunctionagainst billing of the ICAP charges until the market is”thoroughly” reviewed by federal investigators, he told Daily GPI.
ICAP charges essentially are the fixed charges associated withelectricity, according to Tuleja. “They’re a hold-over from theregulated world. They’re a tool that was put in place to ensurethat utilities had adequate capacity to serve their native loads.But in the unregulated world, many would argue there’s no reason tohave this [ICAP charge] in place any longer.”
In fact, FERC terminated the ICAP auction market in New Englandeffective Aug. 1, but that didn’t ease the high ICAP costs thatsome marketers — especially small ones like APS — have beensaddled with during the past year.
“Competitive companies shouldn’t be entitled to bill youanything they want for the electricity [the commodity], and thenhit you with an up-charge for what they consider to be their fixedcosts,” said Tuleja.
APS filed a complaint at FERC earlier this week after itreceived a bill charging it over $700,000 for an ICAP deficiencylast April. The ICAP charge was based on a market price that”purportedly” cleared at $3,240/MW/month, even though NEPOOLreported there was 2,522 MW of excess ICAP last April, according tothe marketer.
APS now is faced with a “Hobson’s choice” of 1) either payingthe $70,000 into escrow, pending resolution of the billing disputethrough the ADR process; or 2) being declared in default of itscontractual obligations, it told FERC.
“Either choice would result in dire and irreparable financialconsequences to APS — either an extensive and crippling loss ofcash flow, or a potential fatal series of chain reaction defaultsin APS’s contractual obligations with its customers and supplies,”APS noted.
APS, which sells about 1.6 million MWhs of electricity a year,contends it is the “victim of gaming of the ICAP ‘markets’ by largesuppliers.”
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