Charging “price gouging” and “a raw abuse of market power”several Midwest utilities and power marketers have asked theFederal Energy Regulatory Commission to hold an emergencyconference to find out what went wrong in the Midwest electricmarket last week that forced some to pay as much as $7,500 MWh.

Illinois Power asked FERC to issue an interim emergency orderlimiting the cost of electricity bought by utilities duringelectric system emergencies to $200/MWh. IP said it paid as much as$4,000/MWh last week and knew of a company that paid $7,500/MWh.

It blamed the skyrocketing electric prices on marketers who tookadvantage of a power shortage due to a prolonged Midwest heat waveand forced outages of several large baseload nuclear plants. Facedwith the prospect of curtailing retail customers “franchisedutilities, such as Illinois Power, had no choice but to paywhatever price was demanded.” IP said it bought power at pricesranging from $1,000/MWh to $1,900/MWh on one day and up to $4,000the next day. “In one instance a seller offered emergency power ataround $400/MWh and then, after the energy flowed, adjusted theprice to $4,000/MWh.”

Cincinnati Gas & Electric, the utility arm of Cinergy Corp.,along with Dynegy Inc., NP Energy, and Western Resources stoppedshort of asking for a price cap, but said FERC should conduct afact-finding forum “to determine whether any action from theCommission is required for the remainder of the summer period toensure the continued availability of electricity supply in themarket at just and reasonable prices.”

The group said as much as 15% of the generating capacity in ECARwas out of service during the period from June 22 to June 27 and”utilities through the region were subject to Regional ReliabilityCouncil emergency conditions and were forced to interrupt serviceto certain end-use customers.” Some market participants defaultedon commitments, and “severe credit and financial strength issueshave arisen regarding the status of market participants and accessto transmission and commodity services.”

FERC has an interest in “assuring that rates charged forjurisdictional service shall be just and reasonable (18 U.S.C.,Sec. 824d(a):” and also ensuring no undue preference, the groupsaid. IP said FERC should issue an emergency order for this summer”amending each and every rate schedule that permits the sale ofwholesale power at market rates” to cap the price at $200/MWh.

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