FERC Potpourri
Roundtable Discussion
2005 APPA Legal Seminar
San Antonio, TX
Major FERC Issues for Public Power
Generation resource
adequacy/LICAP/capacity markets
LICAP in New England: no capacity
mechanism in CAISO tariff; but soon may
have one; how to assess legal position?
CAN an ISO impose resource adequacy on
munis given recent case law?
RPM in PJM : has some possible
application; munis must bid into market
More Major Issues
LICAP: It is an attempt to put a market model in
place in NE with a demand curve; an alternative
is being proposed; the entire Congressional
delegation and all Governors to object to LICAP:
now being postponed
FERC on LICAP: Why doesn’t it work? It works
in NY; got generation built in NYC (but it was
built by NYPA—not in response to market
signals) Case is now in settlement negotiations
in Boston; they are hoping for consensus result
More Major Issues
Must bid requirement—if you must bid in to meet
capacity obligation are you subject to new FERC refund
authority??? Can you be forced to bid in and thus
subject yourself to FERC jurisdiction under new FPA
section?
MISO: MISO Whitepaper has no capacity construct--
energy only market with relaxed price caps; State PUCS
and regional reliability councils want to keep resource
adequacy; MISO Staff wants to let the energy price
signal need for new capacity
Retail choice states thinking shorter term; other states
want longer term planning.
More Major Issues
IPPs want prices to spike to as high as the
market will set; they say otherwise no one will
construct new capacity in absence of capacity
market.
CA: PUC wants to do resource adequacy
(instead of ISO); backstop procurement by ISO
on “peanut butter” rate basis can add millions to
rates
What about the munis not in the ISO? Will the
charge on exports draw them in?
More Major Issues
Some munis in MISO prefer the energy only
market to the capacity construct; you can use
bilaterals to protect yourself from most price
volatility; you can deal with the price spikes
CAL: Our price spikes were very prolonged and
it would be politically very difficult to lift caps
Role of Transmission constraints in CA, NE: can
contract ahead if not in load pocket; if in load
pocket, hard to contract due to few choices.
RMR units had to be kept in operation and paid
via PUSH, RMR contracts
More Major Issues
Higher of cost or market; role of Transmission
constraints and NIMBYs in maintaining these
problems
Capacity poison or energy market poison? Which
is the better for us, or is there a third way?
Mergers: Cross country mergers may be on the
rise. How to get FERC to pay more attention?
Does membership in an RTO mean that
generation/transmission market power is fully
addressed? (Hardly)
More Major Issues
Can you show flows of power coming from
new merger partners’ transactions will
exacerbate market power even in an RTO
region?
Gas-electric mergers; Dominion, Duke
Market-based rate dockets: what happens
after loss of market based rates?
CLECO docket: negative 500 MW import
capacity!
What’s Eating Public Power
Systems?
AMEA: Southern OATT customer; big issue is the
comparability of the rates they pay; Southern
uses postage stamp and Alabama Power’s rate is
lower. Creates competitive problems for AMEA
NCPA: All of the above. Rewrite of ISO Tariff
being done on the fly and outcome could be
very problematic.
NTUA: Keeping WAPA out of an RTO; Desert
Star turned into Death Star
What’s Worrying Us?
WPPI: Best way to protect yourself is to
have own base load generation; need
LTTRs to do this.
FMPA: RTOs now scare them; looking for
mandatory joint planning; may lead to
joint ownership? Need recognition of
generation behind the meter; why is it not
part of the network? No one size fits all
on behind the meter generation
What is Worrying Us?
Those in MISO--SECA: MAKE IT GO
AWAY!
McDiarmid: How to strengthen the TX
system? This is the key to other problems.
SEPA: Our plants badly need maintenance.
Weathered one year in PJM. Customers
want to manage own allocations; rolling
change, possible impact on Transmission;
review of Southern system agreement
What is Worrying Us?
Michigan: Capacity issues; developers come and
go but won’t invest—no surety they will get
money back. How to finance capacity for
growth?
UAMPS: How to serve load growth? Generation
and transmission planning with multiple states
raises many issues; parochial state jurisdictions;
network customers get forgotten? Coordinated
planning could get us far…
What is Worrying Us?
FLA: looking at OATT; rollover rights
MAPP: Lack of competitive bids for power
supply; need adequate transmission
Jennifer Tribulski: Need non-monetary incentives
to encourage us to invest in transmission; high
rate of return does not do it for us; congestion
charges don’t get transmission built; offsets
transmission charge; no structural incentive to
eliminate transmission constraints
What is Worrying Us?
Platte River: Cure to our problems may be worse
than the disease. CO is a “backwater” that was
not on the bleeding edge. Relatively small G&T;
how will FERC-lite be implemented and will we
have to functionally unbundle?
CA: Cost/benefit analysis—we were sold a bill of
goods. Lack of transmission capacity and long
term planning; why are folks fleeing CAISO?
High costs.
What is Worrying Us?
Metropolitan Water District: Reliability and the
ISO’s goldplating; 15% reserve morphing into
operating reserve; what does the ISO really
need? And can some one else do it more
cheaply?
Reemergence of market power; in CA the IOUs
are reacquiring generation; can they in an LMP
environment exercise market power?
Cost allocation consistent with cost causation;
demand response also a big issue
What is Worrying Us?
Vernon: Behind the meter generation;
how will it be treated by the ISO?
NCPA: Long term bilateral contracts; need
to make sure the terms are fair and not
subject to abuse; need to avoid unfair
termination provisions in power supply
contracts