FERC Heeds Consumer Opposition and Rejects Effort of Power Traders and Generators to Raise California ISO Wholesale Spot Market Price Caps

The Federal Energy Regulatory Commission (FERC) on March 14 rejected a March 4 petition filed by a number of power marketers and generators who operate in the California market. They asked FERC to waive certain existing California market rules due to gas price spikes that were allegedly causing these companies (which include Shell Energy America and other major actors) to lose millions of dollars. The National Consumer Law Center (NCLC) joined in a protest and comments drafted by Public Citizen and The Utility Reform Network (TURN), opposing any waiver of the California market rules as unfairly shifting to consumers the risk of volatility in the natural gas markets.

The March 14 Order Denying Waiver is in Docket ER14-1428-000, and is cited as 146 FERC ¶ 61,183.

On January 31, 2014, FERC, after giving 8 days notice, granted a NYISO request for waiver of its $1,000/MWH price cap through February, based on changes in short term gas costs. Docket No. ER14-1138    146 FERC ¶ 61,061.  The application did not indicate whether power generators  purchased at least a portion of their fuel prior to the recent price spike in the daily gas spot markets.

The New York PSC intervened but did not comment.    Some representatives of power generators asked that prices exceeding $1,000 be paid to all generators even if their costs were less.  No New York consumer group intervened or  filed comments to oppose or modify the request.  The FERC Order allowed the higher spiking real time market electricity prices to be paid to generators claiming their costs were above that level, but denied the effort to pay that price to all sellers.  The order recognized that higher costs will be passed through to retail customers of New York’s retail electric utilities, and required a report by March 28 from the NYISO on the costs added due to the exceptions to the $1,000 price cap.

In October 2012 FERC awarded New York $10 million, to be spent $1 million per year, for advocacy on behalf of consumers in NYISO and FERC matters.  New York has not implemented this residential advocacy program.  The Governor’s budget for 2014 reappropriates last year’s $1 million appropriation and would appropriate another million for this year.

See FERC URGED NOT TO GO OVERBOARD ON WHOLESALE ELECTRICITY CAPACITY MARKETS – NEW YORK NEEDS INDEPENDENT STATE CONSUMER ADVOCATE;

Silver Announces Approved Assembly Budget Includes State Consumer Advocate Office Budget Measure will Provide Ratepayers a Voice in Utility Actions.

Gerald Norlander

Update

On March 28, 2014 NYISO filed a report with FERC saying that no bids above $1,000/MWH were accepted during the temporary price cap waiver period.

Scrutiny of the NYISO January 2014 real time price reports does indicate some prices were above $1,000/MWH.  We assume they were paid under some other existing rule allowing prices above $1,000/MWH.

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