The Federal Energy Regulatory Commission reaffirmed its market-based rate policy April 17. At least two commissioners said it’s a method to “protect consumers” from wholesale electricity sellers’ market power. However, in California the wholesale market plays only a small role, representing about five percent of the state’s energy market. FERC specified that sellers who cannot prove they “lack market power” must come to them. “The burden is on the seller” of energy,” said commissioner Jon Wellinghoff. The decision does not provide a “safe harbor” for sellers, he added. For illustrative purposes, FERC staff clarified that for instance, in California, that if a company like Calpine sells energy that makes up more than one fifth of the state’s wholesale market, the trade would invoke an investigation. The federal regulators took up the matter again after stakeholders protested a 2006 decision in which the commission said it would investigate market-based rates if market abuse was suspected. Also, FERC agreed to streamline wholesale electric market power analysis for oversight on a case-by-case basis. It essentially reaffirms FERC’s position on market based policy from June 2007, according to FERC spokesperson Mary O’Driscoll. The California 2000-01 energy crisis reflects what can occur when sellers and marketers allegedly exercise “market power.” Traders, most notably Enron, allegedly gamed the new market for excess profits. State utilities were unable to fund rising energy costs. One utility, Pacific Gas & Electric, declared bankruptcy. At the height of the crisis, the state Department of Water & Power was charged to take over buying power due to the lack of utilities’ creditworthiness. In other federal regulatory news, FERC opened a docket to determine whether its own charges on electric wholesalers are “fair.”
