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South Carolina Regulator Considering Competitive Procurement of Power

The South Carolina Public Service Commission ("SCPSC") is considering whether utility procurement rules should be changed in the state to require a competitive RFP-based solicitation process. This inquiry grows out of a recent SCPSC decision granting local electric and gas distributor SCE&G a rate increase. The SCPSC appears reluctant to embrace competitive procurement. This is evident from the order granting SCE&G a rate increase. Even thought the Commission undertook the RFP inquiry, it also faulted the RFP concept, affirming its earlier rejection of challenges to a utility's self-...

Incentives to Sell Are Needed More than Improved Metrics, Says FTC

Reprising a message it has voiced for nearly decade, a frustrated Federal Trade Commission (FTC) lectured FERC that standardizing the measurement of available transmission capacity (ATC), as FERC proposes, is fine, but unlikely to eradicate the real problem of transmitting utilities denying available transmission capacity for use by power sellers with whom they compete. "Behavioral rules, such as rules governing calculation of ATC," instructed the competition watchdog FTC, will not effectively address transmission discrimination unless accompanied by solutions that deprive transmitting...

Reliability v. Health: Neighboring States Battle over Dirty but Needed Generator

A cross-Potomac skirmish over the competing principles of energy reliability and public health has broken out over the fate of Mirant Potomac River's 482-MW, coal-fired power plant in Alexandria, Virginia. The District of Columbia Public Service Commission's ("DCPSC") petition to FERC and the Department of Energy ("DOE") to prevent Mirant from shutting down both provoked urgent protests and drew support from regional stakeholders. Prompting the DCPSC's petition was Mirant's announcement that, because of a Virginia Department of Environmental Quality ("VDEQ") directive to remedy air quality...

Rhode Island, Wisconsin Investigate Benefits of RPS

Joining the growing number of states embracing Renewable Portfolio Standards ("RPS"), both Rhode Island and Wisconsin have begun to assess the potential benefits of and need for renewables to power their states. The Rhode Island Public Utilities Commission is reviewing a stakeholder group proposal that recommends the state begin enforcing an RPS in 2007 requiring both utilities and retail marketers to obtain 3% of their power supply from renewables. Under this proposal, utilities would be allowed rate recovery of all associated costs other than non-compliance penalties. Renewable power...

FERC Scurries to Conclude California Refunds Case

With an order issued August 8, FERC has stepped up its efforts to bring to a close the four-year-old refund proceeding that grew out of the 2000-2001 California energy crisis. The order clarifies how generators and other suppliers should seek to prove the costs they incurred in supplying power to the California ISO ("CAISO") and the California Power Exchange ("CalPX") during the refund period (October 2, 2000 through June 20, 2001) exceeded the mitigated market clearing price established by FERC. These suppliers now have detailed guidelines as to the types of data they need to provide to...

TVA Considers Open Access Policy As Customers Defect

Hopkinsville Electric System has become the latest Kentucky distribution system to give the Tennessee Valley Authority ("TVA") the five-year notice required to terminate its long-term agreement with federal power company and begin shopping around for other energy suppliers. In the wake of several recent terminations, TVA has begun to examine the implications of opening up access to its transmission grid. FERC took up the same issue in an August 3 order [East Kentucky Power Cooperative, Inc., 112 FERC ¶ 61,160 (2005)], directing TVA to allow East Kentucky Power Cooperative to interconnect with...

California Merchant Generators, IOUs Put Forth Market Reform Plan

Two of California's investor-owned utilities ("IOUs") along with six merchant generators quietly unveiled on August 17 a plan to reform California's struggling power markets at a closed-door meeting in Sacramento. Pacific Gas & Electric Co., Southern California Edison Co. ("Edison"), AES Corp., Duke, NRG, Mirant, Dynegy, and Reliant secretly developed the plan. Governor Arnold Schwarzeneggar also encouraged the proposal, in the hopes that the development of a strong energy policy will amount to the decisive action on energy policy that will placate California voters still smarting from...

Reconsider Exelon-PSEG Merger, NJBPU Urges FERC

Apprehension over the effect of the Exelon-PSEG merger continues, as the New Jersey Board of Public Utilities ("NJBPU"), along with several other regional interests, including New Jersey's Ratepayer Advocate and Pennsylvania's Office of the Consumer Advocate, asked FERC to rehear its July 1 order approving the merger and instead set the merger for hearing. The NJBPU argues in its request that FERC violated Section 203 of the Federal Power Act ("FPA") by failing to determine affirmatively that the merger is in the public interest in advance of authorizing the transaction. Instead, complained...

Negotiations Continue on BPA's Role in Pacific Northwest RTO

Following the Transmission Improvements Group's ("TIG") regional transmission proposal, made public earlier this month, BPA solicited public comments on whether it should support and join the opposing Grid West proposal, adopt the TIG alternative, push for a combination of the two, or choose to remain separate from the formation of a Pacific Northwest RTO altogether. TIG comprises several northwestern electric utilities. In order to be considered, comments are due to BPA by September 9, 2005. Grid West's proposal focuses on the creation of an independent entity that would manage and control...

Energy Policy Act of 2005 Hands FERC a Long To-Do List

The Domenici-Barton Energy Policy Act of 2005 , signed into law on August 8, mandates that FERC issue several new rules and engage in other new initiatives over the next few months. Milestones of particular significance to the power and natural gas industries are: Within 60 days: Issue regulations on the National Environmental Policy Act pre-filing process for liquefied natural gas (LNG) projects. Within 90 days: Consult with Departments of Interior, Commerce, and Agriculture, to establish procedures for trial-type expedited proceedings for mandatory conditions and fishways on hydropower...

Reliant Settles Litigation over Energy Crisis

Houston-based Reliant Energy announced August 15, 2005, that it has entered into a comprehensive settlement agreement with many of the parties to the ongoing litigation over the 2000-2001 California energy crisis, including FERC staff, the states of California, Oregon and Washington, California's three largest investor-owned utilities, and various private class-action plaintiffs. The settlement will end much of Reliant's liability exposure from sales made during the crisis. Pursuant to a Memorandum of Understanding ("MOU") executed by the settling parties, Reliant will make a $150 million...

Xcel Joins Industry Retreat from Market to Cost-Based Pricing of Wholesales

Xcel Energy Services recently became the latest integrated utility to abandon efforts to convince FERC that it lacks generation market power in its control area and thereby surrender its authorization to make control-area power wholesales at market rather than cost-based prices. Entergy made the same decision in July, as did AEP earlier this year. (See Entergy Will Not Renew Market-Based Rate Authority, August 2, 2005). Motivating this retreat is recognition that these large regional utilities are unlikely ever to convince regulators that they have adequately mitigated their generation market...

Court Vacates Erratic FERC Orders on Congestion Pricing

A federal appeals court recently reversed a FERC order on pricing arrangements in a congested area of ISO-NE region because of the agency's failure to respond to reasonable objections to its mercurial policies on pricing. The opinion demonstrates that the agency's abrupt policy changes will not withstand appellate scrutiny where FERC fails to resolve reasonable objections by appellants. FERC's order concerned the ongoing attempts to devise an appropriate mechanism for compensating generators in a congested area of southwest Connecticut in which there is a risk of generator market power. As...

California Supreme Court Puts Re-Regulation Proposition Back on the Ballot

Controversial Proposition 80 , which seeks to re-regulate California's electricity market, should be put to a vote in the upcoming November 8 elections, according to the Golden State's highest court. The court's decision overturns a July 22 ruling of a lower court that would have kept Proposition 80 off of the ballot. The lower court ruled that Proposition 80 was unconstitutional on its face because it would expand the authority of the California Public Utilities Commission ("CPUC") to regulate the energy industry, a role that the court found to be reserved for the California Legislature...

Texas Ups Renewable Energy Requirements

Texas Governor Rick Perry has signed legislation requiring increased development of renewable energy in Texas. The legislation requires the installation of another 3,000 MW of renewable energy on top of current Texas law requirements. Texas has taken a different approach in mandating renewable energy development compared to other states. Most states with renewable energy portfolio legislation require load-servers to include a given percentage of renewable energy in the energy they provide to retail consumers. Texas, however, mandates the construction of certain amounts of renewable energy. As...