alliance info alert ferc report western markets special meeting today ferc released results eagerly awaited probe california summer power crisis concluding certain circumstances california ratepayers subjected unjust unreasonable power rates due california seriously flawed market structure rules conjunction tight demand supply conditions throughout west ferc staff report western markets causes summer 2000 price abormalities entitled part staff report u bulk power markets available following website response ferc issued order proposing series sweeping structural changes california iso px help remedy pricing problems solicited public comment november 22 technical conference also scheduled november 9 discuss proposed solutions remedies might suggested details tba four commissioners supported order order stretched commission chairman hoecker comm breathitt expressed strong endorsements comms hebert massey concurred citing areas felt commission either reached gone far enough discussed final order expected issued year end time commission warned california consumers continued risk paying higher prices unless policy makers resolve state issues 1 immediately implementing availability day ahead markets power purchases 2 development demand responses 3 siting generation transmission 4 assurance sufficient reserve requirements highlights proposed california structural remedy order ferc proposed series market overhauls including 1 eliminating state mandatory requirement state investor owned utilities buy sell electricity px allowing utilities purchase electricity forward contracts alternative mechanisms manage supply risks 2 requiring market participants schedule 95 percent transactions day ahead market instituting penalty charge scheduling excess five percent hourly load requirements order discourage reliance real time spot market 3 establishing independent non stakeholder governing boards iso px 4 modifying current single price auction system imposing temporary 150 mwh soft cap prohibits supply bids excess 150 setting market clearing price bidders b requiring sellers bidding 150 mwh report bids ferc confidential weekly basis provide certain cost support c requiring iso px report monthly information bids commission price mitigation measures would remain effect december 31 2002 5 declining order retroactive refunds state ratepayers utilities citing insufficient authority subjecting sellers potential refund liability transactions october 2 2000 december 21 2002 lower marginal opportunity costs ferc finds non competitive behavior 6 encouraging accelerated state siting approval introduction demand response management programs separately draft order rejected iso request extension current purchase price cap authority px request price capping authority commissioner responses comm herbert reluctantly concurred noting decision may change final order considered based comments filed testimony offered november 9 meeting stressed would preferred order address four areas 1 eliminate price controls california markets 2 abolish single price auction entirely 3 terminate buy sell mandate px 4 direct iso address long list cited problems january 2001 rto filing rather commission prescribe specific remedies hebert stated opposed principle soft cap concept one adopted soft cap increase incrementally increase time specific pre announced dates believes would serve encourage greater investment facilities additional forward contracting well provide incentive california regulators address market design flaws also would disbanded stakeholder governing boards time allow iso px address issue january 2001 rto filings addition would dictate risk management methods preferring instead market participants determine appropriate actions finally advised californians environmentally focused realize tremendous need generation capacity comm breathitt stated approval order warning ferc allow events past summer reverse slow progress towards open competitive markets noted commission job guide market self correct conduct command control also commended managers iso px saying performed admirably however noted awaiting comments single price auction remedy accompanying confidential reporting requirements comm massey concurred emphasized advocates aggressive approach feels congress put thumb scale federal power act protect consumers stating prices continue unreasonable future believes order moves right direction proposing solutions identified problems reliance spot market lack demand response need reconstitute governance iso px elimination buy sell mandate comm massey specifically called comments regarding whether 150 mwh soft cap went far enough whether ferc legal authority issue refunds determine whether requirement certain percentage forward contracting hedge spot market price volatility finally chairman hoecker stated strong support order noted time pull punches emphasized commission needed frank comments industry echoed comm breathitt warning competition risk needed get markets back track noting commission lacked authority order refunds stated responsibility rests congress addressing jurisdictional issues stated siting problems encountered state level slowing meandering transition competition feels state california ferc need work together resolve problems ferc attempting usurp power rather california part broader interstate market dependent western region reliable energy thus placing burden federal action make things work hoecker maintained chairman also said commission fully investigate act upon complaints market power abuse evidence provided staff ongoing investigation questions comments please call jack cashin 202 508 5499