FERC sets sanction higher than Northeast ISO requests

Dec. 14, 2000—The Federal Energy Regulatory Commission rejected an ISO New England's request to cap rates for its so-called installed capability (ICAP) market at 17 cents/kW-month, calling it a �token� amount, and reinstated an $8.75/kW-month charge.

The charge is intended to encourage new generation and is levied against New England utilities or other load entities that don�t contract for enough electricity to serve customers and maintain a reasonable generation margin, or the so-called ICAP. The charge or fine is paid to generators.

FERC sees the charge as a way to provide monetary incentives to manage congestion by stimulating new generation supply. The agency said the $8.75/kW-month is an approximation of the cost to install a peaking unit and represents a reasonable basis for encouraging construction of new generation.

�The ICP deficiency charge needs to be high enough to influence behavior and serve a reliability function," according to the FERC order. "The charge should be related to the actual harm created by ICAP deficiencies.�

In a June 28 order, FERC permitted ISO New England to eliminate the ICAP auction market Aug. 1 because the commission found it wasn't useful and could produce inflated prices unrelated to actual harm created by ICAP deficiencies.

Instead, the federal agency ordered the ISO to revert to levying administratively administered sanctions against companies that failed to comply with ICAP requirements. The ISO proposed the 17 cents/kW-month charge based on the average clearing price in the ICAP auction market in 1999. But FERC agreed with those who argued for the higher rate, which was in effect before the ISO was created.

�We are evaluating FERC�s order,� says Ellen Foley, spokeswoman for the ISO New England.

The ISO could implement the new charge or challenge the order in federal court, an action still not decided.

Separately, FERC agreed to extend a $1,000/MWh cap on the wholesale (operating reserve) electricity market until March 31, 2001. The temporary bid cap was put in place July 26 at the request of the ISO and was set to expire Dec. 31.

The ISO said the extension was necessary due to continuing flaws in its markets and the potential for price spikes during periods of high demand in the winter as well as summer. Generators argued the cap will discourage investment in new generation exacerbating supply problems in the region, but FERC said the cap "allows a significant margin for profit above the marginal costs of the most expensive unit existing or planned in New England."

Sponsored by FLSmidth

Related Articles

Wisconsin Electric gets no bids to buy Presque Isle coal plant

Wisconsin Electric Power hasn't gotten any purchase bids at this point off a recent request for proposals (RFP) that it issued for the coal-fired Presque Isle power plant in Michigan's Upper Peninsula.

Gas, renewables account for new generation additions in February

Basin Electric Power Cooperative has commissioned its 45-MW Pioneer 2 peaking unit in North Dakota and it was the largest conventional peaking plant to come online during February as renewables accounted for the rest of the new generation.

Follow Power Engineering on Twitter
Latest News

Dominion Virginia Power shelves plans for offshore wind project

Dominion Virginia Power, a subsidiary of Dominion (NYSE: D), put plans to build an offshore w...

Coal ash recycling company successfully repurposes pond ash

The SEFA Group Inc. recently opened a stand-alone Staged Turbulent Air Reactor (STAR) facilit...

Hawaii energy park, Sandia National Laboratories to test energy storage

The Natural Energy Laboratory of Hawaii Authority (NELHA) has secured a deal with New Mexico-...

E.ON, GE wind farm reaches operation in Texas

E.ON and GE's (NYSE: GE) Energy Financial Services celebrated the opening of the Grandview Wi...

Feds move to speed approval for Great Plains wind projects

Federal officials are moving to speed up their review of wind power projects across the Upper...

Sempra U.S. Gas & Power acquires Minnesota wind project

Sempra U.S. Gas & Power has acquired the 78-MW Black Oak Getty wind project — in Stearns ...

Mississippi Power to build largest utility-scale solar projects in the state

Mississippi Power, a subsidiary of Southern Company (NYSE: SO), is partnering with two solar ...

Another measure to block advance of NC renewables law falls

North Carolina electric companies must keep planning to generate more power through alternati...

Power Engineering Current Issue

03/01/2014
Volume 118, Issue 3
1403PE-cover
Products Showcase
Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Power Industry Wire News

Rockdale Resources Enters Into Letter of Intent to Acquire Working Interest in a Historical Oklahoma Oil Field

Rockdale Resources Enters Into Letter of Intent to Acquire Working Interest in a Histor...

Scorpio Tankers Inc. Announces Newbuilding Vessel Deliveries and Reminder for Upcoming Conference Call

Scorpio Tankers Inc. Announces Newbuilding Vessel Deliveries and Reminder for Upcoming ...

Falcon Crest Energy Searching for Opportunities Outside Oil and Gas Sector

Falcon Crest Energy Searching for Opportunities Outside Oil and Gas Sector

West Texas Resources, Inc. Announces Appointment of Paul Brogan to Board of Directors

West Texas Resources, Inc. Announces Appointment of Paul Brogan to Board of Directors

Younicos Commends U.S. Department of Energy Call for Energy Storage to Be Part of National Electricity Grid Infrastructure Improvements

Younicos Commends U.S. Department of Energy Call for Energy Storage to Be Part of Natio...

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>