Con Ed files with FERC to correct alleged market power abuse


By Ann de Rouffignac
OGJ Online

HOUSTON, Mar. 6, 2001—Consolidated Edison Co. of New York filed Mar. 1 with federal regulators requesting additional measures be adopted to protect against alleged market power abuse by generators in New York City.

The utility sold off its generation as part of restructuring 2 years ago and must buy power on the wholesale market to serve customers. After the law was passed, Consolidated Edison said it identified loopholes in measures intended to protect against market power that could lead to excessive prices.

"The loopholes identified by the company can inflate prices by as much as $20 million in some months," said Kevin Burke, president of Consolidated Edison, in a release.

Consolidated Edison claimed generators in New York City can bid up prices in the real-time market limited only by a $1,000/MW-hr cap.

It said exercise of market power is likely in the real-time market because there are even fewer generating units which can compete than in the day-ahead market. Competition in the real-time market is limited to units already committed in the day-ahead market but not fully utilized or to units that can start up quickly. Units not committed in the day-ahead market or that have long start-up times cannot compete. Fewer units means more potential for market power abuses.

But, according to the filing, no market power mitigation measures have been adopted in the New York area real-time market. The price in the day-ahead market, however, is subject to mitigation. When bids exceed the market-clearing price at a generator's location by 105% of the price at Indian Point 2, mitigation kicks in.

The price is automatically adjusted, including fuel costs, to an average bid the generator has accepted during similar but unconstrained periods during the previous 90 days. This measure applies only to the day-ahead market and not the real-time market.

"In real-time generators can, and do, bid far above competitive levels, knowing that they can force these prices upon in-City consumers," according the Federal Energy Regulatory Commission filing.

Because there are no corresponding constraints on the real-time market, this creates perverse incentives in the day-ahead market, Consolidated Edison said. Utilities that serve customers bid for most of their power needs in the day-ahead market in an effort to avoid the expensive real-time market. Consolidated Edison said the system leads to excessive unit commitment and additional costs.

Consolidated Edison alleged it has already found evidence of real-time market problems this winter without the stress of summer demand.

"When system conditions and weather problems caused the NYISO [New York Independent System Operator] to constrain imports into the in-City load pockets, real time prices skyrocketed there to as high as $1,000/MW-hr," according to the filing.

Consolidated Edison pointed to local reliability requirements that create "must-run" situations as another instance in which the exercise of market power become possible. This occurs when owners of units that must run can charge prices in excess of competitive levels—knowing that there is no choice but to pay—according to the filing.

Consolidated Edison said it found in December 2000 and January 2001 there was at least one call per day for a must-run plant in New York City. Unit owners know must-run situations occur frequently. When they do, Consolidated Edison said, unit owners adjust bids upwards in real-time while the problem exists.

Because owners know their generation is urgently needed, the situation is described in the filing as handing owners "a blank check."

Contact Annd@OGJOnline.com

Sponsored by FLSmidth

Related Articles

JEMB, Harbert Power increase investment for Astoria I Natural Gas Power Plant

East River FundCo, a partnership of JEMB Family LP, and Harbert Power Fund V have increased their investment in Astoria Project Partners’ Astoria I natural gas power plant in Queens, New York.

Con Ed to pay part of $24M gas plant cleanup

Consolidated Edison Co. (Con Ed) will have to pay part of an estimated $24 million in cleanup costs tied to a former polluted manufactured gas plant, a New York federal judge ruled on Nov. 21.

Follow Power Engineering on Twitter
Latest News
SMEPA Will Buy Power From Second Lamar County Solar Site

SMEPA Will Buy Power From Second Lamar County Solar Site

Origis Energy will build an additional 52 megawatts of solar energy capacity in Sumrall, sell...
Most U.S. nuclear power plants operating at highest level, NRC says

Most U.S. Nuclear Power Plants Operating At Highest Level, NRC Says

A majority of U.S. nuclear power plants are operating at the highest performance levels in th...
09/02 Henry Hub Average Natural Gas Spot Prices

09/02 Henry Hub Average Natural Gas Spot Prices

The Henry Hub is the pricing point for natural gas futures contracts traded on the New York M...
Federal regulators back keeping Colorado Coal mine open

Federal Regulators Back Keeping Colorado Coal Mine Open

The Office of Surface Mining Reclamation Enforcement issued its decision Tuesday, five days b...
Manitoba Hydro names Darren Rainkie interim president and CEO

Manitoba Hydro Names Interim President and CEO

While it continues to search for a new permanent president and CEO, the Manitoba Hydro-Electr...
Silver Spring Networks, Inc., a developer of software and networking platforms for major utilities, yesterday announced that Michael Bell has been appointed president and CEO of the organization.

Silver Spring Networks Names President and CEO

Silver Spring Networks, Inc., a developer of software and networking platforms for major util...
SCPSC approves updated construction schedule and costs for SCE&G Summer nuclear power plant

SCE&G Updates Costs, Construction Schedule For Nuclear New Builds

The two reactors under construction at the V.C. Summer nuclear power plant in South Carolina ...
Dominion to no longer bill for some charitable donations

Dominion To No Longer Bill For Some Charitable Donations

The energy giant, which owns the state's largest electric utility, said in a recent regulator...

Power Engineering Current Issue

12/01/2014
Volume 118, Issue 12
1412pe-cover1
Products Showcase
Areva delivers reactor vessel head to Belgium nuclear power plant

Areva delivers reactor vessel head to Belgium nuclear power plant

Areva delivered a nuclear reactor vessel head to Electrabel for Unit 4 at the Doel nuclear power plant in Belgium.

GE announces launch of latest aeroderivative gas turbine, LM6000-PF+

GE announces launch of latest aeroderivative gas turbine, LM6000-PF+

GE is launching its latest aeroderivative gas turbine, the LM6000-PF+, which employs technologies from four GE businesses, bringing power online faster and more efficiently than ever before.

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

Perma-Fix Environmental Services to Present at the Rodman & Renshaw 17th Annual Global Investment Conference in New York City

Perma-Fix Environmental Services to Present at the Rodman & Renshaw 17th Annual Global ...

Despite Downturn, Some Suppliers to Oil & Gas Industry Are Growing, an Industrial Info News Alert

Despite Downturn, Some Suppliers to Oil & Gas Industry Are Growing, an Industrial Info ...

2015 National Advanced Biofuels Conference & Expo Announces Preliminary Agenda

2015 National Advanced Biofuels Conference & Expo Announces Preliminary Agenda

Energy Partner Paul Kaufman Joins Sheppard Mullin Del Mar

Energy Partner Paul Kaufman Joins Sheppard Mullin Del Mar

Algae Biomass Summit Showcases Advances in Engineering and Analysis

Algae Biomass Summit Showcases Advances in Engineering and Analysis

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 >>