News 
2007
| Statement: June 21, 2007 | 
View Printable PDF Version |
| Docket No. RM04-7-000 | |
Commissioner Moeller's statement on market-based rates for wholesale sales of electric energy, capacity and ancillary services by public utilities
"The Commission has been granting market-based rate authority to applicants for 19
years now (1988-2007). Over the years, the Commission's policy has evolved based
on its experience on a case-by-case basis. As I have mentioned before, competition
is the law of the land for the energy industry as mandated by the Congress. Past
Commissions and well as this Commission have implemented Congress' mandate in
various ways. Our decision granting market-based rate authority to sellers--
allowing them to participate in energy, capacity and ancillary services markets--
enhances liquidity, thus improving the state of competitive markets. I support
refining and codifying effective standards for market-based rates to help customers
by ensuring that market-based rates are just and reasonable and protect customers
from the exercise of market power. This rule also provides greater certainty to
sellers seeking market-based rate authority.
The Western Energy Crisis of 2000-2001 provided an opportunity for some entities to
abuse their market-based rate authority and various other entities to attack the
Commission's implementation of its market-based rate authority program. We have
come a long way. Now, the market-based rate program provides a rigorous up-front
analysis of whether market-based rates should be granted and reinforces the
Commission's ongoing oversight of market-based rates. Specifically, a grant of
market-based rate authority imposes requirements upon a seller, including: a
commitment to abide by affiliate restrictions that govern transactions and conduct
between power sales affiliates where one or more of those affiliates has captive
customers; a requirement to file post-transaction electric quarterly reports or "EQRs"
containing specific information about contracts and transactions; a requirement to
file any change of status; and a requirement for all large sellers to file triennial
updates. If a seller is found to have market power, the market power can be
addressed by mitigation or revocation of market-based rates. A violation of an
seller's market-based rate tariff exposes the seller to revocation of market-based
rate authority, penalties and/or disgorgement of profits. This final rule provides the
consistent, clear and enforceable regulations that are needed for the market-based
rate program.
Finally, I appreciate the difficult decisions and balancing that has been achieved in
this rule, but as discussed in my partial dissent, any public utility that qualified and
received a "1996 exemption" should retain its exemption from filing a generation
market power analysis. Such a limited grandfathering provision is warranted to
avoid modifying the understanding that certain generators relied upon to finance and
construct new generation. I do not believe a limited grandfathering provision would
have raised any new generation market power concerns. Such a provision would
have fostered my goals of providing regulatory certainty, and promoting
infrastructure investment and independent power production."
|
View Printable PDF Version |
