News October-December 2005
News Release: October 20, 2005 | View Printable PDF Version |
Docket Numbers: ER02-1406-006 et. al. and ER99-1005-004, et al. |
Commission terminates Section 206 proceedings; utilities
rebut presumption of market power
The Federal Energy Regulatory Commission today terminated market-based
rate investigation proceedings for two companies after they successfully
rebutted the Commission's presumption of market power.
"These are significant orders, as they mark the first time the
Commission has accepted a showing by companies successfully rebutting
the presumption of market power under our revised market-based
rate program. The orders show the rebuttable presumption is not
irrebuttable, and they further show the Commission properly weighs
the obligation to serve native load," Commission Chairman Joseph
T. Kelliher observed.
The Commission allows wholesale electric power sales at market-based
rates if the seller and its affiliates do not have, or have adequately
mitigated, market power in generation and transmission and cannot
erect other barriers to entry by other suppliers. The Commission
also looks for evidence of affiliate abuse or reciprocal dealing.
As a condition of a company's authorization to sell power at market-based
rates, the company must file an updated market power analysis
every three years.
In separate orders today, the Commission terminated proceedings
under section 206 of the Federal Power Act against Acadia Power
Partners (ER02-1406-006, et al.) and Kansas City Power and Light
Co. (ER99-1005-004, et al.). In these two proceedings, the companies
successfully rebutted the Commission's presumption of market power
in their respective control areas. The companies had failed their
respective preliminary market power screens.
However, in the case of Acadia Power Partners, because the Cleco
companies failed to comply with a directive in a previous Commission
order, the Commission instituted a section 206 proceeding to investigate
whether the Cleco companies may continue to charge market-based
rates in the neighboring Lafayette and Louisiana Energy and Power
Authority control areas.
The orders result from a new process for reviewing applications
for market-based rate authority, which the Commission initiated
in April 2004 (Docket No. ER96-2495-016, et al.). The Commission
adopted two new generation market power screens to preliminarily
assess whether a seller is a pivotal supplier and how much market
share a seller has compared to other competitors.
Failure of one or both of the Commission's generation market power
screens establishes a presumption of market power, which companies
have an opportunity to rebut in further proceedings under section
206 of the Federal Power Act. Initiation of a section 206 proceeding
does not revoke a company's market-based rates or impose mitigation.
The proceeding provides refund protections to wholesale customers
while allowing the applicant and other interested parties an opportunity
to submit additional evidence and analysis to address whether
the applicant has market power. In addition, companies can adopt
default cost-based rates or propose tailored mitigation for Commission
consideration.
R-05-72
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