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LPPC CALLS FOR FULL REVIEW OF WHOLESALE COMPETITION IN ORGANIZED MARKETS

Net consumer benefits must be Commission's priority

For Immediate Release                                          Contact: Bob Bonitati
Thursday, September 13, 2007                                           302-226-0482

Claiming that organized markets have resulted in a "substantial transfer of wealth from customers to the generation sector," and that these mechanisms "have not worked as anticipated in controlling costs and eliciting new supply," the Large Public Power Council (LPPC) has urged the Federal Energy Regulatory Commission (FERC) to conduct a full review of "what works and doesn't work" in organized wholesale markets.

Responding to FERC's Advance Notice of Proposed Rulemaking on Wholesale Competition in Regions with Organized Electric Markets, the LPPC stated that "much has gone wrong in RTO and ISO markets since their inception nearly a decade ago."

While expressing appreciation to the Commission for seeking "feedback" on wholesale market issues, the LPPC supported the American Public Power Association's call for a "broader inquiry" than that contemplated by FERC. The LPPC comments are being filed with FERC on Friday, September 14, 2007.

"LPPC has been a strong advocate of a wholesale access regime under which transmission capacity not needed to meet utility obligations is made available to the marketplace on a non-discriminatory basis," the LPPC told the Commission.

"LPPC members uniformly make such surplus transmission capacity available, some by way of participation in RTO/ISO operations, some under open access reciprocity tariffs and others under locally regulated tariffs designed to meet customers' local needs. With members that are both transmission providers and transmission customers on third party systems, LPPC offers a broad perspective on transmission policy."

In their comments, the Large Public Power Council told the Commission that their focus on enhancing RTO and ISO responsiveness to their customers and developing means to ensure cost-effective operations "is critical." The LPPC urged that a proposed rule should include: "publication of meaningful detailed strategic plans, periodic measures of customer satisfaction and performance criteria for RTO and ISO executives tied to specific objectives -- including the ability to meet budgets."

"Most important," the public power group stated, "LPPC believes that all substantial RTO and ISO capital expenditures and significant tariff changes must be supported with cost-benefit analyses. Refocusing RTOs on means to ensure net consumer benefits must be the Commission's priority."

The LPPC also reported that it was squarely behind the Commission in its promotion of demand resources within RTOs and ISOs, but was "vigorously opposed" to proposals which would permit generation prices to rise above rate cap levels in scarcity situations.

"The Commission should focus its efforts on compensation directly to demand resources, the LPPC stated, "but risks violating its statutory responsibility to establish just and reasonable rates if it releases price caps on generation pricing at precisely the time they are most needed."

The Large Public Power Council represents 24 of the nation's largest publicly owned, not-for-profit energy systems. Together, LPPC members control 90% of the public agency owned, but non-federal transmission investment in the nation. 

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