FYI.
----- Forwarded by Jeff Dasovich/NA/Enron on 11/20/2000 03:54 PM -----

	pwpens <pwpens@socrates.Berkeley.EDU>
	11/20/2000 01:11 PM
		 
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        N E W   P O W E R   W O R K I N G   P A P E R


                  Working Paper Series of UCEI
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         POWER Working Paper Email Notification Service (PWPENS)

A service of The University of California Energy Institute's Program on 
Workable Energy Regulation (POWER).  All POWER working papers can be 
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follow the link to "POWER Research".

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"Soft Price Caps and Underscheduling Penalties: How Would the FERC Plan 
Affect California Electricity Markets?"  (November 2000)
   PWP-079 by Steven Stoft

FERC proposes three short-run stabilization "remedies" in its Market Order 
Proposing Remedies for California Wholesale Electrics, issued November 1, 
2000. The first allows the IOUs to purchase power outside the PX. The 
second sets a penalty that will frequently reach $100/MWh on unscheduled 
power in excess of 5% of a purchaser's total load. The third is a $150 
"soft" price cap on the ISO and PX. On the infrequent occasions when the 
cap is effective, it will exacerbate the scheduling problem. Generally, 
when needed, it will be subverted by exemptions for opportunity costs. 
Because the soft cap is applied to the PX, but not to other scheduling 
coordinators, it will drive suppliers away from the PX. Allowing more 
forward contracting of net suppliers will reduce market power, but it will 
be very expensive without an effective bid cap. To be effective, a bid cap 
must allow no exceptions and must also be a regional cap to avoid causing 
reliability problems for California.

Download this paper in Adobe Acrobat 
format:  http://www.ucei.org/PDF/pwp079.pdf

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