The FERC order appears to be putting a significant crimp on the  real time (R/T) desk of Enron and other marketers whenever market prices are at or near the cap.  The initial west wide cap is approx $108 an we hit that today in R/T. Briefly:

Marketers cannot sell above the cap.  So when prices reach the cap, generators are on their own to find buyers. (Generators can sell above the cap; if the generator is thermal they simply make a end-of-month cost filing.)  Marketers which provide an important function of making the market and providing transmission are simply shut out.

Even if a marketer makes a deal below the cap, the deal could be cut due to transmission problems.  Should the cost of replacement power exceed the cap (which can easily happen), the marketer may be left holding the bag because, again, the marketer cannot sell above the cap. 

When CAISO declares an emergency, the cap will change hourly.  R/T deals are usually done several hours out.   A marketer will essentially have no idea what the relevant cap will be when it is making its deal.

Cash markets can also face all these same problems.  However, the cash desks may be able to sell more than 24 hours out. 

Because these impacts are disproportionate on marketers, we should consider an appeal of this order separate from EPSA.

Alan Comnes