Transcript ELECTRICITY What California Must Do and What FERC Will Allow

ELECTRICITY
What California Must Do
and What FERC Will Allow
Robert J. Michaels
California State University, Fullerton
and
Tabors, Caramanis & Associates, Cambridge MA
Power Association of Northern California
May Energy Conference
Pleasanton, California
May 14, 2002
© 2002 Robert J. Michaels
For California
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Learn self-governance
Restore utility
procurement functions
Learn that Direct
Access will survive
For FERC
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Standardize our
markets
Fit the west back
together
Rethink contracting
and market power
2000-2002: how not to govern
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Cognizant of financial issues, state lets utilities wither
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Government becomes a panic buyer
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Almost everything goes wrong at once, state blames Texans
and then a remorseful one
A CPUC “responsive” to momentary interests
No one to fill stability void left by utilities
SCE and PG&E recovery plans tell the same story
The Power Authority -- On a mission from Jerry Brown
Feel-good agency consolidation legislation
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That everyone knows will not become law
Governing the markets
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ISO governance
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Did FERC order the current board of Davis appointees?
A fascination with refunds
A “hypothetical” market design
Non-fixes for creditworthiness, plus the CPUC tries budgeting
Filling out the EOB
Waiting for the jackpot, blaming the casino
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Attorney General admission that cases are long shots
FERC and the CDWR contracts
How big the ISO refunds?
Calpine settles: $6 million well spent?
What will the utilities become?
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Jan. ‘03: will DWR regime be just a bad memory?
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CPUC’s nut: find rules for utilities to use markets that
the Commission would prefer did not exist
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Initially, only short-term buys for utilities
No more PX, no ISO market reform
Simultaneously: cost-of-service and utility purchase discretion
No obvious PBR choice, retrospective imprudence awaits
Utilities’ procurement proceeding filings
The Lynch scoping memo: back to IRP?
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Adding what to utility-retained generation?
Watch the near-term level of micromanagement
Direct Access: deal with it
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If it could have been extinguished, it would have
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Rebirth: antibypass rates as analogy
Core-noncore separation
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Strategies as cost-of-service returns
Utilities and generators in agreement?
Distributed generation: also back from the dead
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A Davis-majority CPUC will keep it, with exit fees
Politically important users: education, Enron, and AZ
Disgruntled green households and marketers?
A logical component of IRP
Lesson: the competition worth having usually comes
through the back door
What about FERC?
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California’s problems are largely its own creations
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Instead of proposing solutions, we look for jackpots
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And FERC is getting tired of our posture
Our big problem: FERC’s consistent competitive vision
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Largely soluble at home, FERC still fairly permissive
What Massey, Hebert, and Wood have in common
FERC’s market mandates leave us substantial room
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The “hypothetical” ISO market design
Why ACAP? To whose advantage?
Why fight the CPUC over procurement and jurisdiction?
Nodes to you
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Here come nodal prices, like it or not
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Existing contracts and the new markets
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Grandfathered governmental rights and phantom congestion
Damage control bid caps and future FERC mitigation
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Keeping consumers from feeling them defeats their purpose
Why do utilities want them so badly? FTR inequities?
Congestion costs, “socialization,” and locational choice
ISO monitoring: a cosmetic change?
The longer term: coercing unification of the west?
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RTO west resigns itself to option-based nodal rights
WestConnect: does FERC remember it?
If (since?) nobody else wants us, will FERC take us as we
are?
Market power
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FERC’s dilemma: more and more effort to
monitor less and less of the market
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Encouraging contracts it may alter ex post?
Real-time: wagging the dog?
Whose business is demand response?
Using regulatory tools to evaluate
competition
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Why didn’t they learn from gas?