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(No) Surprise: FERC Conference on Winter's Extreme Wholesale Pricing Doesn't Include Any Retail-Only Suppliers

March 20, 2014

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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

In keeping with its long-standing disdain regarding the needs of retail electric suppliers and the foundation necessary for a properly functioning retail electric market, FERC has not seen fit to include any companies which are exclusively focused on supplying competitive retail energy on the discussion panels at its upcoming technical session on winter 2013-14 RTO operations and market performance.

The technical conference will be held April 1, and given that one of the groups most negatively impacted by market performance (or non-performance) during the polar vortex -- independent retail suppliers -- are not on any panel, that date seems appropriate.

Two large integrated energy companies whose strategy mainly revolves around owning (and marketing the output from) formerly incumbent generation assets but who also have retail books are among the panelists announced by FERC, represented by Abraham Silverman, counsel for NRG Energy, and Donald Schneider, President of FirstEnergy Solutions.

However, given these companies' respective generation ownership positions in the FERC-jurisdictional RTOs, they cannot be said to represent the retail energy market -- at best, they represent the competitive supply community, generically, but not specifically retail.

Now, if FERC intends for its hearing to serve as a forum to cross examine capacity owners regarding their failures during the polar vortex in making their capacity available to the market at reasonable prices consistent with their capacity supply obligation, then we'd agree, there would be no need to clutter the panel with an independent retail supplier.

However, given the history of FERC, as well as panel topics and individual panelists, we are doubtful that this is the tenor that the conference will take. Rather, we believe it will simply be a free exchange of ideas and perspectives on the polar vortex events.

Why, then, was an independent competitive retail supplier, one with load obligations but no generating capacity, not included on one of the three panels -- given that independent retail suppliers were one of the stakeholders most negatively affected by the extreme wholesale pricing witnessed during the polar vortex.

There are some load representatives (end-use customers as well as state regulators and consumer advocates) on the panels, but these groups also cannot bring the necessary retail market perspective to the panel, particularly with respect to the strains placed on even those retail suppliers which conservatively hedged, due to various compensation provided to capacity through ancillaries and uplift.

And the conference is not simply discussing plant and system operational issues which would not be informed by having an independent retail supplier participate. One of the panels is specifically devoted to, "Shar[ing] observations about changes that could be made to improve the performance of Commission-regulated markets during future extreme weather events. Panelists are encouraged to highlight any short-term operational, fuel procurement, or other changes that may be necessary before next winter. Additionally, they should share their views on any long-term improvements needed in the future more generally."

We'd hope, in answering these questions, FERC would want to hear from load serving entities who do not own generation and who do not have captive customers from which to collect the extreme prices, but that voice will be lacking at the technical conference.

The panelists for the technical conference are below (affiliations as listed by FERC, sic)

Panelists:
• Brad Bouillon, California Independent System Operator
• Peter Brandien, ISO-New England
• Richard Doying, Midcontinent Independent System Operator
• Wes Yeomans, New York Independent System Operator
• Michael Kormos, PJM Interconnection
• Bruce Rew, Southwest Power Pool
• John Sturm, ACES Power Marketing
• Donald Sipe, American Forest & Paper
• Mark Stultz, BP
• Donald Schneider, First Energy
• David Devine, Kinder Morgan
• Paula Carmody, Maryland Office of the People's Counsel
• James Stanzione, National Grid
• Abraham Silverman, NRG
• Melvin Christopher, Pacific Gas & Electric
• James Tramuto, Southwestern Energy
• James Volz, Chair, Vermont Public Service Board
• Audrey Zibelman, Chair, New York State Public Service Commission
• Lawrence Brenner, Commissioner, Maryland Public Service Commission
• Eric Callisto, Commissioner, Wisconsin Public Service Commission
• Donna Nelson, Chair, Public Utility Commission of Texas
• California Public Utilities Commission (invited)

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