[Federal Register Volume 69, Number 23 (Wednesday, February 4, 2004)]
[Notices]
[Pages 5337-5339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-170]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. PL04-2-000, EL03-236-000]


Compensation for Generating Units Subject to Local Market Power 
Mitigation in Bid-Based Markets PJM Interconnection, L.L.C.; Notice of 
Technical Conferences

January 28, 2004.
    As previously announced in a notice issued January 12, 2004, 
conferences will be held on February 4 and 5, 2004, to discuss issues 
related to local market power mitigation and the methods of 
compensating must-run generators in organized markets.\1\ The 
conferences will be held on February 4 and 5 beginning at 9 a.m. The 
conferences will take place at the offices of the Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426. The 
Commissioners may attend all or part of the conferences.
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    \1\ In an Order issued December 19, 2003, the Commission 
directed staff to convene a two-part technical conference on 
compensation of must run generating units. Compensation for 
Generating Units Subject to Local Market Power Mitigation in Bid-
Based Markets, 105 FERC ] 61,312 (2003).
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    The conference to be held on February 4, 2004, will focus on broad 
general principles for pricing of must-run generating units and the 
general framework the Commission should use to address this issue. The 
conference to be held on February 5, 2004, will focus on PJM's specific 
proposal regarding compensation for must-run generating units in Docket 
No. EL03-236 and how it fits within the broader framework.
    The February 4, 2004 technical conference will include perspectives 
from key industry experts and market participants on local market power 
mitigation and Reliability Must-Run (RMR) issues. This conference will 
be structured as three panels with brief presentations and question and 
answer periods.
    The subject areas to be considered at the conferences are given 
below, along

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with the agenda and confirmed speakers for the February 4, 2004 
conference. A detailed list of questions that may be relevant for any 
panel or day of the conferences is included as an attachment to this 
Notice.
    Issues to be discussed at each panel:
 Description and extent of local market power 
concerns
 Interaction between local market power concerns and 
RMR issues
 How important is additional infrastructure in 
mitigating local market power?
 What are the appropriate ways to mitigate local 
market power and also meet reliability needs?
     Spot market price mitigation
     Market design changes
     RMR contracts
     Infrastructure solutions
 What mix of short-run and long-run solutions should 
be adopted?
 Prospects for successful implementation of solutions
 Is there a single policy that is applicable to all 
markets?
    Region-specific issues (to be addressed during Afternoon Sessions 
#1 and #2 on February 4th and on February 5th):

 Effectiveness and success of current local market 
power mitigation approach
 Current concerns or issues (e.g., price impact, 
inadequate infrastructure, insufficient generator revenues) about local 
market power mitigation and possible solutions
 Proposed solutions being considered
 Infrastructure needs within region

Agenda for the February 4, 2004 Conference

Morning Session 1 (9--9:20)

    Presentation on capital commitment/investment decision-making Frank 
Napolitano, Lehman Brothers Inc.

Morning Session 2 (9:30--12:15)

Frank Napolitano, Lehman Brothers Inc.
Michael Schnitzer, The NorthBridge Group, representing Exelon Corp.
Bill Hogan, Harvard University
Roy Shanker, Consultant to generators and financial market participants
David Patton, Potomac Economics, MISO Market Monitor
Joe Bowring, PJM Market Monitor
Roy Thilly, Wisconsin Public Power Inc.
Abram Klein, Edison Mission Marketing & Trading

Afternoon Session 1 (1:30--3)

Mark Reeder, New York Public Service Commission
Steve Wemple, Con Edison Energy
Bob Ethier, ISO-NE Market Monitor
Steve Corneli, NRG Power Marketing Inc
Gunnar Jurgensen, Northeast Utilities/Select Energy
John Anderson, John Hancock

Afternoon Session 2 (3:15--4:45)

Keith Casey, CAISO
Danielle Jassaud, Public Utility Commission of Texas
John Meyer, Reliant Resources, Inc.
Judi Mosley, Pacific Gas & Electric Company

    The February 5, 2004 PJM-specific technical conference will focus 
on the alternative local market power mitigation and RMR proposals and 
comments that have been filed in the Docket No. EL03-236-000 
proceeding. The structure of this conference will be more informal than 
the general conference. PJM and the participants sponsoring alternative 
policies will present and discuss their proposals. Opportunity for 
additional comment will be provided. Issues addressed at the February 4 
conference may be discussed at the PJM-specific conference.
    Transcripts of the conference will be immediately available from 
Ace Reporting Company (202-347-3700 or 1-800-336-6646), for a fee. They 
will be available for the public on the Commission's e-Library two 
weeks after the conference. The Capitol Connection offers the 
opportunity for remote listening and viewing of the conference. It is 
available for a fee, live over the Internet, via C-Band Satellite. 
Persons interested in receiving the broadcast, or who need information 
on making arrangements should contact David Reininger or Julia Morelli 
at the Capitol Connection (703-993-3100) as soon as possible or visit 
the Capitol Connection Web site at http://www.capitolconnection.gmu.edu 
and click on ``FERC''.
    Questions about the February 4 conference should be directed to: 
Michael Coleman, Office of Markets, Tariffs, and Rates, 888 First 
Street, NE., Washington, DC 20426, 202-502-8236, 
[email protected].
    Questions about the February 5 PJM conference should be directed 
to:
    David Kathan, Office of Markets, Tariffs, and Rates, 888 First 
Street, NE., Washington, DC 20426, 202-502-6404, [email protected].

Magalie R. Salas,
Secretary.

Detailed Questions; Technical Conferences; February 4 and 5, 2004

    (1) What is local market power and why should it be mitigated? When 
should a supply offer be mitigated?
    (2) What are load pockets and what infrastructure is needed to 
resolve them?
    (3) What are the goals of local market power mitigation, and how do 
they fit with the goals of attracting and retaining needed 
infrastructure investment?
    (4) When does scarcity occur within a local area or load pocket?
    a. What distinguishes between short and long-term scarcity?
    b. How does one distinguish between scarcity pricing and monopoly 
rents?
    (5) How is infrastructure developed in load pockets?
    (6) What are the options for local market power mitigation?
    (a) Bid Offer caps.
    a. Unit-specific.
    b. Seller-specific.
    c. Region-specific.
    (b) RMR contracts.
    (c) Other.
    (7) Which roles are appropriate and preferred for the following 
entities, and who should be responsible for addressing local market 
power and infrastructure development?
    a. Should RTOs and ISOs:
    i. Administer markets that appropriately value resources over time 
and location?
    ii. Administer local market power mitigation measures?
    1. What degree of discretion is appropriate?
    iii. Develop and enforce capacity obligations?
    iv. Negotiate contracts (e.g., RMR contracts) and auctions for 
resources?
    b. Should LSEs.
    i. Have the responsibility to procure sufficient resources 
including in load pockets?
    ii. Pay for resources that RTOs and ISOs procure on their behalf?
    c. State commissions.
    d. FERC.
    (8) What approaches produce price signals and market structures 
that attract investment in load pockets?
    a. Relax market power mitigation.
    i. Safe harbor bid adders (e.g., PUSH).
    b. Local installed capacity obligations (LICAP).
    i. Enforcement through capacity deficiency rate.
    ii. Enforcement through spot price penalty.
    iii. Duration of obligation.
    c. Pricing of the value of operating reserves (scarcity pricing).
    d. State-approved curtailment plans.
    e. Infrastructure related Credit Issues.
    (9) For transparent market prices to attract and retain needed 
investment where and when needed, should these prices reflect:
    a. Short run marginal cost.

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    b. ``Going forward'' cost.
    c. Long run marginal cost.
    d. Sunk investment cost.
    e. Other.
    (10) Are long-term commitments necessary for investment in 
infrastructure (generation, transmission or demand response) to resolve 
or remove load pockets?
    (11) Under what conditions is an RTO-administered auction to 
acquire capacity in a local area warranted?
    a. Who can call for an auction?
    b. What resources will be able to bid into auction? Transmission? 
Existing generation units? Demand Response?
    (12) What are appropriate combinations of the market power 
mitigation measures and the local resource adequacy measures?

 [FR Doc. E4-170 Filed 2-3-04; 8:45 am]
BILLING CODE 6717-01-P