Arizona regulators seek FERC 'assurances' on Cal-ISO market plan

Arizona regulators seek FERC 'assurances' on Cal-ISO market plan

Washington (Platts)--20Sep2006

Arizona regulators are asking the US Federal Energy Regulatory Commission
to provide "specific assurances" that Arizona consumers will not be harmed by
the California Independent System Operator's proposed changes to its wholesale
power market, saying California's last attempt at market design was
"disastrous" for the West.

In a September 18 letter made available on FERC's Website Wednesday, the
four-member Arizona Corporation Commission told agency Chairman Joseph
Kelliher it is concerned about elements of the ISO's proposed market redesign
and technology update and the "potentially adverse impact it will have on
Arizona consumers."

"California's previous attempt at market design was disastrous for
California and the rest of the West," the ACC said. "It sacrificed reliability
for the promise of cheaper energy that never materialized. It also created an
environment which allowed for widespread market manipulation. The unintended
results adversely impacted Arizona consumers as well," the commission added.

The ACC voiced concerns similar to those raised by US House and Senate
members from western states, who in separate letters Monday urged FERC to
closely review elements of the MRTU, including locational marginal pricing for
supply and load, centralized bid-based dispatch of generation and financial
transmission rights.

They lawmakers warned that MRTU may lead to wholesale power market rules
that could conflict with existing policies in the Western interconnection and
could raiseretail electricity prices.

An ISO official late Tuesday cautioned against further delays in
approving the MRTU, saying the grid operator has spent the past five years
"collecting stakeholder input from every sector of the electricity industry
throughout the West," Charles King, ISO vice president market development and
program said.

The market redesign and technology upgrade "is based on tried and true
market designs that are working and bringing cost savings to consumers in
other parts of the country," King said.

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