FERC OKs Hearing To Probe New England Power Market Practices
August 25 2009 - 3:15PM
Dow Jones News
The U.S. power regulator has approved an investigation into the
market practices of New England electricity companies, according to
federal documents published Tuesday.
The case follows allegations by Connecticut Attorney General
Richard Blumenthal earlier this year that several power companies
manipulated the market and the firms subsequently owed ratepayers
more than $50 million.
"This investigative hearing will deliver a stunning jolt of
transparency and truth to the public about gross manipulation of
our power markets," Blumenthal said in a statement.
Although the Federal Energy Regulatory Commission said the
attorney general had "provided little evidence in support of these
allegations" of market manipulation, the federal watchdog said it
would grant an investigative hearing before a FERC judge to probe
the practices of generators operating within Independent System
Operator New England and the power grid manager itself.
"Typically, the commission looks with disfavor on poorly
supported complaints," FERC said in its order. "We are mindful,
however, of the unique history of the allegations regarding the
capacity importers' bidding strategy raised in the complaint,
including the inconsistency in the ISO-NE's position regarding
these allegations."
Firms specifically mentioned in the FERC brief include
Brookfield Energy Marketing; H.Q. Energy Services, a unit of
Hydro-Quebec; and Constellation Energy Commodities Group, a unit of
Constellation Energy Group Inc. (CEG).
Companies such as NRG Energy Inc. (NRG), Entergy Corp. (ETR),
Dominion Resources Inc. (D) and Public Service Enterprise Group
Inc. (PEG) also operate within the New England ISO.
According to Blumenthal's office, a number of generators were
paid to provide power during peak demand periods, but on scores of
occasions between 2006 and 2009, failed to supply electricity as
requested.
In a FERC document, one of the companies responding to the
attorney general's complaints, Brookfield Energy Marketing, said
the complaints "are based on a fundamental misunderstanding of how
the markets operate."
"They confuse the bidding and scheduling of underlying capacity
resources" in the system, Brookfield stated in the FERC
document.
Although the Connecticut attorney general had applied for FERC
to review the market rules governing the New England ISO, the
commission said a similar request was already pending before the
agency and would be dealt with under that docket.
-By Ian Talley, Dow Jones Newswires; 202-862-9285;
ian.talley@dowjones.com