How about another late edit? This is really interesting stuff...NY ISO - Designed for Maximum Market Power???
Hi Frank,
This stuff just blows my mind. How could the power generators get away with this horses#it?
nytimes.com
For example, plant owners might offer their power at prices ranging from 2 cents per kilowatt-hour upward, with most offers bunched between 5 and 10 cents. But a few offers might be as high as $1 per kilowatt- hour. On days when demand is close to overall supply, the I.S.O. has to buy that last bit of power, and under its rules every producer gets $1. Something like that happened a few times last summer, and it could happen more often as demand rises.
The idea behind the bidding system is that when supplies of power are adequate, generators will make bids close to their operating costs, because if they bid too high, their power plants may go untapped. In practice, when supplies are tight, generators can be certain almost any price will be accepted.
The system also encourages generators to bend bidding rules to move prices higher, said Richard Schuler, a member of New York's I.S.O. board. Generators that own several plants may even have a perverse incentive to take some of their supply out of service on hot days, since that can push up prices for the plants they do run. Though generators deny that such practices occur, the New York I.S.O. says it discovered 10 instances last year in which power suppliers manipulated the market. The most serious incident occurred June 26, when a generator withheld power from the market, making wholesale prices soar and costing consumers $100 million.
Given the I.S.O.'s limited enforcement powers — federal regulations prevent it from imposing fines or even publicly naming the generators that break its rules — analysts say manipulation will increase if supplies tighten.
"You've kind of given the generators a get- out-of-jail-free card," said Dr. Frank A. Wolak, chairman of the market surveillance committee of California's I.S.O. "If they continue with the pricing in New York, where they pass through the wholesale pricing, and you guys have a hot summer, wow — I wouldn't want to be at the New York I.S.O."
In theory, Con Ed could protect its customers from short-term price spikes by signing long-term, fixed-price contracts with generating companies, and some consumer advocates fault the utility for not locking up more supply. But Con Ed officials say the terms that generators are offering would lead to even higher rates.
Companies that buy and sell power are already expecting higher prices this summer. Natsource, a local trading company, is offering wholesale power in New York City at 13 cents per kilowatt-hour for July and August. Including Con Ed's transmission charges and other wholesale costs, that translates into a consumer rate of 23 or 24 cents per kilowatt-hour, or a monthly bill of about $120 for the average customer.
Get Ready, Ben Dover :) |
