New Power files PJM complaint with federal regulators

Rules ensuring reliable electricity service in Pennsylvania, New Jersey, and Maryland discriminate against new market entrants in the region, electricity marketer New Power Co. said in a complaint filed with federal regulators.


By the OGJ Online Staff

HOUSTON, July 20 -- Rules ensuring reliable electricity service in Pennsylvania, New Jersey, and Maryland discriminate against new market entrants in the region, electricity marketer New Power Co. said in a complaint filed with federal regulators.

The NewPower Holdings Inc. subsidiary filed the petition with the Federal Energy Regulatory Commission, regarding installed capacity (ICAP) charges in PJM markets. The charges are assessed and intended to be used for building new generation.

New Power's FERC complaint contended the rules for ensuring reliable electric service in the PJM control area have resulted in prices for capacity that are "unjust and unreasonable, and unduly discriminatory and preferential" for new marketers.

Under current PJM market requirements, companies that own generation in the region, or have bilateral deals with generators, do not have to pay an ICAP charge. But companies such as NewPower, Purchase, NY, that do not own generation are forced to pay "unreasonably" high capacity rates, it said.

In its complaint, NewPower asked FERC to revise the calculation of the deficiency penalty. The company said the charge allows capacity owners to drive up the price of the ICAP. In addition, NewPower asked FERC to impose longer term requirements for ensuring reliability that satisfy statutory requirements. CEO Eugene Lockhart said the installed capacity charges are remnants of the old regulatory system that were intended to help ensure reliability and don't reflect conditions in a competitive market.

He said current PJM rates for capacity are not cost based, and there is no assurance the revenues derived will be used to build new capacity. Lockhart recommended ICAP be replaced with a system that determines how much reserve capacity is necessary, establishes a reasonable charge that is cost based, and ensures evenues derived from that charge are applied towards creating capacity.

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