ERCOT 2019 Summer Quarter Outlook

LCG, May 29, 2019-- LCG released a new summer (June – September 2019) report that looks at how the ERCOT grid copes with strained network conditions. Resource adequacy analysis for the region is especially important during extreme summer loading conditions. This summer the network is under particular scrutiny as the reserves have tightened because of recent retirements.

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South Field Energy Breaks Ground for 1,182-MW Power Plant

LCG, May 16, 2019--South Field Energy LLC announced yesterday its groundbreaking for an 1,182-MW, combined-cycle electric generating facility in Columbiana County, Ohio. The natural gas-fired facility is scheduled to commence operations in mid-2021 and represents a $1.3 billion investment.

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Industry News

FERC Tightens Procedures for Market-Based Rates

LCG, May 26, 2005--The Federal Energy Regulatory Commission yesterday announced new procedures to motivate over 200 electric companies to comply with its rules - on time - or risk losing their privilege of charging market-based rates.

Wholesale electric power sales are allowed by the Commission at market-based rates if the seller and its affiliates do not have market power in generation and transmission and cannot erect other barriers to entry by other suppliers. The Commission may grant such authority under the Federal Power Act (FPA) only to applicants who demonstrably lack market power. Utilities must file new market analyses at least every three years to preserve the right to sell power at market-based rates.

Over the past two years, the Commission spent considerable time evaluating and revising its methods for analyzing market power. As a result, there are two new screening tests to analyze a market participant's total amount of uncommitted capacity available for wholesale sales in a market. The first screen is the pivotal supplier analysis, which examines a participant's generation market power during the peak hour of the year. The hours leading up to that point are the most likely time that a participant will be a pivotal supplier.

The second screen is the wholesale market share analysis that examines the market share of a participant in all seasons. Both screens use a control area perspective and consider native load obligations, operating reserve requirements and other commitments of the participant. If the participant passes both indicative screens, it is presumed that generation market power does not exist. If the participant fails either screen, it is presumed that the generation market power exists.

The use of the new market screening tests last year led to seven utilities - Duke Power, Southern Company, Entergy, Alliant Energy, American Electric Power, Kansas City Light and Power, and Public Service of New Mexico - failing the test. In addition, a number of companies were either delinquent in filing or were found not to have submitted the necessary information in their filing.

The Commission has now announced that the companies that are delinquent in filing their market analysis will have their market-based rate authority revoked if they do not file those analyses within 60 days. Alternatively, if a company does not wish to retain its market-based rate authority, it may file a notice of cancellation with the Commission. Also in yesterday's order, the Commission instituted a FPA Section 206 proceeding (Docket No. EL05-111) to determine whether the rates charged by the more than 200 listed companies remain just and reasonable.

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