Duke Forfeits Market-Pricing Authority for Wholesales in Home Control Area; FERC Initiates Further Investigation into Entergy's Ability to Exercise Market Power

In its first order revoking a utility's market-pricing under authority of its interim market power screen tests that became effective in April 2004, FERC found that Duke Power ("Duke") has the ability to unfairly influence the price of wholesale power in its home control area. After failing the initial indicative market-power screens, Duke filed a more thorough analysis of its market power in its home control area using FERC's Delivered Price Test ("DPT"). Duke's second filing claimed that it satisfied FERC's standards regarding pivotal suppliers using both the DPT economic capacity measure...

Thumbs up for Three LNG Terminals, Down for Another

In late June FERC approved the construction and operation of three new liquefied natural gas ("LNG") terminals that jointly will be able to import up to four billion cubic feet per day of LNG into the United States. Weaver's Cove Energy and Mill River Pipeline, affiliates of Hess LNG, proposed one of the projects, which will be located in Fall River, Massachusetts. The other project, proposed by Golden Pass LNG Terminal and Golden Pass Pipeline, subsidiaries of ExxonMobil, will be constructed in Texas and Louisiana. These projects, together with the Vista del Sol LNG Terminal LP that FERC...

Senate Votes in Favor of Energy Bill, Tumultuous Conference Awaits

In what some have described as the easy first step down what will surely be a long and difficult road, on June 28, 2005, the Senate voted 85-12 to pass its version of the energy bill (H.R. 6), which has an estimated price tag of up to $35 billion. The Senate's version would benefit the power industry in several key ways, but it also addresses energy conservation and development of clean energy alternatives. Despite drawing praise from President Bush for its bipartisan support, the bill still faces an iffy future in a Senate-House conference that is sure to be contentious. There are...

FERC Provides More Guidance on Status Changes that Power Sellers with Market-Pricing Authority Must Report

FERC relented in June to market participants' demands and provided additional examples of those types of changes in status that, if not reported to the agency, could cause a power seller to forfeit its market-pricing authority. The resulting message was a classic example of a regulator seeking to point those it regulates in a salutary direction, while at the same time striving mightily not to fence itself in through overly descriptive examples of applicable conduct. FERC provided several illustrations of the types of contracts and events that would and would not trigger the reporting...

FERC Takes a Second Look at the Independent Ownership and Operation of Power Transmission Systems

Hoping to encourage the formation of independent transmission companies ("ITC"), FERC adopted in June a new Policy Statement on the ownership of ITCs. The Policy Statement addresses the types of ownership structures that are eligible for ITC status. The Policy Statement clarifies that FERC will consider ITC proposals from applicants in which market participants have passive minority equity interests, based on FERC's evaluation of certain criteria. Under the Policy Statement, FERC will consider proposals involving passive participation of up to 49 percent ownership by a single market...

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