Power Engineering - PG&E Corp. files comments in support of FERC's proposed standard electricity market design

SAN FRANCISCO, Nov. 18, 2002 -- PG&E Corp. announced Friday that it had filed comments with the Federal Energy Regulatory Commission, supporting the commission's Notice of Proposed Rulemaking (NOPR) on Standard Market Design (SMD).

In its filing, PG&E Corp. stated that the commission's efforts to amend its regulations under the Federal Power Act would remedy undue discrimination in the provision of interstate transmission services, and facilitate development of electric wholesale energy markets in all regions across the nation. Reform is necessary to ensure there is a well-functioning wholesale market that will ultimately benefit consumers.

Specifically, PG&E Corp. fully supports the following elements in the commission's proposed SMD:

-- Creating an Independent Transmission Provider (ITP) that will administer the day-ahead and real-time energy and ancillary services markets while providing transmission services under the SMD tariff.

-- Replacing the existing Open Access Transmission Tariff (OATT) with Network Access Service to better service bundled retail customers.

-- The use of Locational Marginal Pricing to manage congestion on transmission systems.

-- An independent market monitoring function that reports to the commission on all facets of the market, including the behavior of the ITP.

PG&E Corp. also made several recommendations to the commission for consideration. The company asked the commission to consider the following:

-- A strengthening of the current reciprocity provisions under which non-jurisdictional owners or operators of interstate transmission facilities must offer comparable services in return for taking service under a public utility's OATT.

-- Expressly clarifying that the costs resulting from the new market rules should be recoverable by transmission owners that honor transmission contracts that pre-date Order No. 888, thereby removing disincentives for contract conversions to the new SMD tariff.

-- Recognizing and accepting differences between the Western and Eastern Interconnections for a transition period, including the continuation of the price mitigation currently in place in the Western markets.

"PG&E Corp. strongly supports the commission in its efforts to implement an improved and standardized market design for the electricity industry."

"PG&E Corp. agrees that reform is absolutely essential to ensure that there is a well-functioning wholesale market that will benefit consumers, and supports the effort to implement structural changes to market design necessary to create large electric power markets in which power is bought and sold pursuant to standardized open access tariffs and practices."

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