California Municipal Utilities Association Questions New Electric Market Experiment.Energy Editors/News Editors SACRAMENTO, Calif.--(BUSINESS WIRE)--July 3, 2003 By vote of its state-appointed Board last week, the California Independent System Operator Corporation (CAISO CAISO California Independent System Operator ) has decided that California should risk reliving the electricity service disaster that plagued the state in 2000 and 2001. The CAISO was established in 1998 to provide open access to high voltage The term high voltage characterizes electrical circuits, in which the voltage used is the cause of particular safety concerns and insulation requirements. High voltage is used in electrical power distribution, in cathode ray tubes, to generate X-rays and particle beams, to transmission systems. Last week the CAISO approved a new market structure that has two basic principles: (1) reliability services should be provided by market-based bids rather than assured through a cost-based regime; and (2) scarce transmission, akin to space on crowded interstate freeways, should be made available to the highest bidder HIGHEST BIDDER, contracts. He who, at an auction, offers the greatest price for the property sold. 2. The highest bidder is entitled to have the article sold at his bid, provided there has been no unfairness on his part. . "By its vote last Thursday, the CAISO Board essentially affirmed that the market experiment commenced by the state legislature with AB 1890 in 1996 was the right thing to do. We disagree," said Jerry Jordan, Executive Director of the states association of publicly owned electric utilities, the California Municipal Utilities Association. "California is once again breaking new ground and adopting a market structure that is not being adopted by anyone else in the Western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century . The 11 western states operate one interconnected electric system. California's adopting a market structure which ignores the practices in the rest of the West is a huge gamble. This is doubly true when applied to California's electricity grid, which is short of transmission and generation in key locations. The state-appointed CAISO Board is taking a big chance with California's energy future." The CAISO action came in its approval of Market Design 2002 (MD02). MD02 is based upon the Standard Market Design advocated by the Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. (FERC FERC Federal Energy Regulatory Commission FERC FEMA Emergency Response Capability ), but which has been rebuffed by several states. It is based on a system of financial derivative transmission rights that attempts to replicate the traditional system of assigning physical transmission capability to consumers. "The FERC and CAISO proposal is not a good idea at this time, because now California can not afford another energy market experiment, especially when state energy officials are predicting shortfalls right about the time MD02 would go into actual operation." Jordan said. CMUA CMUA California Municipal Utilities Association CMUA Central Maryland Ultimate Association CMUA Certificate Management User Agent is a non-profit association that represents 28 publicly-owned electric utilities that serve about 30% of the electricity needs of California. |
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