WPCNR THE POWER NEWS. By John F. Bailey September 17, 2008 Exclusive Interview with Con Edison: Consolidated Edison told WPCNR Tuesday afternoon they cannot calculate the amount of overcharges Westchester and White Plains electricity customers paid as a result of the Lake Erie electricity routing contracts.

Consolidated Edison, the utility which put  the pressure on the New York Independent Systems Operator to investigate and discover the Lake Erie Bypass Caper by which millions,(perhaps billions) of dollars in passalong costs were laid onto the bills of electric consumers resident and corporate in the first seven months of this year  told WPCNR Tuesday it could not calculate the approximate dollars added to the bills of Westchester consumers

Meanwhile in the eight weeks since NYISO stopped the procedure, Con Edison reports significant drops in overcharges of Westchester electricity users.

The New York Independent Systems Operator stopped the practice July 22, based on an investigation encouraged by Con Edison last spring, which had been alerted to the Lake Erie Bypass “maneuver” by DC Energy, a energy broker based in Vienna, Virginia.

67% Increase since November, 2007

 The bill of the typical White Plains consumer increased 67% from November 2007 through August 2008. Previously, these costs were explained by Con Edison to be related to the increase in fuel costs of oil, natural gas and coal used to manufacture the electricity. However based on letters from the New York Municipal Power Agency  to NYISO,  NYISO budget overruns of 90% charged 36 small municipalities have been made up of NYISO additional charges based on Uplift costs (during congested times) and budget shortfalls caused by discounts granted an undisclosed number of  energy market traders.

Con Edison is not ruling out a legal suit against the companies whose actions produced these cost overruns which were passed on to Con Edison consumers.

Schumer Investigates as we Write

As this article is published, New York Senator Charles Schumer is meeting with Federal Energy Regulatory Commissioner Joseph Kelliher in Washington to assure an open investigation, and hopefully more information on the scope of what the Senator has called “a sham routing scheme” by what he called “rogue traders.”

FERC is currently conducting a non-public investigation into the matter, and has declined to name the traders who used the Lake Erie finesse,or dollar amounts of the overcharges. The Lake Erie counter-clockwise circulation, designed to ease congestion on the grid,  gave a $20 windfall per Megawatt hour by filing contracts circulating electricity counterclockwise around Lake Erie, instead of clockwise down its eastern shore and directly into the New York Power Grid. However the electricity action did go clockwise resulting in uplift charges to users of the power, including Con Edison and members of the New York Municipal Power Authority.

WPCNR interviewed Bob McGee with  Consolidated Edison  Media Relations, by e-mail on what Con Edison knows:

WPCNR: Does Con Edison and host of other power suppliers anticipate class action legal suit against the companies that perpetuated this practice -- in light of the NYISO findings? 

Bob McGee, Con Edison: Actions will depend upon the findings and FERC actions.

 WPCNR:  How many  Market participants put electricity on the grid ?

McGee:  In the eastern quarter of the country, there are primarily 4 ISO/RTOs – ISO-NE, NYISO, MISO and Ontario.  There are several hundred market participants in each.  Should check with the ISOs/RTOs for information about which actually transact and meet transactional requirements.   The NYISO list over 300 market participants at their website  http://www.nyiso.com/public/webdocs/services/customer_relations/customers/nyiso_approved_customers.pdf

WPCNR: Does Con Edison have an estimate of how much these charges (the $20 MGW difference--according to the NYISO and FERC papers -- as well as the UPLIFT Charges and the additonal buys of power Con Ed had to make during crunch periods) --were passed on to Con Ed customers? The last six months? 

McGEE: No.  Only the NYISO has the information to calculate the total impact to consumers.  We are pressing them to do the analysis.

WPCNR: Any statewide  $$$ estimate of the counter-clockwise Lake Erie windfalls, the additional buys, the uplift charges? 

McGEE: No.  Again, only NYISO can calculate this.  It is not easy to do, as uplift charges can vary based on a variety of conditions, including the market price of fuels, demand levels, and other factors.  Only the NYISO has the information to separate the charges, and even it cannot do so easily.

WPNCR: . Is Con Edison calling for a congressional investigation of this practice and the NYISO market? 

McGee:  Con Edison is working with the other NYTOs, as all were impacted.  The NYTOs are asking for FERC to investigate and the NYISO to provide additional information.

(WPCNR notes that FERC is already conducting a so far secret investigation of the matter.)

WPCNR: What caused counter-clockwise circulation to be installed in the Lake Erie "circuit"? 

McGee:  Loop flows around Lake Erie are normal and expected in an integrated electric system. 

WPCNR: Has Con Edison seen any relief yet stemming from NYISO's stopping of the procedure July 21? 

McGee: Yes.  It appears that uplift charges have been lowered, and that day ahead and real time transactional flows are in the same direction around Lake Erie.

WPCNR: Does Con Edison  agree with the New York Law Project that feel NYISO's Tariffs on congestion "are unjust and unreasonable insofar as they do not prohibit gaming, profits from unreasonable rates and correction for clearing prices artificially high due to gaming" ? 

McGee: FERC has general anti-manipulation rules.  These rules may be sufficient.  We will continue to work with appropriate parties to determine if further NYISO tariff changes are warranted.