|
Server : Apache/2.4.62 System : FreeBSD fbsdweb2.web.rcn.net 14.1-RELEASE FreeBSD 14.1-RELEASE releng/14.1-n267679-10e31f0946d8 GENERIC amd64 User : www ( 80) PHP Version : 8.3.8 Disable Function : NONE Directory : /domains/enrgy/statelin/ |
Upload File : |
<html>
<head>
<title>March 2004: Texas PUC Adopts Rule Against Market Manipulation</title>
</head>
<body style="font-family: Arial" vlink="#808080">
<div align="center"><center>
<table border="0" cellpadding="8" cellspacing="0" width="98%" bgcolor="#000000">
<tr>
<td width="100%" valign="middle"><a name="top"></a>
<img src="../images/pmamagsm.gif" alt="PMA Online Magazine" border="0" align="right" width="229" height="100"></td>
</tr>
</table>
</center></div><div align="center"><center>
<table border="0" cellpadding="8" width="98%">
<tr>
<td width="15%" valign="top" align="center">
<!--webbot bot="Include" U-Include="sl_sidebar.htm" TAG="BODY" startspan -->
<table border="2" cellpadding="8" width="15%" id="table1" bordercolor="#FFFF00" bgcolor="#C0C0C0">
<tr>
<td width="100%" valign="top" align="center"><map name="FPMap0_I1">
<area href="http://www.powermarketers.com/adrates.html" shape="rect" coords="14, 297, 97, 322">
<area href="http://www.powermarketers.com/pmajobs.htm" shape="rect" coords="11, 230, 95, 257">
<area href="http://www.powermarketers.com/main.htm" target="_parent" shape="rect" coords="12, 163, 96, 189">
<area href="http://www.powermarketers.com/power2.htm" target="_blank" shape="rect" coords="12, 95, 96, 121">
<area href="../pmamag.htm" shape="rect" coords="11, 29, 96, 54"></map><img rectangle="(12,163) (96,189) http://www.powermarketers.com/main.htm##_parent" rectangle="(12,95) (96,121) http://www.powermarketers.com/power2.htm##_blank" rectangle="(11,29) (96,54) ../pmamag.htm" src="../images/magmenu.gif" alt="PMA OnLine Magazine Menu" border="0" align="center" usemap="#FPMap0_I1" width="110" height="350"><p><a href="../searchpma.htm"><img src="../images/archives.gif" alt="Archives Search" border="0" align="center" WIDTH="70" HEIGHT="40"></a></p>
<p align="left"><strong><small><font face="Arial">About The Author:</font></small></strong></p>
<p align="left"><font face="Arial" style="font-size: 9pt">Robert A. Olson is a partner in the law firm of
Brown, Olson & Gould, P.C. which maintains a nationwide practice in energy law,
public utility law and related commercial transactions.</font></p>
<p><small><font face="Arial"><font style="font-size: 9pt">He can be reached at:</font><br>
<br>
<b><font color="#0000FF">Brown, Olson & Gould, PC</font></b><br>
2 Delta Drive<br>
Suite 301<br>
Concord, NH 03301<br>
<a href="mailto:[email protected]">[email protected]</a><br>
(603) 225-9716<br>
<a href="mailto:[email protected]"></a></font></small></p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p> </p>
<p><a href="#top"><img src="../images/b-t-top.gif" alt="Back To Top" border="0" width="71" height="35"></a></td>
</tr>
</table>
<!--webbot bot="Include" i-checksum="45188" endspan --></td>
<td width="75%" valign="top">
<img src="../images/statelin.gif" alt="STATELINE by Robert Olson" border="0" width="375" height="75">
</center><p align="left"><b><u><br>
</u></b></p>
<center>
<p ALIGN="left"><u><b>March 2004<br>
</b></u><font size="6"><b>Texas PUC Adopts Rule Against Market Manipulation</b></font><strong><br>
by Robert Olson -- Brown, Olson and Wilson, P.C.<br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine Magazine:
200</em>4/</font><font size="2">04/24)</font></p>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<center>
<p align="justify">The Texas Public Utility Commission (the “Commission”)
enacted a new rule to prevent manipulation of wholesale electricity markets
by market participants. Texas P.U.C. Subst. R. 25.503 (the “Rule”). The
Commission, in commenting on the need for the rule, explained that “[r]ecent
experience in Texas and other states has shown that during the transition to
competition, the developing wholesale and retail markets can be subject to
practices by market participants that serve the private interest of the
participants at the expense of the public interest. These practices have
resulted in unjustified increased prices to customers and market
participants, reduced reliability of the electric power grid, and ultimately
threaten the implementation of a successful competitive electric market.”
Rulemaking to Address Wholesale Market Rules, Project No. 26201, Order
Adopting New �25.503 (January 29, 2004) (the “Order”). To prevent these
problems, the Rule establishes certain affirmative duties and prohibited
practices of “market participants,” defined to include power marketers,
utilities, power generation companies, qualifying facilities and other
persons “participating in the ERCOT-administered wholesale market.” <br>
<br>
Among other things, the Rule gives market participants the affirmative duty
to:</p>
<ul>
<li>
<p align="justify">“[E]xercise due diligence to prevent the release of
materially inaccurate or misleading information”<br>
</p></li>
<li>
<p align="justify">Make “bids of energy and ancillary services [only] from
resources that are available and capable of performing”<br>
</p></li>
<li>
<p align="justify">Generally comply with ERCOT procedures; and<br>
</p></li>
<li>
<p align="justify">Notify ERCOT immediately upon learning of an inability
to comply with such procedures.</p></li>
</ul>
<p align="justify">The Rule broadly prohibits “[a]ny act or practice of a
market participant that materially and adversely affects the reliability of
the regional electric network or the proper accounting for the production
and delivery of electricity among market participants.” The Rule also sets
forth a non-exclusive list of such “prohibited activities.” Among other
things, a market participant must not:</p>
<ul>
<li>
<p align="justify">“[C]onduct trades that result in a misrepresentation of
the financial condition of the organization”;<br>
</p></li>
<li>
<p align="justify">“[C]ollude with other market participants to manipulate
the price or supply of power”;<br>
</p></li>
<li>
<p align="justify">“[S]chedule, operate or dispatch its generating units
in a way that creates artificial congestion;”<br>
</p></li>
<li>
<p align="justify">“[E]xecute pre-arranged offsetting trades with the same
product among the same parties, or through third party arrangements, which
involve no economic risk and no material change in beneficial ownership”;
or<br>
</p></li>
<li>
<p align="justify">“[E]ngage in market power abuse,” which specifically
includes the “[w]ithholding of production . . . by a market participant
who has market power.”<br>
</p></li>
</ul>
<p align="justify">In its Order, the Commission acknowledges that “market
power” and “market power abuse” need to be further defined and states that
it will do so in a new rulemaking on market power.<br>
<br>
The Rule recognizes a defense for a market participant that “served a
legitimate business purpose consistent with prices set by competitive market
forces; and that it did not know, and could not reasonably anticipate, that
its actions would inflate prices, adversely affect the reliability of the
regional electric network, or adversely affect the proper accounting for the
production and delivery of electricity; or, if applicable, that it exercised
due diligence to prevent the excluded act or practice.” The market
participant has the burden to prove that the defense applies.<br>
<br>
In the event of a violation, the Rule provides that the Commission “may seek
or impose any legal remedy it determines appropriate for the violation
involved.”</p>
<!--webbot bot="Include" u-include="sl_bottom.htm" tag="BODY" startspan -->
<hr color="#FFFF00">
<blockquote>
<p align="left"><font face="Arial">
<small>Robert A. Olson is a partner in the law firm of Brown, Olson &
Gould P.C.
which maintains a nationwide practice in energy law, public utility law and related
commercial transactions. He can be reached at:</small></font><p align="center">
<font face="Arial"><small><font color="#0000FF"><b>Brown, Olson & Gould, PC</b></font><br>
2 Delta Drive, Suite 301<br>
Concord, NH 03301 <br>
<br>
<a href="mailto:[email protected]">[email protected]</a> | (603) 225-9716<a href="mailto:[email protected]"></a></small></font>
<!--webbot bot="Include" i-checksum="27861" endspan --></td>
</tr>
</table>
</div>
<p align="center"><a href="#top">
<img src="../images/b-t-top.gif" alt="Back To Top" border="0" width="71" height="35"></a></p>
</body>
</html>