FERC proposes three short-run stabilization “remedies” in its Market Order Proposing Remedies for California Wholesale
Electrics, issued November 1, 2000.  The first allows the IOUs to purchase power outside the PX.  The second sets a
penalty that will frequently reach $100/MWh on unscheduled power in excess of 5% of a purchaser’s total load.  The
third is a $150 “soft” price cap on the ISO and PX.  On the infrequent occasions when the cap is effective, it will
exacerbate the scheduling problem.  Generally, when needed, it will be subverted by exemptions for  opportunity costs.
Because the soft cap is applied to the PX, but not to other scheduling coordinators, it will drive suppliers away from
the PX.  Allowing more forward contracting of net suppliers will reduce market power, but it will be very expensive
without an effective bid cap.  To be effective, a bid cap must allow no exceptions and must also be a regional cap to
avoid causing reliability problems for California.