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1
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85168777423
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For a recent example of a decision on such a matter, see New York State Electric & Gas Corporation, NGE Generation, Inc., Pennsylvania Electric Company Mission Energy Westside, Inc., Docket No. EC98-64-000 Order Authorizing Disposition Of Jurisdictional Facilities Issued Jan. 13, 1999
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1. For a recent example of a decision on such a matter, see New York State Electric & Gas Corporation, NGE Generation, Inc., Pennsylvania Electric Company Mission Energy Westside, Inc., Docket No. EC98-64-000 Order Authorizing Disposition Of Jurisdictional Facilities Issued Jan. 13, 1999.
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2
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0032119348
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The analytic approach to measuring horizontal market power in electric utility markets: A historical perspective
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July
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2. For a description of the history of the Commission's policies in assessing market power in the electric utility industry, see Walter Surratt The Analytic Approach to Measuring Horizontal Market Power in Electric Utility Markets: A Historical Perspective, Elec. J., July 1998 at 22-33.
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(1998)
Elec. J.
, pp. 22-33
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Surratt, W.1
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3
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0041464148
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Antitrust policy in the new electricity industry
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16 U.S.C. § 824b(a) (1994), f.n. 8
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3. 16 U.S.C. § 824b(a) (1994) Cited in Richard J. Pierce, Jr., Antitrust Policy in the New Electricity Industry, Energy Law J. (1996) at 30, f.n. 8.
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(1996)
Energy Law J.
, pp. 30
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Pierce R.J., Jr.1
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4
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85168782463
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15 U.S.C. § 18a (1994), Cited in Pierce, supra note 3 at 30, f.n. 8
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4. 15 U.S.C. § 18a (1994), Cited in Pierce, supra note 3 at 30, f.n. 8.
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5
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85168783490
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18 CFR Part 2 [Docket No. RM96-6-000; Order No. 592] 61 FERC 68,595, Dec. 30, 1996. Inquiry Concerning the Commission's Merger Policy Under the Federal Power Act; Policy Statement. This can be found on the Internet by searching "GPO Access" at
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5. 18 CFR Part 2 [Docket No. RM96-6-000; Order No. 592] 61 FERC 68,595, Dec. 30, 1996. Inquiry Concerning the Commission's Merger Policy Under the Federal Power Act; Policy Statement. This can be found on the Internet by searching "GPO Access" at http://www.access.gpo.gov/su_docs/ aces/aces140.html.
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6
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85168787316
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Commonwealth Edison Co. (Commonwealth), 36 FPC 927,931 (1966), aff'd sub nom. Utility Users League v. FPC, 394 F.2d 16 (7th Cir. 1968), cert. denied, 393 U.S. 953 (1968).
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6. Commonwealth Edison Co. (Commonwealth), 36 FPC 927,931 (1966), aff'd sub nom. Utility Users League v. FPC, 394 F.2d 16 (7th Cir. 1968), cert. denied, 393 U.S. 953 (1968).
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7
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85168782056
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It is FERC's objective to complete the review of a merger within five months of the filing of a completed application. See FERC Merger and Acquisition Policy, Speech by Commissioner William Massey, July 16, 1998. Available at
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7. It is FERC's objective to complete the review of a merger within five months of the filing of a completed application. See FERC Merger and Acquisition Policy, Speech by Commissioner William Massey, July 16, 1998. Available at http://www.ferc.fed.us/intro/oea/ mass7-16.pdf.
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8
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85168784625
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61 FERC ¶ 68,595 at 68,596
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8. 61 FERC ¶ 68,595 at 68,596
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9
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85168780814
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note
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9. The Guidelines can be viewed on the Internet at the Federal Trade Commission's Web page at www.ftc.gov/bc/ docs/horizmer.htm and can be down-loaded from the Department of Justice's Web page at www.usdoj.gov/atr/ guidelin.htm. The Guidelines are being increasingly invoked by the courts and by several state utility commissions. For instance, the decision of the California Public Utilities Commission on the proposed merger between Southern California Edison and San Diego Gas and Electric cited to the then-current version of the Guidelines extensively (Decision 91-05-028. App. 88-12-035, 1991.) See also State Regulatory Agency Refers Probe to ALJ on Legality of Utility Merger, 73 Antitrust & Trade Reg. Rep. (BNA) 264 (Sept. 11, 1997) referring to Pennsylvania PUC's Decision to evaluate the proposed merger on the basis of the DOJ/FTC Merger Guidelines. Cited in 1998 Annual Report of the Section of Public Utility, Communications and Transportation Law, at 46.
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10
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85168781698
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53 FERC ¶ 61,473 (Dec. 31, 1990) at 62,664
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10. 53 FERC ¶ 61,473 (Dec. 31, 1990) at 62,664.
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11
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85168792712
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The Commission has made it clear that it will not address retail issues in reviewing mergers unless state commissions request that they do so. See Baltimore Gas and Electric Company and Potomac Electric Power Company Docket Nos. EC96-10-000 and ER96-784-000 Opinion and Order Authorizing Proposed Merger (Opinion No. 412), at 16, citing the Merger Policy Statement
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11. The Commission has made it clear that it will not address retail issues in reviewing mergers unless state commissions request that they do so. See Baltimore Gas and Electric Company and Potomac Electric Power Company Docket Nos. EC96-10-000 and ER96-784-000 Opinion and Order Authorizing Proposed Merger (Opinion No. 412), at 16, citing the Merger Policy Statement.
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12
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85168782902
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77 FERC 61,265 (1996) at 62,085 citing 77 FERC ¶ 61,204 at 84-86
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12. 77 FERC 61,265 (1996) at 62,085 citing 77 FERC ¶ 61,204 at 84-86.
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13
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85168784578
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note
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13. For example, it may be possible to bundle different products from varying sources in order to provide a substitute for long-term capacity, as was found in assessing an application by Public Service of Indiana (PSI) to sell 450 MW of firm power at market-based rates and a commitment to file open access transmission tariffs. FERC defined the relevant market as the market for long-term firm delivered power. "PSI's product market will include all products that can be substituted for PSI's product, including components of long-term firm delivered base-load power that can be bundled with complementary products from other sources." Public Service Co. of Indiana, Inc., Docket Nos. ER89-672-000 and ER89-672-001, 51 FERC (CCH) ¶ 61,367 (1990) at 62,193, June 28, 1990.
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14
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85168778005
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Entergy 58 FERC (CCH) ¶ 61,234 (1992) at 61,755
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14. Entergy 58 FERC (CCH) ¶ 61,234 (1992) at 61,755.
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15
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85168786159
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See, for instance, the comments of the Edison Electric Institute on Federal Energy Regulatory Commission, 18 CFR Part 33, Docket No. RM98-4-000, Notice of Proposed Rulemaking, Revised Filing Requirements, issued April 16, 1998
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15. See, for instance, the comments of the Edison Electric Institute on Federal Energy Regulatory Commission, 18 CFR Part 33, Docket No. RM98-4-000, Notice of Proposed Rulemaking, Revised Filing Requirements, issued April 16, 1998.
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16
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85168791633
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FERC has also indicated that three "wheels" are enough to exclude a utility from consideration as a participant in a relevant destination market for short-term energy. Three wheels refers to the number of third-party transmission systems to be used. See for instance, Inquiry Concerning the Commission's Policy on the Use of Computer Models in Merger Analysis; Notice of Request for Written Comments and Intent To Convene a Technical Conference, FR Vol. 63, No. 79, April 24, 1998, at 20,401
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16. FERC has also indicated that three "wheels" are enough to exclude a utility from consideration as a participant in a relevant destination market for short-term energy. Three wheels refers to the number of third-party transmission systems to be used. See for instance, Inquiry Concerning the Commission's Policy on the Use of Computer Models in Merger Analysis; Notice of Request for Written Comments and Intent To Convene a Technical Conference, FR Vol. 63, No. 79, April 24, 1998, at 20,401.
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17
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85168789401
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Order 592, Merger Policy Statement, Appendix A, Section B. 3.a
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17. Order 592, Merger Policy Statement, Appendix A, Section B. 3.a.
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18
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85168789013
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Order 592, Merger Policy Statement, Appendix A, Section B.3.c
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18. Order 592, Merger Policy Statement, Appendix A, Section B.3.c.
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19
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85168784694
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Some of the data requirements and data sources to undertake this test are described in Staff's Framework for a Delivered Price Test Without a Model in Inquiry Concerning the Commission's Policy on the Use of Computer Models in Merger Analysis; Notice of Request for Written Comments and Intent To Convene a Technical Conference, FR Vol. 63, No. 79 April 24, 1998, at 20,401
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19. Some of the data requirements and data sources to undertake this test are described in Staff's Framework for a Delivered Price Test Without a Model in Inquiry Concerning the Commission's Policy on the Use of Computer Models in Merger Analysis; Notice of Request for Written Comments and Intent To Convene a Technical Conference, FR Vol. 63, No. 79 April 24, 1998, at 20,401.
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20
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85168780070
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Significantly within the meaning of the Horizontal Merger Guidelines
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20. Significantly within the meaning of the Horizontal Merger Guidelines.
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21
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85168788400
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Appendix A, Section B.3.a
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21. Appendix A, Section B.3.a.
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22
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85168779077
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Appendix A, Section B.3.b
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22. Appendix A, Section B.3.b.
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23
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85168777999
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77 FERC ¶ 61,265 (1996) at 62,084
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23. 77 FERC ¶ 61,265 (1996) at 62,084.
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24
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85168782512
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Id.
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24. Id.
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25
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85168782180
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Opinion No. 413, Docket No. EC95-16-000, issued May 14, 1997. See Section IX.A.3
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25. Opinion No. 413, Docket No. EC95-16-000, issued May 14, 1997. See Section IX.A.3.
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26
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85168793078
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Section 2, Merger Guidelines
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26. Section 2, Merger Guidelines.
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27
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85168789055
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The step is described in Section B.4 of Appendix A
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27. The step is described in Section B.4 of Appendix A.
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28
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85168784719
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They are "the 'mid-merit order' generating units which are likely to be the units providing the final increment in the supply portfolio. The concentration of ownership of this group of assets might be more important than overall generation concentration. In both cases, the powerful entity may control the final increment in the market-clearing supply portfolio and thus control the marginal price for generation." CPUC, D.95-12-063, Dec. 20, 1995, as corrected by CPUC D.96-01-009, Jan 10, 1996, Chapter 4 available at See also the description of PG&E's suggested methodology in Federal Energy Regulatory Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company 77 FERC ¶ 61,265 Docket No. ER96-1663-000, Order Providing Guidance And Convening A Technical Conference (Dec. 18, 1996), at 62,081
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28. They are "the 'mid-merit order' generating units which are likely to be the units providing the final increment in the supply portfolio. The concentration of ownership of this group of assets might be more important than overall generation concentration. In both cases, the powerful entity may control the final increment in the market-clearing supply portfolio and thus control the marginal price for generation." CPUC, D.95-12-063, Dec. 20, 1995, as corrected by CPUC D.96-01-009, Jan 10, 1996, Chapter 4 available at http://www.cpuc.ca.gov/ restur.dec/toc.html. See also the description of PG&E's suggested methodology in Federal Energy Regulatory Commission, Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company 77 FERC ¶ 61,265 Docket No. ER96-1663-000, Order Providing Guidance And Convening A Technical Conference (Dec. 18, 1996), at 62,081.
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30
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85168784901
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The report offers no citation to previous regulatory or legal findings or the economic literature to support such a finding
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30. The report offers no citation to previous regulatory or legal findings or the economic literature to support such a finding.
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31
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85168791021
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-
note
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31. Baltimore Gas and Electric Company and Potomac Electric Power Company (Docket Nos. EC96-10-000) and ER96-784-000 Opinion and Order Authorizing Proposed Merger (Opinion No. 412), at 25. Footnote 79 shows HHI changes resulting from the merger for prices of $19-20/MWh, $20-21/MWh, and so on. This analysis is based upon an attempt by the trial staff to determine the impact of the merger on concentration of "economic capacity" (which includes marginal capacity and capacity whose incremental costs are lower than those of marginal capacity). According to trial staff, marginal capacity is that capacity with costs in the range of $15 to $25/ MWh. Trial staff further argues that economic capacity is all capacity with costs at or below $25/MWh." (See p. 19.)
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32
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85168789753
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For instance, the Commission found that the proposed decision in the Primergy merger application, which had found the merger was consistent with the public interest, was incorrect. Among other points the Commission made was that the applicants' "market power analysis, which does not include any HHI analyses, falls short of what the Merger Guidelines require."
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32. For instance, the Commission found that the proposed decision in the Primergy merger application, which had found the merger was consistent with the public interest, was incorrect. Among other points the Commission made was that the applicants' "market power analysis, which does not include any HHI analyses, falls short of what the Merger Guidelines require."
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33
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85168791555
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Southwestern Public Service Company, 72 FERC ¶ 61,208 at 61,966-67 (1995), reh'g pending; Louisville Gas & Electric Company, 62 FERC ¶ 61,016 at 61,146 (1993)
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33. Southwestern Public Service Company, 72 FERC ¶ 61,208 at 61,966-67 (1995), reh'g pending; Louisville Gas & Electric Company, 62 FERC ¶ 61,016 at 61,146 (1993).
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34
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85168791953
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Appendix A, Sections A and B.4
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34. Appendix A, Sections A and B.4.
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35
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85168780580
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This quotation is taken from Section 2.0 of the Merger Guidelines
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35. This quotation is taken from Section 2.0 of the Merger Guidelines.
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36
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85168787375
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Supra note 14 at 61,759
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36. Supra note 14 at 61,759.
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37
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0032116947
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Numerical techniques for analyzing market power in electricity
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July
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37. A more complete description of some of the issues raised in modeling is provided in Edward P. Kahn, Numerical Techniques for Analyzing Market Power in Electricity, Elec. J., July 1998, at 34-43.
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(1998)
Elec. J.
, pp. 34-43
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-
Kahn, E.P.1
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38
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85168792849
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Notice of Request for Written Comments and Intent to Convene a Technical Conference, Concerning the Commission's Policy on the Use of Computer Models in Merger Analysis, April 16, 1998, Docket No. PL98-6-000
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38. Notice of Request for Written Comments and Intent to Convene a Technical Conference, Concerning the Commission's Policy on the Use of Computer Models in Merger Analysis, April 16, 1998, Docket No. PL98-6-000.
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39
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85168792790
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Re DQE Inc.,186 P.U.R.4th 39 1998 WL 406768_(Pa.P.U.C.)
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39. Re DQE Inc.,186 P.U.R.4th 39 1998 WL 406768_(Pa.P.U.C.)
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40
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0003594143
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Wiley Press
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40. For a description of the use of these models, see H. Stoll, Least Cost Electric Utility Planning, (Wiley Press, 1989) and Edward P. Kahn, Electric UtilityPlanning and Regulation (American Council for an Energy Efficient Economy, Second Ed., 1991) and Edward P. Kahn, Regulation by Simulation: The Use of ProductionCost Models in Electricity Pricing and Planning, Operations Res., 43(3) 1995.
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(1989)
Least Cost Electric Utility Planning
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-
Stoll, H.1
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41
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0004093907
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-
American Council for an Energy Efficient Economy, Second Ed.
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40. For a description of the use of thesemodels, see H. Stoll, Least Cost Electric Utility Planning, (Wiley Press,1989) and Edward P. Kahn, Electric UtilityPlanning and Regulation (American Council for an Energy Efficient Economy, Second Ed., 1991) and Edward P. Kahn, Regulation by Simulation: The Use of Production Cost Models in Electricity Pricing and Planning, Operations Res., 43(3) 1995.
-
(1991)
Electric Utility Planning and Regulation
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-
Kahn, E.P.1
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42
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-
0000481099
-
Regulation by simulation: The use of production cost models in electricity pricing and planning
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40. For a description of the use of these models, see H. Stoll, Least Cost Electric Utility Planning, (Wiley Press, 1989) and Edward P. Kahn, Electric Utility Planning and Regulation (American Council for an Energy Efficient Economy, Second Ed., 1991) and Edward P. Kahn, Regulation by Simulation: The Use of Production Cost Models in Electricity Pricing and Planning, Operations Res., 43(3) 1995.
-
(1995)
Operations Res.
, vol.43
, Issue.3
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-
Kahn, E.P.1
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43
-
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85168790103
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-
note
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41. See, for instance, Severin Borenstein, James Bushnell, and Christopher Knittel, Comments of the University of California Energy Institute on the Use of Computer Models for Merger Analysis in the Electric Utility Industry, June 15, 1998. "There is, however, another class of models that do attempt to explicitly model strategic behavior. Indeed it is often far more important to represent the strategies of producers than to model their physical production characteristics in minute detail." The Department of Justice suggests that an appropriate model should simulate the profit-maximizing behavior of the hypothetical monopolist.
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44
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85168790906
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These rates, once set, are subject to the non-discrimination and other restrictions that are part of tariff setting
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42. These rates, once set, are subject to the non-discrimination and other restrictions that are part of tariff setting.
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45
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85168781361
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Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company, Docket No. ER96-1663-000, Order Providing Guidance and Convening a Technical Conference, Dec. 18, 1996. 77 FERC ¶ 61,265
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43. Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company, Docket No. ER96-1663-000, Order Providing Guidance and Convening a Technical Conference, Dec. 18, 1996. 77 FERC ¶ 61,265
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-
-
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46
-
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85168787408
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Rule 888, at 7. This language copies that found in Enron Power Enterprises, in which a successful bidder in a competitive auction applied for a finding that its rates were just and reasonable. 52 FERC (CCH) ¶ 61,193 (1990) at 61,708, and 85 FERC ¶ 61,379 Federal Energy Regulatory Dec. 17
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44. Rule 888, at 7. This language copies that found in Enron Power Enterprises, in which a successful bidder in a competitive auction applied for a finding that its rates were just and reasonable. 52 FERC (CCH) ¶ 61,193 (1990) at 61,708, and 85 FERC ¶ 61,379 Federal Energy Regulatory New England Power Pool Order Conditionally Accepting Market Rules, And Conditionally Approving Market-Based Rates, Dec. 17, 1998.
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(1998)
New England Power Pool Order Conditionally Accepting Market Rules, and Conditionally Approving Market-based Rates
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-
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47
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85168784278
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As stated in 77 FERC ¶ 61,265 (1996)
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45. As stated in 77 FERC ¶ 61,265 (1996).
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48
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85168778668
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Enron had 4 percent of the generation capacity in the relevant market and no transmission facilities
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46. Enron had 4 percent of the generation capacity in the relevant market and no transmission facilities.
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49
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85168790489
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Supra note 14 at 61,752
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47. Supra note 14 at 61,752.
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50
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85168778943
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note
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48. See for example, AES Huntington Beach, L.L.C 83 FERC ¶ 61,100. et al. Docket No. ER98-2184-"Order Accepting For Filing Proposed Market-Based Rates And Denying Request For Waiver Of Filing Requirement" (April 30, 1998). See also Pennsylvania Power & Light Company "Order Conditionally Accepting For Filing Proposed Market-Based Rates" 80 FERC ¶ 61,053, July 17, 1997, finding, under item 3, that if the applicant abused its ownership of oil and gas pipelines by denying access or imposing unreasonable terms on competitors, those competitors could complain to the Commission.
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