"I'm going to have to qualify that position I just laid out. It applies only in the absence of anti-competitive price manipulation by merchant IPPs. If an IPP is fully hedged through a bilateral, its profits in the WESM market are capped. Past a certain point, as prices rise, the IPP gets no benefit and all the benefit of the hedge flows to the off-taker. In such case, there is no incentive for an IPP to manipulate market-clearing prices because it cannot benefit from that activity.However, it the IPP is merchant (or has an unhedged component), there can potentially be an incentive to manipulate market-clearing prices upward through anti-competitive behavior since the merchant can benefit from that.The presence of merchant IPPs in the market doesn't mean that prices necessarily WILL be manipulated. And if they are not, if the merchants are just profit-maximizing but within the bounds of allowed competitive behavior, then my point holds: - bilaterals don't affect price." - Nick in Manila