posted on Thursday, June 28, 2007 1:59 PM by Gunnar Birgisson

FERC Scrutinizes Organized Power Markets, but Proposes No Reforms for Now

Following a series of industry conferences on wholesale electricity markets, FERC issued an advanced notice of proposed rulemaking (ANOPR) aimed at exploring means of strengthening competition in organized power markets ― markets with spot energy sales and administered by regional transmission organizations (RTOs) or independent system operators (ISOs).  Public comments on the ANOPR will be due in mid- to late-August ― 45 days following publication in the Federal Register.

FERC is not aiming for a major redesign of RTO or ISO markets, but rather is focusing on four discrete issues on which the agency seeks advice:

    • the role of demand response in organized markets, including possible rule changes to increase its use in times of emergency as well as through aggregation and for (or in lieu of ) ancillary services;  
    • opportunities for long-term power contracting, including having the organized market operator serve as a clearing house for information on bilateral prospective bilateral deals;
    • attributes of market monitors, including independence, enforcement authority, and reporting responsibility; and
    • the responsiveness of RTOs and ISOs, in particular at the board level, to customers and other stakeholders.

Each of these issues relates to recent hot topics at the agency.  Commissioner Wellinghoff has become a vocal proponent of demand response.  An increasingly acrimonious dispute between PJM management and its market monitor has drawn attention to the role of market monitors, and in particular their independence.  The perceived remoteness of ISO and RTO boards has brought some calls for allowing market participants greater access to the boards.  And both energy users and project developers at times call for greater use of long-term contracts to stabilize prices.

After reviewing public comments on these topics, FERC will decide whether to issue a notice of proposed rulemaking to propose specific changes to its regulations governing power markets.