An expansive and diverse group of 82 electricity market stakeholders - including retail electricity customers, consumer groups, retail service providers, economists and academics, utilities, generators, former utility regulators and innovative demand response service providers - has jointly urged federal energy regulators to stay the course in a pivotal rulemaking designed to improve organized regional wholesale electricity markets.
The Federal Energy Regulatory Commission should maintain the scope of its June 22, 2007, advance notice of proposed rulemaking (ANOPR), which identified four areas for important incremental improvements in the organized wholesale power markets, the coalition said in its regulatory filing today.
The broad-based coalition noted that fundamental redesign of the markets would be disruptive and harmful to consumers.
"The Commission is on solid ground in its regulation of organized competitive wholesale electricity markets, and should not overturn its precedents and weaken confidence in the organized markets based upon such a thin and unsubstantiated pleading," the coalition told the Commission.
The coalition noted that FERC has already determined competitive markets to be successful. "The Commission's observations in the ANOPR are right on point: the organized markets are producing the benefits expected. The price signals in the organized markets allow regional system operators and consumers to measure the value of demand response and thereby provide a solid foundation for the substantial growth in demand response seen in the organized markets in recent years. Competitive pressures have improved the operating efficiency of power plants, resulting in cost savings, fewer outages and enhanced reliability."
"The ANOPR clearly acknowledges the important innovations and efficiencies made possible by competitive markets," said William Massey, former FERC commissioner and Counsel to COMPETE. "Many solutions to the country's pressing energy and environmental challenges, such as renewable energy development and innovative demand response programs, are already happening in competitive electricity markets. The regulatory uncertainty from a drastic redesign of these markets would threaten the investment we need to continue these gains and meet these challenges going forward."
The coalition's filing responded to a Dec. 17, 2007, request by large industrial energy users and other interest groups making unsubstantiated claims and asking the Commission to expand the scope of its proceeding to entail a formal Federal Power Act investigation of the organized markets overseen by regional transmission organizations (RTOs) and independent system operators (ISOs).
"As the record in this proceeding demonstrates, there is no evidence of 'deep systemic problems' in organized electric power markets. If anything, these markets would benefit from the regulatory stability the Commission intends as it considers incremental changes that will improve market functioning," the coalition told the commission.
The Dec. 17 filing does not meet the regulatory requirements for initiating a section 206 investigation, the coalition told the Commission, calling the filing "remarkably deficient" and a "rehash of old argument, barren of facts or new insights."
In the ANOPR, the Commission identified four issues to consider: (1) the role of demand response and greater use of market prices to promote electricity demand reductions during a power shortage; (2) improving opportunities for long-term power contracting; (3) market monitoring; and (4) board governance at the RTOs and ISOs.
The coalition's filing urged the Commission to maintain the scope of issues it identified in the ANOPR, as they appropriately address the most salient issues identified during two technical conferences last year and extensive comments the Commission obtained in framing the ANOPR.