Rules 'patchwork' impedes restructuring

DALLAS, Texas, Nov. 29, 2000--Deregulated natural gas and electricity markets also need liberalized business rules if competition is to flourish, several former U.S. government officials said Wednesday.

They spoke at the North American Summit on Harmonizing Business Practices, sponsored by the U.S. Energy Department and the National Association of Regulatory Utility Commissioners (NARUC).

The meeting's goal was to find ways to promote competition as natural gas and electricity markets are restructured.

Speakers said the differences among network companies�gas and electric distribution firms, pipelines, electric transmission companies, and independent system operators�have become barriers to the development of mature and competitive markets.

Robert Gee, former assistant U.S. Energy Secretary for fossil energy, said in the gas sector, restructuring has occurred primarily in the wholesale markets, because the Federal Energy Regulatory Commission has oversight over all interstate gas pipelines.

Gee said although gas decontrol was complicated, it lacked the jurisdictional and other physical and engineering issues vexing the restructuring of the electricity sector. "Moreover, while natural gas retail regulatory reform has been slowly emerging, its adoption this far has occurred only on a limited geographic and state basis.

"By contrast, electric industry restructuring has been, and continues to be, more complex, owing to the long history of jurisdictional division of authority between state, federal, and local authorities."

He said there are myriad differences between the types of utilities (investor-owned, cooperatives, municipalities, and power authorities) and they often have unique physical and engineering configurations.

Gee said those complexities have been compounded by the state-by-state control of electricity. "What we have now, for better or worse, is an emerging patchwork of different blueprints for introducing retail competition.

"The necessary rules and procedures for electric retail competition are becoming embodied in state regulatory commission rules, individual retail access tariffs, and/or operating agreements and contracts. However, as states have begun introducing restructuring at the retail level, business rules have been varying significantly from state to state."

He argued that a lack of uniformity has the potential to be a significant impediment to the profitable market entry and operation of competitive energy service providers on a regional or national basis.

"The diversity in rules and procedures for providing essentially the same service in different areas may increase the costs to consumers and decrease the profits of some competitive providers.

"Absent harmonious rules an standards, truly competitive gas and electricity markets could be stunted. Uniform standards, on the other hand, hold the potential of lowering the cost for all market participants, lowering barriers to market entry, and easing the movement of capital, goods, and services. Buyers and sellers wold then have more choices and better opportunities to recognize the value of a competitive market," Gee said.

He also said any potential standards also should be drafted to include transboundary transactions, in recognition of the growing North American energy market.

Energy policy
Branko Terzic, director of public utility services for the Deloitte & Touche consulting firm, said state-by-state regulations have resulted in a diversity of business rules.

Terzic, a former U.S. Federal Energy Regulatory Commission member, said: "We have a patchwork of government rules, and it doesn't have a national vision."

In contrast, he said the European Commission�representing a variety of nations�has established electricity and natural gas directives with goals and deadlines. The overall objective in Europe is economic efficiency of energy markets.

Terzic noted that in the U.S., there is not even a national policy that declares the production of electricity should be cost-competitive. "We can talk about the needs for voluntary business practices, but we need to agree on national energy goals first."

He said the old Federal Power Act has a neglected provision that would allow FERC to convene a board to harmonize U.S. electricity practices, and the commission should consider activating it.

Tom Casden, chairman and CEO of Americas Power Partners, said the most efficient segment of the electricity generating market is distributed generation. But he said most state regulatory commissions were established to regulate large central generating plants, and their rules act as a barrier to the more efficient smaller plants. "Talk about a crazy quilt. There is no logic to it."

Casden said the only goal of government energy policy should be to drive the costs of generating power and the resulting pollution as close to zero as possible.

Gary Nakarado, of the National Renewable Energy Laboratory, discussed a recent study by the lab.

It found that the electricity industry needed uniform technical standards for interconnection to the grid. After the technical issues are resolved, he said governments should review their rules to ensure they are fair to potential market entrants.

Sponsored by FLSmidth

Related Articles

NCC Report: DOE must develop stronger policy to foster adequate carbon capture and storage

The National Coal Council (NCC) today released a new study in response to a request by Secretary of Energy Ernest Moniz.

Yucca Mountain Nevada nuclear spent fuel waste repository DOE application NRC review SER evaluation volumes

NRC publishes last two volumes of Yucca Mountain safety evaluation

The NRC published two more volumes of its safety evaluation on a geologic high-level nuclear waste repository at Yucca Mountain in Nevada.

Follow Power Engineering on Twitter

Latest News

NCC Report: DOE must develop stronger policy to foster adequate carbon capture and storage

The National Coal Council (NCC) today released a new study in response to a request by Secret...
CASL DOE light water reactors LWR research and development

DOE extends funding for light water reactor research consortium

MHPS to take over thermal power business

Effective April 1, Mitsubishi Hitachi Power Systems (MHPS) will take over the business in the...

Builder projects 18-month delay for nuclear plant in Georgia

Southern Co. (NYSE: SO) said the firms building its new nuclear power plant in Georgia estima...

Alstom to maintain Olkiluoto nuclear island equipment

Alstom was awarded a five-year contract to maintain equipment at the Olkiluoto nuclear power ...
2014 Projects of the Year

Power Engineering Photo of the Day

Capstone Turbine corporation shale oil and gas microturbines Horizon Power Systems

Capstone Turbine Receives Follow-On Order for Fifteen C65s from Horizon Power Systems

Capstone Turbine Corp. received an order for 15 C65 microturbines for shale oil and gas custo...
Yucca Mountain Nevada nuclear spent fuel waste repository DOE application NRC review SER evaluation volumes

NRC publishes last two volumes of Yucca Mountain safety evaluation

The NRC published two more volumes of its safety evaluation on a geologic high-level nuclear ...

Power Engineering Current Issue

01/01/2015
Volume 119, Issue 1
1501pe-cover-lg

Products Showcase

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015

Power Industry Wire News

Intergraph(R) Releases PV Elite(R) 2015 With New Modeling Capabilities and Other Productivity Enhancements

Intergraph(R) Releases PV Elite(R) 2015 With New Modeling Capabilities and Other Produc...

Utility Execs Explain How to Centralize Crew Management Before and After Storms

Utility Execs Explain How to Centralize Crew Management Before and After Storms

Con Edison 2016 Rate Plan Cites Reliability, Storm Prep, Better Technology

Con Edison 2016 Rate Plan Cites Reliability, Storm Prep, Better Technology

Diesel Particulate Matter (DPM) Testing Evidences 20% Reduction With Use of CyberFuels Dynamo(TM) Cetane Booster

Diesel Particulate Matter (DPM) Testing Evidences 20% Reduction With Use of CyberFuels ...

Miller Energy Declares Cash Dividends on Its Series B, Series C and Series D Preferred Stock

Miller Energy Declares Cash Dividends on Its Series B, Series C and Series D Preferred ...

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>