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FERC introduces basis for standardized wholesale power markets

March 13, 2002 — The Federal Energy Regulatory Commission (FERC) on Wednesday began working on a framework for standardizing the wholesale power markets across the nation.

In an upcoming Notice of Proposed Rulemaking (NOPR), the new design will include a new open-access transmission tariff to be administered by regional transmission organizations (RTOs), Dow Jones Newswires reported.

The design involves a regional approach in which RTOs have responsibility of administering the competitive wholesale electricity markets and overseeing transmission access.

FERC would then have regulatory authority over all wholesale transmission services, including those for retail sales regulated by states.

FERC got to work right away after a Supreme Court decision last week that said the agency could expand its jurisdiction over wholesale electricity transmission services.

Under FERC’s model, RTOs would also run real-time and day-ahead bid-based markets for wholesale energy, as well as those for operating reserves for peak power needs. These organizations would also have to monitor the markets to ensure that generators don’t try to influence power prices in any way.

The market design would make use of locational marginal pricing (LMP) as PJM’s market does. With this pricing method, participants can hedge against price risks from power-grid congestion, Dow Jones reported.

For more information, visit FERC’s web site at http://www.ferc.gov/.