Executive and academic views on what to fix and what's not broke.
The sound and fury over trading scandals, credit defaults, and market manipulation so far has drowned out much of the mind-numbing debate over a standard market design (SMD), and rightly so. Utilities understand (as does the press) that Enron, "Deathstar," and "Get Shorty" will always sell more newspapers than locational pricing or congestion management.
But the day of reckoning is upon us. The time has come to get back to basics. With the deadline now passed for filing initial comments with the FERC, the power industry once and for all must put up or shut up on SMD.
Up till now, FERC's initiative has left utilities, merchants, and regulators completely polarized. Some states still welcome competitive markets, but many others do not. Meanwhile, the experts warn that the two sides must cooperate-or risk doing even more damage to the industry's already dismal financial standing.
One only need recall regulated utilities Nevada Power or Avista, which experienced their own problems as a result of the California crisis, to make the point that malfunctioning "wholesale" markets affect regulated as well as unregulated utilities.
In a joint statement, David A. Svanda, NARUC president-elect, and EEI Chairman Erroll B. Davis Jr., summarized the challenges ahead and the need for standard markets.
"The current market turbulence presents a very real and tangible threat to the viability of the industry and the reliability of the nation's electric system. … Investors and customers lack confidence in the financial health of energy providers. Bulk power markets are listless, liquidity has evaporated and the movement to retail competition remains in transition.