Federal Energy Regulatory Commission (FERC)

Now comes Entergy’s pending plan to create an “Independent Coordinator of Transmission” to manage certain grid operations. On the surface, the plan would create independent accountability for the transmission grid, as called for in FERC Order No. 2000, with special attention paid to planning and expansion. Will the model work? Can it improve grid access for IPPs and reduce energy costs for Entergy’s ratepayers?

The wide-ranging Energy Policy Act of 2005, signed into law by President Bush Aug. 8, already is affecting the energy industry—and guaranteeing that FERC will be a very busy agency. Fortnightly asked FERC Chairman Joseph T. Kelliher what the future holds for the commission.

When we least expected it, the politicians finally were able to pull a multi-billion white rabbit out of their hat—enacting a comprehensive national energy law (Energy Policy Act of 2005) that will usher in extraordinary changes in the industry However, just how the new law really will affect the industry is the question of the hour, with many provisions of the law left to the interpretation of regulators.

Wholesale competition is working, and the best evidence to date is the savings produced from the opening of the PJM market to competitive power generation from the Midwest. A real-time case study unfolded before our eyes in May and October 2004.

What good is a penalty that does nothing to deter the crime? For wind turbines, generation imbalances are caused primarily by variations in weather. Even if these imbalances are indeed a bad thing, no $100 penalty will make them go away.

What's the right price signal to bring forth enough infrastructure to maintain reliability over the long haul? Moreover, if such a model exists, can it work without stifling competitive markets?

Look at the gargantuan, gerrymandered service territories you would get with the latest pending merger deals: Exelon-PSEG, Duke-Cinergy, and Warren Buffet's bid to combine PacifiCorp with his MidAmerican Energy. Now ask yourself if they make any sense.

Ten years after the initial Notice of Proposed Rulemaking that set in motion the establishment of RTOs, it is hard to dispute that the mature organized markets with independent management of the grid have achieved tangible benefits for all customers. It is important to remind ourselves of the accomplishments and challenges ahead.

What's wrong the Public Utility Holding Company Act of 1935 (PUHCA)? The 1935 act clearly did not contemplate a competitive marketplace for electricity. Legislation should be updated to reflect the prevailing energy economic climate.

The lack of transmission investment transcends the usual culprits, pointing to a serious flaw in market structure.