FERCandMkts - FERC & Electric Industry Restructuring...

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FERC & Electric Industry Restructuring Judy Cardell ESD.126 April 1, 2002 April 1, 2002 J Cardell 2 Overview ± Introduction to FERC ± Electric power industry structure ± Industry restructuring ± FERC rulemakings ± Creating competitive markets o How to price products o Impediments to competition ± Summary
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April 1, 2002 J Cardell 3 FERC Organization Chairman Lawyers Commis- sioner Commis- sioner Commis- sioner Commis- sioner Pipeline Projects Administrative Litigation Markets, Rates April 1, 2002 J Cardell 4 FERC Authority ± Independent agency o Commissioners appointed by President o Budget from Congress ± Industries o Natural gas pipelines o Oil pipelines o Hydroelectric dams o Electric transmission lines
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April 1, 2002 J Cardell 5 Energy Legislation ± FERC has jurisdiction over wholesale energy transactions, comes from Federal authority over interstate commerce ± 1935: Federal power act and public utility holding company act ± 1978: Public utility regulatory policy act ± 1992: Energy policy act ± 2002?: Legislation to address jurisdiction for reliability, mergers, mandate company restructuring April 1, 2002 J Cardell 6 FERC Authority from the FPA ± Approve transmission and wholesale energy rates o Rates must be “just and reasonable,” FPA 205 (Federal Power Act, section 205) o FERC control revenue from regulated facilities ± Approve transfers of ownership or control of regulated facilities o Filing must be “consistent with the public interest,” FPA 203 o FERC authority over mergers, ISOs, RTOs
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April 1, 2002 J Cardell 7 FERC Policy Making ± FERC makes policy by o Issuing rules (rulemaking) - not tied to any specific case o Case by case - decisions on filings made under the FPA, refine interpretation previous Rules o Litigation - Administrative law hearings o Hold conferences - coordination with states and stakeholders April 1, 2002 J Cardell 8 Recent FERC Electricity Rules ± Orders 888 and 889: Open Access for the high voltage transmission system, issued 1996 ± Order 592: Merger Policy Statement, issued 1996 ± Order 2000: Regional Transmission Organizations, issued 12/1999
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April 1, 2002 J Cardell 9 Traditional Power Industry Structure ± Supply: Vertically integrated suppliers o Electric utilities control generation, transmission and distribution ± Demand: Native load o Captured customers in a monopoly franchise area ± Product: Buying and selling bundled electric service, energy (kWh) and transmission ± Market: No competitive marketplace April 1, 2002 J Cardell 10 Power Industry Structure: Which Segments are Competitive? ± Generation o Can be competitive o Public goods, joint products (ancillary services) ± Transmission network o Natural monopoly (common carrier) o * Can not direct or control power flows * o The control of transmission affects the operation of the energy market - source of market power concerns
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April 1, 2002 J Cardell 11 Power Industry Structure: Which Segments are Competitive? ± Distribution system
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This note was uploaded on 11/02/2011 for the course ECON 301 taught by Professor Gandhi during the Spring '01 term at Andhra University.

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FERCandMkts - FERC & Electric Industry Restructuring...

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