Staff031502 - Federal Energy Regulatory Commission Working...

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Federal Energy Regulatory Commission Working Paper on Standardized Transmission Service and Wholesale Electric Market Design To enhance competition in wholesale electric markets and broaden the benefits and cost savings to all wholesale and retail customers, the Commission intends to reform public utilities’ open access tariffs to reflect a standardized wholesale market design. The goals of this initiative are to: provide more choices and improved services to all wholesale market participants; reduce delivered wholesale electricity prices through lower transactions costs and wider trade opportunities; improve reliability through better grid operations and expedited infrastructure improvements; and to increase certainty about market rules and cost recovery for greater investor confidence to facilitate much-needed investments in this crucial economic sector. A key challenge will be to balance the need for standardization for a seamless transmission grid with streamlined operations and costs with the need to permit regional differences and market innovation. The Commission is conducting this effort through Docket No. RM01-12-000 and plans to issue a notice of proposed rulemaking, containing a reformed open access transmission tariff, this summer. The reformed tariff will be filed by regional transmission organizations (RTOs) and other public utilities that own, operate or control interstate transmission facilities. The Commission’s Order Nos. 888 and 889 established non-discriminatory open access transmission services and stranded cost recovery rules for the transition to competitive markets. These rules established a sound foundation for competitive bulk power markets in the United States, but did not address every issue now before us. There is wide consensus today about the need to update the pro forma tariff and the basic elements of wholesale electric market design. On some issues, there is clear consensus about what needs to be done; on others, further policy decisions are needed to move forward. The Commission intends this paper to offer that policy guidance and allow the parties to move forward in a focused process that builds upon Order Nos. 888 and 889, and the institutional innovations of RTOs identified in Order No. 2000, to complete the establishment of robust, seamless competitive wholesale electric markets. Based on dialogue with a wide array of stakeholders and state commissioners over the past few months, this paper lays out principles and policy decisions on the standard market design to guide the Commission in developing a revised transmission tariff. Most of these reflect consensus voiced by the parties in written comments and in the conferences and workshops held by the Commission with the industry between October 2001 and February 2002. These policy calls are subject to further dialogue with and comment from participants. The Commission will issue a notice of proposed rulemaking this summer and all affected parties will be able to further comment on the notice of proposed rulemaking.
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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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Staff031502 - Federal Energy Regulatory Commission Working...

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