Markets Wired

Approval of FTC comments to the FERC on the wholesale electric power market: The Commission has provided a comment to the Federal Energy Regulatory Commission (FERC) regarding competition at the wholesale level in regions of the U.S. with organized electric power markets. The comment was developed in response to an Advance Notice of Proposed Rulemaking issued by FERC as part of the regulatory reform process designed to substitute vigorous competition for cost-based rate regulation in wholesale electric power markets.

According to the Commission’s comment, which can be found as a link to this press release on the FTC’s Web site, one of the greatest deficiencies in electric power market reform efforts has been the limited amount of decrease in consumption (or “demand response,” also referred to as DR) when wholesale prices increase. This characteristic can leave electricity markets and consumers vulnerable to the exercise of market power by electricity generators and traders. The FTC’s comment proposes a range of ways in which FERC might strengthen the role of competition in electric power markets, including a deeper acknowledgment of the costs and benefits of DR policies and, as DR grows, a greater reliance on DR (rather than wholesale price caps) to prevent the exercise of market power by electricity generators. The comment also encourages FERC to develop incentives for efficiency and improved customer service in organized electric power markets.

The Commission vote approving the filing of the comment with FERC was 5-0. (FTC File No. V070014; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of General Counsel, 202-326-2702.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.