Markets Wired

The Federal Trade Commission has submitted comments to the Federal Energy Regulatory Commission on how alternative sources of energy – such as wind farms, solar cells, and solar thermal installations – can best be integrated into the nation’s electric power grid. The FTC recommends that FERC study ways to make electricity markets better reflect the costs, constraints, and realities of these energy sources to encourage efficient cost-reducing choices in the marketplace.

According to the FTC comment, certain alternative energy sources are different from traditional power sources, such as fossil-fuel and nuclear generators, because they do not produce power constantly. The amount of energy produced by solar cells, for example, depends on the amount of sunlight they receive, while wind power may vary depending on whether the wind is blowing. Because of these differences, FERC is exploring whether and how to modify electric markets and operating procedures to allow these variable sources to compete to supply power at the lowest possible cost.

The FTC’s comment, which can be found on the agency’s Web site and as a link to this press release, highlights three issues:

• Potential discrimination against variable energy sources and in favor of other types of power generators;
• Existing rules and regulations that could hamper the integration of variable energy sources into the power system; and
• How the increasing use of variable sources could affect the costs to maintain the reliability of the electric system.

The comment concludes by suggesting several ways in which variable energy sources could be used more efficiently in the electric power grid.

The vote approving the comment was 3-0-2, with Commissioners Edith Ramirez and Julie Brill not participating. (FTC File No. V100009; 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.

(FYI 16.2010.wpd)