June 17, 2016
|House Energy Committee to FERC on Wholesale Electricity Market Issues|
The Chairman of the House Energy Committee submitted a letter to FERC Chairman Bay seeking the Commission's feedback on the current and future state of the organized electricity markets. The letter notes the current atmosphere of market, regulatory and technology changes as well as changes in consumer expectations.
"As the changes occur, the competitive electricity markets - particularly the organized wholesale markets - continue to underachieve, a result of pervasive and persistent problems within their respective regulatory frameworks. We have previously communicated many of these concerns to the Commission, ranging from an inability to provide accurate price signals to a lack of fairness and transparency in governance structures and stakeholder processes. Despite continued best efforts by the Commission and among the independent system operators (ISOs) and regional transmission organizations (RTOs) to address these issues and adapt to changing market conditions, the restructured wholesale markets have, in many ways, become mere administrative constructs that are continuously 'tweaked' through the regulatory process. Such inefficiencies have impeded the efficient deployment of capital and prevented consumers from realizing the potential benefits that competitive markets should yield. With some of the organized markets seemingly ill-equipped, and in the absence of comprehensive reform, it is difficult to see how these markets will be able to adapt to new market forces, technology advances, changing consumer expectations, and shifts in the regulatory and policy landscape."
The letter goes on discuss the recent Supreme Court cases of FERC v. EPSA and Hughes v. Talen Energy Marketing, regarding the Commission's jurisdiction under the Federal Power Act. The letter notes that the Committee is, "concerned that, in an evolving electricity sector, distinguishing between wholesale and retail will become increasingly difficult, resulting perhaps in more litigation of this nature."
The letter also asked for FERC's perspectives on the following questions:
"1. Have the competitive markets fared as expected since restructuring began over 20 years ago, particularly in terms of market efficiency, capital investment, reliability, electricity rates, and consumer impacts?
2. Are the competitive markets equipped to promote, integrate, and adapt to new technologies, new products and services, and state and federal policy changes?
3. What is the Commission's view as to how non-FERC jurisdictional federal and state actions, such as the federal production tax credit or state renewable energy mandates, impact the operation of wholesale markets generally, and, specifically, in terms of impacts on reliability, source and technology neutrality, and wholesale power prices?
4. How do new technologies, programs, incentives, and policy changes at the state and federal levels affect the jurisdictional 'bright line'? Is that line becoming increasingly blurred as a result of such changes?
5. Does the Federal Power Act continue to be well-suited for today's electricity sector? Is it well-suited for the electricity system of the future?"
The letter concludes by asking for FERC's technical assistance in educating Committee members in preparation for a more comprehensive review of electricity markets in the future. The full text of the House Committee Letter to Chairman Bay is available on the NEM Website.
|FERC Order 825 on Settlement Interval and Shortage Pricing Requirements|
Stemming from its inquiry into price formation issues in RTOs/ISOs initiated after the polar vortex events, FERC adopted Order 825 establishing settlement interval and shortage pricing requirements for organized markets. "We require that each regional transmission organization and independent system operator align settlement and dispatch intervals by: (1) settling energy transactions in its real-time markets at the same time interval it dispatches energy; (2) settling operating reserves transactions in its real-time markets at the same time interval it prices operating reserves; and (3) settling intertie transactions in the same time interval it schedules intertie transactions. We also require that each regional transmission organization and independent system operator trigger shortage pricing for any interval in which a shortage of energy or operating reserves is indicated during the pricing of resources for that interval." The RTOs/ISOs must make a compliance filing 120 days after the effective date of the Order. The RTOs/ISOs will then have twelve months from the compliance filing date for the tariff changes implementing reforms to settlement intervals to become effective, and 120 days from the compliance filing date for the tariff changes implementing shortage pricing reforms to become effective. The full text of Order 825 is available on the NEM Website.
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|Notice of Inquiry on Electric and Natural Gas Bill Unbundling|
The Commission opened a Notice of Inquiry into whether and to what extent electric and natural gas bills should be further unbundled. The utilities unbundled their bills to separately state supply charges in preparation for retail access. However, current Commission rules require that, "a utility may not separately list line items on the bill that do no represent a separate, discrete utility service or a State or Federal Tax." It was thought that further unbundling would confuse consumers.
Recently, Emera Maine sought to implement a new bill format that unbundled rates further. Given consumer reaction to the Emera bill change, the Commission opined that, "the potential for confusion by unbundling charges may no longer exist."
As a result, the Commission is requesting comment on the following:
"1. What components of electricity and natural gas delivery rates should be itemized on customer bills? Please explain the objective for itemizing each such item.
2. What components of electricity and natural gas supply prices should be itemized on customer bills? Please explain the objective for itemizing each such item.
3. With respect to supply, how should the charges for any unbundled item be determined? Should the charges be determined by the utility or the CEP/Marketer?
4. Should any unbundling requirements apply to bills issued by CEPs or Marketers?
5. Should the degree of bill unbundling vary by customer type, e.g., residential vs. industrial? If so, please explain how and why.
6. Should unbundling be limited to items for which the charge can be precisely calculated, e.g., electric transmission rates, or should it extend to estimated or illustriative amounts, e.g., renewable portfolio standard compliance costs? Please explain the response.
7. Should unbundling of a delivery rate component require that the component be explicitly stated in the utility's tariffs or terms and conditions? Please explain your response.
8. Please identify all components of delivery rates that can be precisely calculated at all times.
9. Please identify all components of supply prices that can be precisely calculated at all times.
10. Please identify the components of delivery rates that are currently separately stated in utility terms and conditions.
11. What level of detail should accompany any unbundled component to explain or describe it?
12. Is there an optimal or preferred number of pages for utility bills?
13. Please identify alternative ways to convey information to customers about the components of their delivery rates and supply prices, and comment on the relative pros and cons compared to bill unbundling.
Comments are due on July 15, 2016. The full text of the Notice of Inquiry is available on the NEM website.
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