6.6. ERMUSR 01-11-2005 - Laserfiche WebLink

Home Browse Search

Restructuring at the Crossroads: FERC Electric Policy Reconsidered Introduction t has been n~,~elve years since Congress passed the Energy Policy Act of 1992. It has been more than eight years since the Federal Energy Regulator}' Commission ("FERC") issued Order No. 888, which fuse encouraged the development of Independent System Operators ("ISOs"). It has been live years since FERC issued Order h'o. 2000 (its rule governing the voluntary formation of `7:egional Transmission Organizations" ("R'TOs") ), and more than two years since it launched its now-moribund "Standard ~~larket. llesign" ("S~~ID") initiative. During that time, h~ERG's policti~ emphasis has changed from ensuring non-discriminatory transmission access to advocacy of RTO-run wholesale electric markets. Electric restructuring has turned out to he a more complex, difficult and uncertain undertaking than moss people imagined when FERC issued Order No. 888. The Western market debacle of 2000-2001, the spectacular flame-out of Enron and the subsequent revelation of its cynical and duplicitous business practices, the massive Northeast-Midwest blackout of August 14, 2003, the increasing and often unstable cost of natural gas used to fuel most new electric generation, the related run-up in long-term power supply pries (often without regard to actual production costs), the ever-increasing costs of RTOs in those regions where they exist, the severe financial distress of so many competiti~'e electric ,generators/marketers, and the resulting entrance of financial institutions and lenders into the generation and po~~-er trading sectors, all illustrate tl~e phenomenon of unintended consequences. There arc currently five up-and-running FEKC jurisdictional ISOs.t With the possible exception of the Southwest Power Pool ("SI'P") region, it is The five arc ISO New England ("'ISO NF."),the Newyork ISO ("N'y'ISO"), the PJ~'I Interconnection ("PJ~'["), the hlid~,~est ISO (";~IISO"),and the California ISO ("CAISO").The ERCO"F ISO in Texas is not FERC jurisdictional, and hence is not included in this discussion. y~Vhile these five entities are organized as ISOs, and FERC has only Iinall~~ approved foi-u~ of their as Order No. 2000-compliant R~I`Os, ~~~e ~~~ill use the term RTOs to refer to all five, both for simplicity's sake and because this is common indusu~y usage.