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FERC Considers Demand Response, Other Reforms to Improve Wholesale Power Markets
The Federal Energy Regulatory Commission (FERC) recently proposed new rules to improve operations in organized electric markets, boost competition and bring additional benefits to consumers.
The proposed reforms, outlined in a Notice of Proposed Rulemaking (NOPR) on competition, are designed to ensure reasonable rates and to remedy undue discrimination and preference and improve wholesale competition in organized markets, according to FERC.
The reforms are intended to address demand response and market pricing during a period of reserve shortage, long-term power contracting, market-monitoring policies, and responsiveness of regional transmission operators (RTOs) and independent system operators (ISOs) to stakeholders and customers.
The specific proposals include:
- Accept bids from demand response resources in their markets for certain ancillary services comparable to other resources.
- During a system emergency, eliminate a charge to a buyer for taking less energy in the real-time market than it purchased in the day-ahead market.
- Permit an aggregator of retail customers to bid demand response on behalf of retail customers.
- Modify market rules to allow market-clearing prices, during a period of operating reserve shortage, to reach a level that rebalances supply and demand so as to maintain reliability while providing sufficient provisions for mitigating market power.
Long-term Power Contracting
- Require RTOs and ISOs to dedicate a portion of their Web sites for market participants to post offers to buy or sell power on a long-term basis.
Improved Market Monitoring
- Require each RTO and ISO to provide its Market Monitoring Unit (MMU) with access to market data, resources and personnel necessary to carry out its duties.
- Require the MMU to report directly to the RTO or ISO board.
- Expand the list of recipients who would receive MMU recommendations regarding rule and tariff changes, and broaden the scope of behavior reported to FERC.
- Remove the MMU from tariff administration, including mitigation, and require each RTO and ISO to include in its tariff ethics standards for MMU employees.
- Expand dissemination of MMU market information to a broader constituency, with more frequent reports.
Responsiveness to Customers and Stakeholders
- Adopt principles for RTOs and ISOs to ensure inclusiveness, fairness in balancing diverse interests, representation of minority positions, and ongoing responsiveness.