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Santa Outlines FERC's Future Focus

Fortnightly Magazine - August 1996

The Federal Energy Regulatory Commission's Donald F. Santa, Jr. looked beyond Order 888 electric restructuring when he addressed the second annual DOE/EPRI Executive Conference in Washington, DC, on May 21. According to Santa, the post-Order 888 electric agenda will be marked by three cross-cutting issues.

First, the FERC will grapple with market power in an open-access environment. While open access will mitigate the market power of transmission-owning utilities, the FERC needs to consider market power stemming from generation concentration. Santa warned that the FERC will examine market power closely when reviewing proposed mergers as well as applications to charge market-based rates for wholesale power sales.

A second issue involves transmission pricing under open access. Santa queried whether across-the-board open access sounds "the death knell for contract-path pricing." The FERC will evaluate the extent to which transmission pricing will contribute to greater efficiency in wholesale markets as well as the role of independent system operators or other institutional innovations in opening the door to regional pricing.

The third issue on FERC's agenda concerns the potential clash between federal and state jurisdiction as regulators at both levels pursue restructuring.

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