FERC's plan to expand into energy market-monitoring faces many challenges.
David O. Jermain is a principal at Andersen. He specializes in restructuring related issues and the management of restructuring projects, including the formation and start up of regional transmission organizations, independent transmission companies, and scheduling coordination functions. He also provides ongoing market design/redesign and market monitoring services to market participants, ISOs, RTOs, and Transcos. Jermain has more than 20 years experience in the energy industry and served as vice president of market monitoring, internal audit and regulatory affairs at the California Power Exchange.
There are three important challenges FERC's vision of market monitoring face. First, the market consequences of a significant institutional "drag coefficient" when addressing problems of market power or, more generally characterized, market abuse. Second, balancing ex ante and ex post modes of mitigation and considering more immediate complementary tools. As well as, third, addressing the relative emphasis on FERC regulation and RTO self-regulation
In the Federal Energy Regulatory Commission's (FERC) Dec. 17, 2001 paper, Concept Discussion Paper for An Electric Industry Transmission and Market Rule, the staff writes that RTOs "need to establish a process for developing periodic reports on prices, volumes, supply, demand, liquidity, and ownership structure and concentration of these markets."1 FERC staffers go on to say reports should be sent concurrently to FERC and the RTO without the RTO's prior review. FERC's vision is that monitors will work together-and with FERC-to establish common market performance measures. The focus of monitoring would include attention to barriers to entry and whether demand is being satisfied efficiently.