Will FERC's market solution wipe out state commissions?
One might say, when it comes to FERC, some state public utilities commissions' lack of faith is disturbing—to paraphrase Lord Vader. It's also necessary, as any journalist would tell you.
The FERC NOPR on standard market design (SMD)—which completes the "trilogy" of regulation on wholesale markets, as chairman Pat Wood described it—had some state PUCs blasting the NOPR even before its July 31 release.
One might call it a small rebellion. PUC commissioners from 15 states, including Alabama, Arkansas, California, Georgia, Idaho, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, South Carolina, Oregon, South Dakota, Washington, and Wyoming, joined to fight FERC's SMD. These PUCs believe in their hearts that FERC's SMD is a "massive takeover" of state authority (see Public Utilities Commissions: Re-regulate or Re-engineer? By Branko Terzic, p. 12).
In fact, many industry experts readily agree that the SMD is a power grab-but the real question is whether it is a legal one. If it is-then what is to happen to PUCs?
FERC does propose establishing a single flexible transmission service that incorporates oversight that once was in the state commissioners' sole discretion-and courts have affirmed FERC's authority. FERC will be exercising jurisdiction over the transmission component of bundled retail transactions, aka native load.
Not to mention that FERC's proposed role for state regulators is to participate in Regional State "Advisory" Committees that would oversee a particular RTO, or independent entity. The fact that they use the word "advisory" does say much about how much PUC authority will be retained.