Setting Rules Without Platonic Ideal of Competition
Robin Lunt is an attorney (Of Counsel) at Wilkinson Barker Knauer LLP. Prior to joining WBK, Robin worked as the general counsel of a venture backed energy technology company. She was previously legal and policy advisor to WBK’s Tony Clark when he served as a commissioner at FERC. She also served as the assistant general counsel to the National Association of Regulatory Utility Commissioners.
The Federal Energy Regulatory Commission has a philosophical inclination toward markets and attempts to shoe-horn "competitive" approaches into the electric sector wherever it can. This devotion to competition unintentionally adds complexity to transactions and limits the opportunity to develop independent power projects destined for purchase by investor-owned utilities in vertically-integrated states.
It may also catalyze the unraveling of the electric markets in restructured states.
FERC's affinity for competition can, ironically, undermine competitive procurement in vertically-integrated states. As part of an integrated planning exercise, utilities often undertake a competitive request for proposals process and select projects based on that RFP.
The selected projects must still run the gauntlet of a FERC-governed generator interconnection queue. This queue can delay projects due to nascent or speculative projects holding queued positions without any promise of being built.
FERC tries to address the risks of speculative projects, by allowing transmission operators to bump a project from a queued position if it does not meet the proscribed element. This too adds compliance and development risk to these projects.