How to find a future that works.
The trouble with treating grid projects as market players in New York’s capacity auction.
The old rules don’t always fit with new commercial realities.
To encourage billions of dollars of investment into America’s transmission grid over the next several decades, the Federal Energy Regulatory Commission (FERC) is restructuring its regulatory policies to bring market-based solutions into the framework for planning, construction, and operation of new transmission lines. The recent Order 1000 is the most dramatic example of this effort. But as FERC has learned before, one set of rules doesn’t serve the financial and commercial needs of all market participants.
The Grid Is Dead
WHY IS ELECTRICITY COMPETITION NOT WORKING? The principal reason is the failure of Order 888 to accommodate the economic and technological constraints of wholesale power markets.
Soon after Congress passed the Energy Policy Act of 1992, to give authority to the Federal Energy Regulatory Commission to compel electric utilities under its jurisdiction to wheel power for others, the FERC correctly recognized that piecemeal wheeling orders wouldn't work well without a tariff. A tariff would make the service quickly available to the user without the need for time-consuming negotiation.
METERING issues can be confusing, especially as they relate to
new technologies and electric deregulation. However, only three guiding principles are needed to protect consumers and to ensure fair competition.
First, consumers need accuracy, safety and reliability. These are ensured through adherence to ANSI C12 standards.
Second, they need public, or "open," access to both meters and communications (with passwords to protect privacy).
Each is unique, whether big or small, niche or mass-market.
Downsizing. Deregulation. Open access. That ought to boost both supply and demand for utility consultants, as unemployed middle managers seek out new careers and utilities struggle to survive in a more competitive and faster-moving environment.
However, since consultants come in many colors, which is right for you and your company?
As the giants of the consulting world, this category includes firms such as McKinsey, Andersen Consulting, The Big Six consultancies, and Booze-Allen.
My business, the natural gas industry, stands at a crossroads. Unbundling and deregulation permeate the market. The next three years will see the end of many fixed, long-term supply and transportation service contracts (em the closing of an era.
In fact, natural gas marks perhaps the last commodity traded on a major exchange that remains captive to such long-term contracts. The demise of such contracts will add flexibility to gas pricing and supply management.
This evolution will accelerate with a host of changes in the way gas moves in wholesale markets.
Despite a recent delay, the stage
appears set for online trading
in electric transmission capacity.
THIS IS ONLY A TEST (EM FOR NOW.
But come January, if all goes well, the OASIS program will start up in real time, with customers venturing onto the Internet to place reservations for capacity on the nation's electric transmission grid.
By Robert J. Michaels
The Justice Department's Guidelines don't tell us very much about
today's (or tomorrow's) electric market.
However many electric utilities remain after this merger wave, competition will be forever changed.