Still Beyond the Pale?
Bruce Radford is executive editor of Public Utilities Fortnightly. Contact him at email@example.com.
Two decades into our grand experiment with wholesale power markets and we're still debating the need for a cap on prices.
Experts have flirted with the idea of an energy-only market, allowing prices to climb to the sky to recover the missing money. But except for ERCOT, which remains a FERC-free zone and thus free of any scolding from Congress, we've not yet found the courage to let prices float free of costs.
Two developments could change that. First is the dash to gas, which turned fuel procurement into a just-in-time dice roll. Second is the Polar Vortex, which struck during the winter of 2013-14, when space heating loads in the northeast pushed natural gas prices to unimagined levels, to leave gas-fired generators at risk for recovery of costs.
These events have prodded the Federal Energy Regulatory Commission to propose a new rule. FERC doesn't plan to take all controls off of prices, but it could lead them higher.
Of course, we don't actually have price caps in wholesale power markets. Never have. Rather, we have offer caps.