Regulatory Commissions and the Development of Competitive Wholesale Electric Markets.

Abstract:

The passage of the Energy Policy Act in 1992 ushered in a new competitve era in the U.S. electricity industry. The task ahead for both state and federal regulators is to make the regulatory changes that are a necessary part of these changes in a coherent fashion.

• There is no way to achieve coherence in transmission policy without formal cooperation between federal and state regulators. The Commission should take steps to begin this collaborative process, in order to address issues of transmission pricing, unbundling of services, siting, access, and planning.
• Who should bear the rists of a transition to a more competitive industry? This is clearly a question of policy, and should be treated as such. As a matter of policy, the jusrisdiction which is responsible for creating stranded assets should be the one which deals with its consequences. I applaud the California and Michigan commissions for dealing with this issue explicitly as part of their proposals. the FERC has done the same in its recent NOPR, but has left unclear the issue of possible preemption of state jurisdiction. 
• The failure of Congress to codify the Pike County doctrine has created a number of regulatory difficulties which make retail competition more attractive, IRP less attractive, and potentially diminishes the richness of wholesale markets. 

The FERC and the state commissions mist exercise the statesmanship on these issues, rather than continuing to engage in bureaucratic turf battles.