Call for electricity market reform in U.S.


Mark Crisson,
President & CEO,
Washington, DC, U.S.A. — (METERING.COM) — February 28, 2008 – The American Public Power Association (APPA) has issued a call for a reform of the U.S. electricity market’s Regional Transmission Organizations (RTOs) and a move away from the RTO-run centralized wholesale market model.

In a new White Paper, “Consumers in Peril,” the APPA says that restructured wholesale electricity markets have produced higher, rather than lower, prices, and that they have failed to provide the promised benefits, including increased competition, to consumers. Accordingly fundamental market reform is necessary to protect consumers.

APPA proposes that the RTOs should continue to perform the functions that they are doing well. Amongst these are ensuring that all buyers and sellers have open access to the transmission system, simplifying regional transmission rate structures, and supervising regional transmission system operations.

However, the functions and features that have failed to produce benefits, mostly associated with RTO-run centralized power supply, ancillary service and locational capacity markets, should be streamlined and ultimately replaced.

Such a regime would de-emphasize participation in RTO-run centralized power supply markets by both buyers and sellers, and foster longer-term bilateral power supply contracting, says the APPA.

In the interim there are also a number of immediate steps that can be taken to provide consumers with some relief, such as requiring demonstrations that new markets or programs provide net benefits to consumers, improving governance of the RTOs to make them more responsive to consumer concerns, and providing for truly independent market monitoring.

“The wholesale electric markets operated by RTOs under federal supervision have driven up electricity bills twice as fast as in regions without such markets,” says Mark Crisson, president and CEO of APPA. “This is a growing problem for businesses and consumers in these regions, threatening jobs and families in a tough economy. It’s time for Congress and the Federal Energy Regulatory Commission to act.”

The APPA is the national service organization for the U.S.’s community and state-owned electric utilities.