Public Power Perspectives
Barriers and Can Openers by Robert Varela, Editor, Public Power Weekly, American Public Power Association, Washington, D.C. Written as an opinion piece for APPA-member publications, May 2008. In its recent rehearing order on its market-based rate policies, the Federal Energy Regulatory Commission said “long-term markets may be presumed to be competitive, absent barriers to entry…” APPA has commissioned a study of barriers to entry in the electricity industry, but there’s an awful lot of anecdotal evidence of barriers to entry of new generation and transmission. Given its statutory responsibility to ensure that rates are just and reasonable, the commission can’t just vaguely say that barriers to entry may or may not exist and leave it at that. The commission under Joseph Kelliher has done a good job of facing up to the reality that RTOs were not going to be established everywhere and that it had to do something about the flaws in its open access rule, Order 888. The commission needs to take that same approach to the RTO-run markets.
In Our Spare Time by Robert Varela, Editor, Public Power Weekly, American Public Power Association, Washington, D.C. Written as an opinion piece for APPA-member publications, April 2008. Climate change and reform of the electricity markets run by regional transmission organizations continue to be the 800-pound public policy gorillas confronting the electricity industry, but APPA has a good deal more on its plate, as illustrated by its comments to 10 House and Senate Appropriations subcommittees on federal budget priorities. The comments deal with a wide range of federal programs, including antitrust oversight; renewable energy resources (opposing plans to zero out the Energy Department’s Renewable Energy Production Incentive program); Navajo electrification; nuclear waste; clean coal; the Low-Income Home Energy Assistance Program and DOE’s weatherization program; the federal power marketing administrations’ purchase power and wheeling programs and Western Area Power Administration’s construction, rehabilitation and operations and maintenance program; the Environmental Protection Agency’s Energy Star Programs; and the Rural Utilities Service’s broadband programs.
Costs and Markets by Robert Varela, Editor, Public Power Weekly, American Public Power Association, Washington, D.C. Written as an opinion piece for APPA-member publications, March 2008.APPA’s new white paper, Consumers in Peril, and its recommendation that regional transmission organizations focus on their transmission services and get out of the business of running centralized markets drew some predictable responses. The Electric Power Supply Association charged that APPA—no matter what we may say—wants a return to “cost-based regulation.” But by definition, market-based rates will be cost-based—if the markets are competitive. If generators in these markets have lowered their costs but not their prices (or if their costs or prices are rising faster than other regions), then the markets are not functioning well and are not competitive. Proponents of the RTO-run markets, including the Federal Energy Regulatory Commission, assert that the markets “are functioning well,” but offer no hard data. The commission needs to develop objective criteria for judging the RTO-run markets. For example, PJM’s reports on its “Reliability Pricing Model” auctions show gains in demand response and new capacity—but those gains appear to be coming at an extravagant price.
