FERC rules aim to boost competition, curb rates

The Federal Energy Regulatory Commission proposed new rules to improve competition in wholesale power markets amid criticism of rising electricity costs.

Average U.S. retail power prices climbed 9.3% to 8.9 cents per kilowatt-hour in 2006, the largest increase since 1981, according to the Energy Information Administration, the statistical arm of the Energy Department. Several states, including Maryland, experienced higher power prices after regulators lifted rate freezes imposed to help encourage competition in electricity markets.

A coalition of 41 consumer advocates, public power companies and energy users asked the commission in December to expand its inquiry into the wholesale markets. About $241 billion worth of power was traded on the markets in 2005, according to EIA data.

The “incremental improvements” proposed will “build on the acknowledged strengths of these well-functioning markets” and provide regulatory certainty to assure investment, said William Massey, former agency commissioner and now counsel to pro-competition group Compete.

“We are acting because we recognize FERC has a duty to improve the competitiveness of wholesale power markets,” Chairman Joseph Kelliher said.

The commission is proposing new rules based on several technical conferences with industry and stakeholders to enhance the independence of market monitors and ensure responsiveness of the regional transmission organizations and independent system operators that run the nation’s wholesale power markets.