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FERC's Standard Market Design..aka Soylent Green II

Discussion in 'Issues Around the World' started by Coot, Jan 20, 2003.

  1. Coot

    Coot Passed Away January 7, 2010

    In other threads, this concept has been touched upon. I've alluded to the idea that what is really going on is that the FERC intends to impose a standard price for electricity throughout the country, irregardless of how the power is produced and what the real cost is. Essentially, the first step in this plan would entail the FERC taking over the entire transmission system for electricity throughout the country. FERC intends to affect this through its NOPR. If this synopsis is unsettling, you can read it in all its glory here.

    Anyone bothering to read the links will notice that the NOPR is largely toothless in that it gives unprecedented power to traders and producers. If they get caught doing what was done to California, they get a handslap and other legislated market forces intervene to limit the activity. In other words, if you, as a significant market power, choose to break the rules, you will be asked with much civility to kindly stop such boorish practices.

    I bother to point all of this out primarily because the Southeastern States are getting ready to take one helluva ride. From the article, it's somewhat difficult to tell that the citizens of Louisiana are being asked to subsidize power for New York. The reporter in this piece fails to see the bigger picture....I'm left with the picture that the writer knows something's amiss, he's just not sure what.

    The situation the article describes used to be handled by contract with the various agencies involved agreeing to pay certain costs by benefit. For example, in this case, the Northeastern states who will benefit from the added generation would pay a portion of the interconnection and upgrade of the transmission system according to benefit received, the generator would pay a portion and the local utility would pay a portion again, based on benefit received. Under the FERC standard market design, the people of Louisana would pay for all of the interconnection...so that the Northeast could hold their rates down, as they don't want new plants in state.

    What ultimately ends up happening is that the only two players in the game end up being the FERC and the power producers. The FERC ends up with unprecedented control over the power market and the generators end up with...making campaign contributions to exert their will.

    Amazing how deregulation will really work isn't it?
  2. mikeky

    mikeky Member

    Seems incredible. How could this work, considering so many different regional issues, not to mention the <a href="http://www.skrecc.com/history4.htm">non-commercial, cooperative-owned power plants</a>? Will it be "your rate is going from $0.08 kw-hr to $0.12 kw-hr, and there's nothing you can do about it"?
  3. Robert Harris

    Robert Harris Passed Away Aug. 19, 2006

    "... citizens of Louisiana are being asked to subsidize power for New York."

    Hey -- that's not such a bad thing!

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