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New FERC rules benefit wind power industry

The Federal Energy Regulatory Commission (FERC) proposed new rules last week aimed at improving operations and boosting competition in organized electric markets, a move that was welcomed by the wind power industry.

The American Wind Energy Association (AWEA) released a statement that said the proposed reforms are “central to the ultimate success and large-scale growth of wind power.”

FERC said the proposed reforms are designed to ensure reasonable rates and improve wholesale competition in organized markets, helping to level the playing field for new utility-scale energy producers, like wind farms.

The proposals address demand response and market pricing during a period of reserve shortage, long-term power contracting, market-monitoring policies, and responsiveness of regional transmission operators (RTOs) and independent system operators (ISOs) to stakeholders and customers.

On long-term power contracting, the proposed reforms would require RTOs and ISOs to dedicate a portion of their Web sites for market participants to post offers to buy or sell power on a long-term basis. As for customer and stakeholder responsiveness, the reforms call for the adoption of principles for RTOs and ISOs to ensure inclusiveness, fairness in balancing diverse interests, representation of minority positions, and ongoing responsiveness.

“Today’s proposal constitutes the next step, not the final step, in the process of improving competition in wholesale electric power markets,” FERC Chairman Joseph T. Kelliher said. “The reforms we are proposing today reflect four areas of the competitive markets debate where proposed improvements were supported by the law, facts and economic theory. FERC is continuing to evaluate other market reforms and we will act on them when ready.”

FERC directed all RTOs and ISOs to consult with their stakeholders and make compliance filings that detail their plans for compliance.

FERC also ordered staff technical conferences. One technical conference will address proposals by the American Forest and Paper Association and Portland Cement Association et al. to modify the design of organized markets. A separate technical conference, to be convened by staff shortly after receiving comments on the NOPR, will discuss barriers to demand response in organized markets.

“The commission has wisely chosen to pursue incremental improvements that build on the acknowledged strengths of these well-functioning markets, and the resulting regulatory certainty will help assure continued investment so consumers can continue to benefit from the efficiencies and environmental advancements brought about by these markets,” said William Massey, a former FERC commissioner and currently counsel to the COMPETE coalition, a group that supports well-structured competitive electricity markets.

SustainableBusiness.com News

25 February 2008