FERC Filings
FERC RTO NOPR COMMENTS
Power Exchanges
Power Exchanges
The NOPR notes that "another important issue is the relationship between RTOs and power exchanges." The Commission concludes that it will "leave it to each region to decide whether there is a need for a PX and whether the RTO should operate the PX." EPSA disagrees with this conclusion and urges the Commission, in the Final Rule, to require RTOs to separate transmission system operations from participation in energy markets. The primary, if not exclusive, focus of any RTO must be to operate the transmission system reliably in a manner that supports the commercial power market. In order to provide this support fairly and competently, the RTO cannot be concerned with supplying energy to the commercial market. It should not administer commercial energy markets and should not take positions in those market. To obtain and perform those services required to ensure short-term reliability - e.g., procurement of resources necessary to provide for transmission constraint mitigation, moment-to-moment system balancing, VAR and voltage support, frequency support, and automatic generation control -- the RTO has the capability of contracting (establishing call contracts) for capacity from the commercial market. It need not enter nor participate in the energy market.
The combination of short-term grid operation (RTO) and direct participation in the commercial energy market (PX) creates unacceptable conflicts of interest. Such conflicts are inevitable when the provider of an essential monopoly facility - transmission access and information - also provides commercial exchange services that can be offered competitively by others. Even the appearance of partiality in the RTO's provision of transmission service will adversely affect a competitive wholesale market by undermining participants' confidence in the RTO's neutrality and fairness.
To the extent that market participants desire alternative spot pools to clear their energy market transactions at the margins, market demand will cause such services to be offered. Such spot pools or power exchanges should be allowed to develop independently of the transmission system operator, with each exchange competing with other exchanges within a regional market. Affiliation or special relationship between any power exchange, a transmission owner, the operator of the transmission system or the administrator of the open access transmission tariff is likely to chill market entry. Moreover, EPSA is concerned that the regulatory rules necessarily imposed on any entity with the dual capacity of operating monopoly transmission services and participating in power markets will limit the RTO's ability to respond effectively to market developments and will stymie commercial innovation. Thus, pool operations must remain separate so as not to hamper the market participants' ability to innovate and respond to new markets and customer needs.