FERC Filings

COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION-Comments Regarding Retail Electric Competition-V010003

VI. Market Structure

Wholesale and retail markets are two sides of the same coin. A healthy wholesale market is a critical element of a well-functioning retail market. If wholesale markets don’t work, retail suppliers cannot provide customers with products that meet their needs. On the other hand, poorly functioning retail markets mask price signals, thereby depriving consumers and retail suppliers of the ability to use appropriate demand-side and hedging tools to manage wholesale price volatility. In a properly-functioning competitive electricity market, wholesale competition will manage the supply, and retail competition will manage the demand. It is the job of LSEs to effectively manage risk through bilateral agreements and other financial tools. Continual retail rate freezes discourage large and small customers from implementing load management programs or securing risk-management products from other energy service providers.

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