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The Not So Solid South: Texas Gov. Urges Adoption of FERC's Wholesale Market Reforms

In a letter leading up to the recent Southern Governors’ Association (SGA) meeting, Texas Gov. Rick Perry urged SGA chairman Gov. Bob Wise of West Virginia to support the Federal Energy Regulatory Commission’s (FERC) proposed reforms to enhance competition in wholesale electricity markets. Perry wanted the SGA not to adopt any resolution that opposed the commission’s efforts to promote certainty and stability in the electric industry.

In the wake of the Aug. 14 blackout in the Northeast and Midwest, FERC’s initiative requires serious consideration because it recognizes the need for a regional approach to manage the flow of electricity across multiple jurisdictions, Perry said.

The reforms advanced in FERC’s April 2003 white paper, Perry felt, would eliminate opportunities for transmission owners to discriminate against other companies seeking access to the electricity grid and would create large markets in which participants may manage the risks associated with operating in a competitive environment.

“These reforms would provide benefits to the nation as a whole, by bringing vigorous competition to the production and wholesale sale of electricity and by improving the efficiency of the electricity market,” the letter said.

“Competition in the sale of electricity at the wholesale level should result in lower costs of producing electricity, greater opportunities for the generation of wealth, low costs of electricity for consumers, and additional investment in electric production and transmission facilities.”

Perry was particularly concerned with the outcome of FERC’s reform efforts because their implementation is essential for effective retail competition in areas of Texas that haven’t yet restructured. Companies must have the assurance of fair and open access to the transmission system, large energy markets and market rules that permit them to manage risks effectively in order to enter the market to compete at retail.

Any delay in the introduction of the wholesale market reforms will harm Texas electricity consumers by delaying the benefits of retail competition, Perry said.

For more information, contact EPSA’s Francine Greenberg at fgreenberg@epsa.org, or Douglas Austin at daustin@epsa.org, or call (202) 628-8200.