PowerFacts
EPSA PowerFact: Reform Order 888 To Unlock Greater Consumer Benefits
EPSA PowerFact: REFORM ORDER 888 TO UNLOCK GREATER CONSUMER BENEFITS
On September 16, 2005, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry on how to reform landmark Order 888 (1996) to enhance competition in traditional power markets by prohibiting discriminatory practices by transmission owners. EPSA filed detailed comments (available at www.epsa.org). As the Commission found in Order No. 2000 (2000), absent a strong federal regulatory structure, certain transmission owners who also own generation will engage in practices that favor their own generation by blocking transmission access for their competitors. Moreover, EPSA agrees with the Commission’s determination in Order No. 2000 that the demonstrated benefits of wholesale power competition will not be fully realized unless and until Order 888 is reformed in a major and timely manner. As such, the Commission must complete the work started in Order No. 2000. EPSA commends FERC for acting on this matter and recommends the following as priority issues to address in the pending proceeding.
Transmission Access
Order 888 recognizes a “native load” preference that allows transmission owners to reserve capacity in the name of their traditional captive retail customers. The problem with this approach in practice is that it creates an opaque “black box” around the transmission that is reserved in the name of “native load” customers. When this occurs, transmission – even that which goes unused – is not available to others, including competitive suppliers, to serve their customers. As a result, consumers are denied access to cleaner, more efficient and less costly electricity. To prevent abuse, FERC should:
• Develop a more transparent system for transmission owners to calculate their native load obligation and system available transfer capability so that transmission is not withheld from the market, going unused rather than enabling access to supply by customers;
• Require that native load providers be subject to the same open access terms and conditions as all transmission users; and
• Require that all sources of power generation in a given area be taken into account when dispatching power plants and planning for new ones so that all customers, including “native load” customers, reap the full benefits of the transmission reserved for them.
New Services
Order 888 was founded on a comparability standard reflecting the uses which supported the vertically-integrated utility model at the time it was issued, not the competitive wholesale model that has evolved in the ensuing decade. Merely requiring transmission owners to treat competitors as they treat their affiliates – while an important policy – will not fully promote competitive markets A reformed Order 888
should include services that all market participants need to get power to market and not simply those services the vertically-integrated utilities use. Examples of such new services include long-term conditional point-to-point transmission service that would be subject to limited curtailment and parking services based on current transmission practices.
Market Access
Truly non-discriminatory access to the transmission system is a necessary, but not solely sufficient, condition to bring the benefits of competition to consumers. Access to transmission without access to the markets that are served by the transmission system is essentially meaningless. In order to enhance competitive markets beyond what states can achieve with competitive procurement and other measures, FERC should ensure access to the market to the full extent of its jurisdiction and prevent vertically integrated utilities from foreclosing access to the market by competitive generation by requiring regional joint planning and comprehensive economic dispatch programs.
EPSA's Comments on Order No. 888 Reform NOI
Energy Policy Act of 2005 – Winners and Losers (Remarks by EPSA President and CEO John E. Shelk at the 24th National Regulatory Conference, Williamsburg, Va. - May 12, 2006)
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.