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APPA's RTO Proposal Is Untested and Untimely
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) today made the following comments about the long-awaited proposal from the American Public Power Association to undo most elements of regional organized electricity markets known as Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs).
EPSA President and CEO John E. Shelk said, "EPSA and its members are committed to a responsible and serious dialogue among electricity stakeholders on public policy issues. Doing so is particularly important in light of the current economic situation. Regrettably, the APPA proposal offers no evidence that even if it could be implemented seamlessly, it would actually lower costs for consumers or increase competition, much less achieve national policy goals. Instead, APPA's scheme would place the two-thirds of the country being served by organized markets at the mercy of an untested, experimental plan."
Shelk said, "The ironically named 'optimization market' in the APPA proposal is neither optimal nor a market. It is not optimal for many reasons, including the plan's inconsistency with investing in a cleaner, greener economy. It is not a market because the plan is essentially a return to cost-based rates, unless the market prices are lower. As presently unfolding in states that retained cost-based rates, such regulation does not protect consumers from higher prices and can actually help drive rates higher. Thus, APPA's proposal is unsustainable and neither good for consumers nor suppliers.
"EPSA believes that long-term contracts play an important role in electricity markets. Given changes in just the past year in expected fuel costs, electricity demand, costs of new construction, and environmental and energy policies, long term contracts are not a panacea to lower prices as APPA implies. Had load serving entities entered into such contracts a year ago to the extent that APPA seems to advocate, APPA would likely be in the forefront of seeking to change those contracts today, given drastic changes in projected fuel costs and demand levels in recent months much less over multiple years," said Shelk.
Shelk concluded, "Competitive power suppliers are committed to refining organized markets and welcome serious proposals to do so, accompanied by sound analysis to show the proposals will actually achieve their objectives. It is unfortunate that APPA did not advance its proposal when FERC was actively seeking input during its extensive, multi-year bipartisan inquiry into wholesale power markets that concluded last year. EPSA and its members are focused on moving forward under a new Administration and a new Congress toward the continued responsible operation and development of reliable, environmentally-responsible, competitively-priced electricity that promotes necessary investment in the power sector."
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.