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INSIGHT: It’s Time for Congress to Unshackle U.S. Competitive Electricity Markets

Nov. 6, 2019, 9:01 AM

Competitive electricity markets are at a crossroads, and Congress should pay attention.

We are now 10 years past congressional debate on a comprehensive climate bill and nearly 20 years into pursuing different models of electricity regulation in different regions of the county. Much has changed. Markets, now more mature and diverse, are poised to enable new affordable energy and climate solutions—if they are operated and governed effectively.

In regions with organized markets (Regional Transmission Organizations (RTO)/Independent SystemOperators (ISO)), there is now greater diversity in stakeholder participation and decision-making processes. There is also diversity in electricity pricing, fuel sources, and new goods and services. What’s missing is oversight and action by Congress to ensure well-functioning competitive markets thrive.

RTOs are increasingly left to fill in policy gaps on complex market and jurisdictional issues with little guidance or direction. Whether it be integrating the views of consumers in stakeholder processes or integrating new technologies into the grid to accommodate state clean energy goals, RTO rulemaking is breaking down.

This is happening at a time when technology and innovation are accelerating—and when markets are uniquely positioned to unleash more cost-effective and cleaner electric supply and services.

Pressure on FERC to Intervene

One result has been that electricity consumers large and small are becoming more proactive, pressing both Congress and FERC to intervene. These consumers want more accountability and transparency from market operators. They want better and fair representation. They increasingly want choice of supplier, direct access to electricity, and the ability to self-supply at wholesale and retail levels. They want access to data and to environmental preferences at market rates. Essentially, they want greater value from markets and a more consistent experience across regions.

In June, a diverse chorus of electricity customers delivered a list of recommendations to FERC for how to begin addressing these issues and ensure competitive wholesale electricity markets deliver the cost-effective, clean, reliable, and resilient solutions that electricity customers demand and deserve.

In response, the bipartisan Congressional Chairs of the Energy and Commerce Committee called for FERC to revisit RTO governance to consider ways to ensure stronger consumer protections and accountability in decision making.

For organized electricity markets to thrive, much more attention is needed. In 2017 and 2018, I helped to organize a series of hearings entitled “Powering America” that systematically reviewed developments in the nation’s electric power system and were developed jointly between Republicans and Democrats on the House Energy and Commerce Committee.

The subjects of the hearings ranged from the origins of the Federal Power Act, to current challenges facing the nation’s grid operators, to emerging issues being confronted by more active consumer engagement and new technologies disrupting the system. The result was a joint, bipartisan fact-finding approach (what congressional experts call regular order) to paving the way for Congress to develop legislation.

It’s time for legislators to step up and unshackle the competitive markets they helped to create. With Congress actively considering the future of climate and energy legislation, including at a recent sweeping hearing on decarbonization of the electricity sector, now is the time to begin a broader discussion around how markets can help accelerate the transition to a modern grid while empowering consumers and protecting the public good.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Tom Hassenboehler is a partner at COEFFICIENT and the founder and executive director of the Energy Consumer Market Alignment Project. He most recently served as the chief counsel for energy and environment at the House Committee on Energy and Commerce under Chairmen Fred Upton (R-Mich.) and Greg Walden (R-Ore.).