According to a new study by Cambridge Energy Research Associates (CERA), urgent changes are needed before United States' power markets can become workable and competitive. The study, Energy Restructuring at a Crossroads, recommends a minimum of 12 policy and structural changes for building the necessary structural elements of competitive power markets.
CERA involved more than 40 energy companies, industry associations, and regulators in the study, which recommends the following actions:
- Define boundaries of wholesale markets.
- Design wholesale markets to achieve critical mass participation
- Expand the missions of RTOs to tightly integrate systems and market operations
- Create regional wholesale spot markets
- Create capacity markets
- Adopt pricing mechanisms to manage transmission congestion
- Stimulate appropriate transmission system planning and investment
- Make sure the CFTC retains and expands its oversight of energy derivative markets
- Have the FERC backstop RTO market conditions
- Rationalize energy infrastructure siting and permitting
- Coordinate wholesale and retail transitions
- Minimize distortions of market price signals
“The power business in the U.S. is too important to continue to restructure on a trial-and-error basis,” said Francis X. Shields of Accenture, sponsor of the CERA study. “Pragmatism should prevail over experimentation in power market designs. The focus should be on markets that do work, not those that do not.”
For further information on the study, contact Tom Sommers at 713-222-1600 or tsommers@sommersassoc.com.
