Federal Energy Regulatory Commission

Innovative smart grid and energy technology solutions can help achieve economic and environmental goals if customers have access to dynamic pricing. That message, and the role competitive markets play in these innovations, was front and center in remarks from national policy leaders at the recent National Town Meeting on Demand Response and Smart Grid. 
 
“Creating a smart grid is an essential part of the energy revolution,” said Congressman Ed Markey (D – MA) in a keynote address, before predicting that smart meter deployment will rise ten-fold over the next decade. “A global revolution in clean energy is needed, and competition between all for leadership in new energy will create jobs.”
 
Innovative new smart grid technologies are already springing up across the country, spurred on by competition. “Because we have organized markets, we are ahead in our ability to bring technology and demand response to consumers,” said Jon Wellinghoff, Chairman of the Federal Energy Regulatory Commission, during a roundtable on the future of smart grid policy. Wellinghoff cited PJM Interconnection’s 9,000 megawatts of dispatachable demand and Plug-in Hybrid Electric Vehicle pilot program, as well as Constellation NE’s VirtuWatt technology.

A lively panel discussion dedicated to the question of whether a change in regulatory structure is needed to power a new clean energy economy helped kick off the National Electricity Forum, an annual confab co-sponsored by the U.S. Department of Energy and the National Association of Regulatory Utility Commissioners, an association representing state utility regulators. Regulators, environmentalists, policy influencers and other panelists roundly pointed to market competition as the answer.

To inspire innovation in the electricity industry and jumpstart a clean energy economy, “We need to start turning the conversation around to markets,” declared Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission (FERC).

The recent American Wind Energy Association (AWEA) Year End 2009 Market Report showed that the U.S. wind industry set new records for installed wind capacity by adding nearly 10,000 megawatts of new capacity in 2009. Again, as in past years, competitive markets are leading the way in developing this clean and renewable energy resource.

The report underscores wind’s contribution to our national energy portfolio, and the role competitive markets have played in spurring new capacity. America now enjoys 35,000 megawatts of installed wind power generation, nearly 2 percent of our total national energy capacity. Four of the top 10 (and two of the top three) highest-volume states in installed capacity are competitive markets. In addition, the total combined installed capacity of the 17 competitive markets states is 16,500 megawatts - nearly half of the nation’s total installed capacity.

Following the Senate’s confirmation last week of former Iowa utility regulator John Norris to a seat on the Federal Energy Regulatory Commission (FERC), we were encouraged to hear him say he would “work toward ensuring open and fair energy markets in which consumers, retailers and wholesalers can have confidence.” His prepared statement further noted challenges ahead including “minimizing the impact changes will have on consumers, ensuring adequate investment in upgrading and building new infrastructure and meeting our nation’s goals for reducing CO2 emissions.”

Thursday’s Hartford Courant brought good news for electricity consumers: “Many CL&P Customers To See Lower Rates Starting Jan.1” Electric rates will decrease 5.2 percent in January for most of Connecticut Light & Power’s 1.2 million customers, continuing a trend of declining electricity prices in competitive electricity markets as reflected in the state’s declining costs.

The rate reduction is a result of Connecticut’s participation in New England’s wholesale competitive market managed by ISO New England, a regional transmission organization. Consumers who shop for competitive energy suppliers in Connecticut have benefited directly from falling electricity prices in the past year – a trend recently noted by the Federal Energy Regulatory Commission.

Two groups this week underscored the need for consumer access to real-time dynamic electricity pricing to reduce greenhouse gas emissions and save money on their bills. On Monday, the Association of Home Appliance Manufacturers (AHAM) released a white paper strongly advocating that “residential electricity prices must be based on time of use” to fully enable smart grid technology. Yesterday, multiple high-tech companies and advocacy groups issued a statement at the United Nations-sponsored climate change negotiations in Copenhagen (COP15) urging world governments to ensure consumers see real-time energy use data to improve energy efficiency and cut greenhouse gas emissions.

Crediting lower electricity prices in the competitive market, two Mid-Atlantic electric cooperatives, Choptank Electric Cooperative and Delaware Electric Cooperative, announced electric rate reductions this week for their members. The co-ops said the reductions were possible due to a sharp decrease in the cost of electricity provided by their wholesale power supplier, Old Dominion Electric Cooperative.

Prices in PJM Interconnection’s competitive wholesale electricity markets, the regional transmission organization (RTO) in which the co-ops operate, have declined by some 40 percent in the past year, reflecting changes in fuel prices and demand. Other organized competitive markets have seen prices decrease by 50 percent, with some producing the lowest prices seen since 2004 and 2002, according to a Federal Energy Regulatory Commission staff analysis. Competitive electricity markets compel power producers to offer their electricity at prices that reflect their cost savings. These savings are immediately passed on to the cooperatives’ members.