Jon Wellinghoff

Competitive electricity markets are helping lead the nation toward a smart grid future. So says a new report from GTM Research, which ranks the top 10 states leading smart grid implementation. Seven of the 10 states participate in competitive electricity markets. California ranks first, followed in the rankings by Massachusetts, New Jersey, New York, Ohio, Pennsylvania and Texas.
 
These state rankings result from a mix of effective regulatory oversight and private investment, but all deliver economic and environmental benefits to consumers. “These 10 states are the laboratories for U.S. smart grid policy, and their influence on the pace and scope of deployment is durable and growing,” said Stephen Munro, energy policy analyst for GTM Research.
 

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.

During last week’s regular open meeting, staff with the Federal Energy Regulatory Commission presented their 2009 State of the Markets Report, and the outcome for energy consumers was profound.  Prices for natural gas were down by 50 percent across the country, and as a result electricity rates declined proportionately in the organized competitive markets, where gas is a key generation fuel. Costs for both natural gas and electricity were at the lowest levels seen since at least 2002 – even earlier in some regions, FERC staff reported.

The benefits of competition were a key topic at a recent Federal Energy Regulatory Commission (FERC) oversight hearing by the House Energy and Commerce Committee’s Energy and Environment Subcommittee.

“Organized wholesale electric markets create opportunities and encourage innovations that benefit consumers,” FERC Chairman Jon Wellinghoff said.

Wellinghoff noted that one of the largest benefits of these markets is the ability to level the playing field between traditional generation resources and a wide range of resources including renewable energy, demand response, energy efficiency and distributed generation. “Removing barriers that keep renewable energy resources from competing in wholesale markets must be part of our strategy to move toward energy independence.”

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.”

“Fair, transparent, open and efficient competitive markets are what we really need to emphasize in this country,” Jon Wellinghoff, Chairman of the Federal Energy Regulatory Commission, said at a recent energy policy forum examining how to meet energy demand while reducing carbon emissions. “I think if we did that in a comprehensive way a lot of these problems would take care of themselves.”

The facts support Chairman Wellinghoff.