Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Staff Makes Recommendations to Texas Public Utility Commission on Programs to Improve Reliability of Electricity Markets, (Mar 12, 2013)
Organizations Mentioned:Electric Reliability Council of Texas | Public Utility Commission | The Brattle Group, Inc.
By E. Darius Sturmer, J.D.
Staff of the FTC Bureau of Economics and Office of the General Counsel submitted a comment to the Public Utility Commission of Texas (PUC) on March 11 regarding demand response (DR) as one aspect of the PUC’s ongoing review of the reliability of electricity markets. According to the comment, the agency and its staff have “long supported allowing DR to compete with more conventional resources to solve energy market challenges.”
The staff comment noted that DR programs give electricity customers an incentive to reduce or reschedule power consumption when electricity is scarce and expensive, which saves money by reducing consumption during peak demand periods, encourages electricity generators to bid competitively, and reduces price volatility. Efforts to get retail customers to address wholesale challenges require complementary, harmonized approaches in the retail and wholesale markets, the staff noted. Such harmonization “allows the development of coordinated products that, for example, give retail consumers incentives to respond in short order to rapidly evolving wholesale market conditions.”
The FTC staff encouraged the PUC to adopt DR policies that use standard market approaches, allow competition, and offer accurate price signals to all entities that can contribute to balancing the amounts of electricity consumed and supplied.
“In particular, if Texas offers good incentives for retailers to enroll consumers in DR programs, it can then harness competition among retailers to offer innovative DR programs that provide the greatest benefits to electricity consumers,” the comment stated.
The staff comment urged the PUC to give serious consideration to constructive ideas that had already been identified in a report released by The Brattle Group last June, including making significant changes in the design of the wholesale and retail markets. The staff suggested that the Electric Reliability Council of Texas (ERCOT) configure its security constrained economic dispatch algorithm to allow DR, energy storage, and generation sources to participate and compete on equal terms.
News: Antitrust FederalTradeCommissionNews