Regulators propose standard design to untangle electricity markets.(Brief Article)

The Federal Energy Regulatory Commission's (FERC) proposal for reorganizing the nation's wholesale electricity market has been called both a watershed event and a power grab, a measure of the divergence of opinion on the matter.

Those in favor of the proposal rank it in importance with FERC Order 888, which gave competitive access to power lines, and Order 2000, which encouraged utilities to voluntarily affiliate with regional transmission organizations (RTOs).

Set against a backdrop of crises and scandals that surrounded deregulation efforts, the 600-page proposal, released on July 31, seeks to impose a standard market design (SMD) to "remedy undue discrimination in the use of the interstate transmission system and give the nation the benefits of a truly competitive bulk power system," said a FERC statement.

The document released by FERC is not final, but rather a Notice of Public Rulemaking (NOPR), which will be open to comment for 75 days.

There should be no shortage of comments. Criticized for shortcomings and inaction just months ago, the regulatory agency now is being taken to task for going too far.

While FERC argues that the rules are designed to prevent congestion and eliminate opportunities for market manipulation, such as took place in California last year, critics say the proposed rules are a potential disaster and an attempt to force deregulation nationwide. Eighteen regulators from utility commissions in 15 states issued a statement calling the new regulations a power grab and vowing to fight their implementation. Opposition was particularly sharp in the West and Southeast.

"Centralized control of electricity by Washington, DC, will not benefit consumers and businesses," said Marilyn Showalter, chair of the Washington Utilities and Transportation Commission. "FERC is subjecting our consumers and economy to a reckless experiment."