Urging FERC to Expand its Investigation of Organized Wholesale Electricity Markets to Include Consideration Whether Rates Established in RTO/ISO Markets are Just and Reasonable

Whereas, the Federal Power Act Section 205 requires all rates demanded and charged by sellers of wholesale electricity to be just and reasonable; and

Whereas, the Federal Energy Regulatory Commission (FERC) has undertaken a review of organized day-ahead and real-time wholesale electricity spot markets operated by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) in FERC Docket Nos. RM07-19-000 and AD07-7-000, and has indicated that it may commence a proceeding under Section 206 of the Federal Power Act to fix certain aspects of the RTO/ISO markets that appear to be unreasonable; and

Whereas, FERC has identified (1) the role of demand response in organized markets; (2) increasing opportunities for long-term power contracting; (3) strengthening market monitoring; and (4) RTO responsiveness to customers and other stakeholders as subjects for possible future action to correct unreasonable RTO/ISO tariffs under FPA § 206; and

Whereas, buyers of wholesale electricity and consumers have raised further issues regarding the performance of RTO/ISO markets, including, but not limited to, the possibility that market participants may exercise market power or engage in market gaming to elevate prices, and whether all rates established by the RTO/ISO markets are just and reasonable; and

Whereas, the four issues preliminarily identified by FERC do not include critical issues raised by buyers and consumers regarding market power and market gaming in the RTO/ISO markets, and do not include a review whether the RTO/ISO markets are yielding rates that are just and reasonable; and

Whereas, rates established in the RTO/ISO markets are passed through by buyers to retail customers, may affect rates for electricity sold in bilateral transactions, and may affect retail rates for electric service necessary and essential for consumers in areas not directly served by RTO/ISO markets ; and

THEREFORE BE IT RESOLVED, that NASUCA supports the inquiry into organized RTO/ISO market functioning, and urges FERC to expand the scope of issues to be considered to encompass additional issues raised by buyers and consumers, including whether rates established in the RTO/ISO markets satisfy the requirement of the Federal Power Act that all rates demanded and charged be just and reasonable.

BE IT FURTHER RESOLVED, that NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution. The Executive Committee shall advise the membership of any proposed action prior to taking action if possible. In any event the Executive Committee shall notify the membership of any action taken pursuant to this resolution.

Submitted by:

Electricity Committee

Gerald A. Norlander, Chair

December 3, 2007

Passed: December 14, 2007


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