FTC Staff Submits Comments on FERC's Proposed Order Addressing California's Electric Markets

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For Release

The staff of the Federal Trade Commission's (FTC) Bureau of Economics and of Policy Planning has submitted comments to the Federal Energy Regulatory Commission (FERC) on its Order Proposing Remedies for California Wholesale Electric Markets (Proposed Order). The Proposed Order is intended to remedy deficiencies in market rules and institutions that have contributed to recent reliability difficulties and high prices for electric power in California.

The FTC has a longstanding interest in regulation and competition in energy markets, including proposals to reform regulation of the electric power and natural gas industries. The staff has submitted numerous comments concerning these issues at both the federal and state levels, and the FTC has reviewed proposed mergers involving electric power and natural gas utility companies.

Although the comment generally supports the short-term and long-term remedies that FERC has identified, the comment suggests that FERC provide more concrete advice on how best to configure the organization that will operate and control the transmission grid in California (the regional transmission organization (RTO)). For example, the staff suggests that FERC may wish to consider creating a benchmark or a baseline of RTO characteristics and operations that can be used as a starting point as part of its revisions to California's wholesale electric power market rules and institutions. In addition, the comment suggests certain refinements to FERC's proposed remedies to ensure that market power is not exercised in wholesale electric power markets, to the detriment of consumers.

The Commission vote authorizing staff to file the comment was 5-0.

This comment represents the views of the staff of the Bureau of Economics and of Policy Planning of the Federal Trade Commission. They are not necessarily the views of the Federal Trade Commission or any individual Commissioner.

Copies of the comment, as well as other documents related to electric utility deregulation are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll-free: 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Media Contact:

Howard Shapiro,
Office of Public Affairs

Staff Contact:

Michael S. Wroblewski,
Policy Planning

John C. Hilke,
Bureau of Economics

(File No. V000014)

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