While some might say it’s long overdue, FERC yesterdayauthorized its staff to undertake a “fact-finding investigation”into conditions in the bulk power markets to determine the reasonsfor the wild price volatility and reliability problems that havegripped the market during the past couple of summers.

The U.S. wholesale power market has witnessed “shockingly highprices” during the summer months, spiking 300-400 times more thanoff-peak electric prices, said Commissioner William Massey. FERCstaff will need to look at what role, if any, the advent ofcompetition has had in triggering the price gyrations, he noted.Staff then will report to the Commission on “what is working andwhat is not working in the electricity markets.”

Specifically, staff has been asked to ferret out “any technicalor operational factors, regulatory prohibitions or rules (federalor state), market or behavioral rules, or other factors [that are]affecting the competitive price of electric energy or thereliability of service.” The Commission directed staff to reportback with its findings by Nov. 1. It “will then determine whatsteps it might take within its jurisdiction to remedy any marketbehavior, operation, design or structural problems,” the ordersaid.

The Commission will use the results of staff’s investigation to:1) analyze Section 205 filings involving market pricing or marketrules; 2) institute Section 206 proceedings to modify existingtransmission or power exchange tariffs or agreements, bylaws forexisting institutions or the institutions themselves if FERC findsthey are “adversely affecting” the efficient operation of acompetitive bulk power market;and 3) help analyze the regionaltransmission organization (RTO) filings that are due later thisyear.

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