Fresh off of the issuance of a Department of Energy (DOE) study finding solid net benefits from FERC’s proposed standard market design (SMD), FERC Chairman Pat Wood last Wednesday said that he wants to “take the lead” from Congress in terms of the timing for implementing a final rule in the SMD proceeding.

In an eagerly anticipated, 78-page report, the DOE on Tuesday said that the net benefit for all consumers if SMD is implemented is about $1 billion per year over the first six years it is in place after factoring in the estimated $760 million per year in regional transmission organization (RTO) costs (see related story).

At a press briefing following the agency’s regular agenda meeting, Wood said that FERC was “buoyed” by the report’s findings. The SMD proposal has come under increasing fire from lawmakers and several state utility regulatory commissioners who question how the sweeping plan will impact power prices in their regions, among other things.

“I’m glad Congress asked for that study and I appreciate the DOE doing it in such a compressed timeframe,” Wood said. “I think it certainly helps inform the debate and maybe gives us some options as we continue our discussions in the regions about adjustments that could be made in the wholesale market design for those different regions that can maximize the benefits a little bit more and, commensurately, reduce the costs,” he added.

“I guess the big issue is there’s pending energy legislation in Congress and we look to guidance from them about how they see wholesale energy markets and a number of issues that could overlap from provisions that they’re requiring of us,” Wood said. “So we’ll be waiting until Congress is done with the energy bill for sure, so we don’t have to do this twice.”

Addressing the timing of when a final SMD rule might be in place, Wood said that “I want to kind of take the lead from Congress on their timetable so that we really keep a separate focus.” Energy legislation recently passed by the U.S. Senate Energy and Natural Resources Committee would prevent FERC from issuing a final SMD rule until July 1, 2005 (see Power Market Today, May 1).

Meanwhile, Wood noted that FERC has set up technical conferences in various parts of the country as a follow up to a white paper recently issued by the Commission related to SMD. FERC has scheduled regional technical conferences that will take place on May 20 in Boston and on June 11 in Omaha, NE.

“Yesterday, we just had a good conference call with regulators from the Southeast and we’ve agreed on a public meeting with them and the market participants in Atlanta on June 5,” Wood disclosed.

At a later point, the FERC chairman was asked whether he thinks the Commission may, at some point, have to force SMD upon certain parts of the country. “We’ve got to work this collaboratively,” Wood said. “You get resentment and you probably stall the day longer by forcing it down people’s throats,” he added.

“The problem is there’s not usually unanimity, either pro or con, in any region and so you can’t really squelch the voices of the people who don’t agree with the others,” Wood said. “So we’ve got to…balance competing interests and try to make sure that the public interest is the one that wins out and I think we can.”

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