regulation

Through the following laws and orders, the Federal Energy Regulatory Commission (FERC) has restructured the wholesale bulk electric industry.

Energy Policy Act of 1992

Provided FERC with more authority over the wholesale bulk electric industry and further opened access to the utility market. One of the provisions of this Act amended the Federal Power Act to allow any wholesale generator to request that the FERC order a utility to provide transmission service. This act also established new requirements and programs to increase energy efficiency, promoted the use of solar and renewable energy, and overhauled nuclear plant licensing procedures.

Regional Transmission Groups

In 1993, FERC issued a Policy Statement regarding Regional Transmission Groups (RTGs). The purpose of RTGs was to coordinate transmission planning and expansion on a regional and interregional basis and to facilitate the resolution of disputes over the services. FERC's intent was to encourage agreements between transmission providers, thus avoiding or reducing the need for potentially time-consuming and expensive litigation before FERC. A few RTGs were established as a result of this statement.

FERC Orders 888 and 889

Issued in 1996, these Orders established the rules regarding opening the wholesale bulk electric system to competition. The Orders require FERC-jurisdictional utilities (private utilities, power marketers, power pools, power exchanges, and independent system operators) to file non-discriminatory open access transmission tariffs and to offer comparable transmission services to eligible third parties. This Order also required that an open access same-time information system (OASIS) be developed that allows simultaneous transmission information to be available to all industry participants selling power. OASIS is an electronic information system - electronic bulletin board - that allows users to receive data on the current operating status and transmission capacity of a transmission provider. Information found on OASIS may include: availability of transmission services, current outage information, requests for transmission service and load flow data. The Orders also required utilities to separate the transmission from generating and marketing functions and communications.

Energy Policy Act of 2005

The Energy Policy Act of 2005, signed into law by President George W. Bush on Aug. 8, 2005, contains comprehensive revision and expansion of provisions in the original Energy Policy Act of 1992. The new policies and programs of EPAct 2005 are aimed at enhancing and improving America's energy resources and infrastructure with incentives for the energy industry to pursue clean coal technology, renewables and conservation. It also addresses the nation's electricity transmission capability and reliability.

FERC Order 890

The FERC adopted a final rule Feb. 15, 2007 to reform the 1996 Open Access orders 888 and 889 to ensure transmission access is provided in a non-discriminatory basis, as well as provide for more effective regulation and transparency in the operation of the transmission grid. The rule is supposed to:

  • increase non-discriminatory access to the grid by eliminating the wide discretion that transmission providers have in calculating available transfer capability.
  • increase the ability of customers to access new generating resources by requiring an open, transparent and coordinated transmission planning process.
  • increase efficient use of transmission by eliminating artificial barriers to use of the grid.
  • facilitate the use of and access to clean energy resources, such as wind power, and
  • strengthen compliance and enforcement efforts.

FERC Order 2000

Issued in 1999, this Order states that FERC-jurisdictional transmission owners are expected to join a Regional Transmission Organization on a voluntary basis. An RTO and its members can modify the RTOs structure, geographic scope, market support and operations to meet market needs.

According to FERC Order 2000, RTOs must embrace four core characteristics and eight key functions. Functions include:

  • tariff administration and design
  • congestion management
  • parallel path flows
  • ancillary services
  • OASIS and capability calculations
  • market monitoring
  • planning and expansion
  • interregional coordination

The four characteristics include: independence, scope/regional configuration, operational authority, and short-term reliability.