Failure to Restrict FERC a Setback to Competition, Lenard Writes
WASHINGTON, D.C. - The electricity title of the Senate energy bill scheduled for a committee vote Wednesday is a “major disappointment” to those who had hoped it would result in increased competition. That is the view of economist Thomas M. Lenard of The Progress & Freedom Foundation, who contends its major flaw is that the measure “explicitly endorses” FERC’s Standard Market Design proposal.
In a ten-point ‘deregulatory scorecard’, Lenard writes that the so-called “Chairman’s Mark” released April 24 is ‘deregulatory’ with respect to only one of the ten criteria – the repeal of the mandatory purchase and sale requirements in PURPA. In fact, he concludes, “It contains little that would diminish the government’s role in the marketplace.”
“The most serious drawback of the bill is its failure to restrict FERC’s authority to finalize its Standard Market Design proposal, which is the most important electricity policy issue under consideration,” Lenard writes. “SMD introduces a FERC-run centralized planning regime for virtually the entire electricity sector. Finalization of this proposal will represent a fatal setback to the development of competition in these critically important markets.” Overall, despite the positive step of extending FERC jurisdiction to public entities, Lenard believes the new transmission provisions are “highly regulatory” and increase the agency’s involvement in a way that will stunt true competition.
The measure also “does little to limit the preferences public power enjoys, reduce its financial advantages, begin the process of privatization, or otherwise put it on a downward trajectory,” he writes. Lenard is a Foundation senior fellow and its vice president for research.
Foundation President Raymond L. Gifford, who chaired the Colorado Public Utilities Commission, testified before the Senate Energy and Natural Resources last month.
The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy.