FERC chairman offers Capital Hill briefing on competitive electricity markets

Washington, D.C., October 26, 2009 – Consumers, renewable energy producers, environmental advocates and innovative electricity service providers briefed Capitol Hill staff and the public on the role competitive electricity markets play in addressing our nation’s pressing energy and environmental challenges.

Federal Energy Regulatory Commission Chairman Jon Wellinghoff was the keynote speaker at the event designed to highlight how competitive electricity markets provide the incentives and mechanisms needed to spur innovation and economic and environmental solutions, thereby offering the best path forward to meet critical national energy and environmental policy goals.

“Competition is good, more competition is better, efficient and full competition with the demand and supply side included in that competition is best. We’re seeing tremendous innovations because of markets,” said Chairman Wellinghoff. “Markets empower consumers by increasing their ability to access those innovations, and by allowing them to control their bills and their costs,” he said.

Chairman Wellinghoff also addressed the markets’ inherent ability to generate significant environmental benefits. “Markets will help us meet our carbon targets and reduce our overall carbon footprint,” he said. “Markets will deliver the most cost effective solutions when policies [promoting renewable energy production] come about.”

In a panel discussion that followed, Judith Judson, Director of Regulatory and Market Affairs for Beacon Power, pointed to innovations in electricity storage technologies as evidence that competitive markets are promoting good economic and environmental outcomes for consumers. Beacon Power is building the world’s largest flywheel energy storage project in New York’s organized competitive power market.

“Competitive markets have provided environments that nurture and facilitate innovation, allowing companies like Beacon Power to continue pushing ahead in developing critical new technologies like flywheel energy storage,” Judson said. “These technologies will play important roles in meeting future energy demand while ensuring grid reliability,” Judson noted.

Mark Brownstein, Deputy Director of the Environmental Defense Fund’s Energy Program, noted that competitive markets are the most effective structures for environmental gains and carbon reduction programs.

“There’s no question that there are important and measureable environmental benefits that come from well-structured competitive markets. If you look at the data, there have been tremendous strides in heat rates and capacity factors in the nation’s nuclear fleet in competitive wholesale energy markets. It is amazing what can happen when you shift responsibility from the person buying the product to the person selling the product,” said Brownstein.

“It is no accident that we’ve seen innovations in programs like demand response happen in competitive markets,” continued Brownstein, pointing to a similar effect in terms of renewable energy development. “In a competitive market there is a greater willingness to work on the challenging issues of bringing renewable resources onto the grid. Markets are a powerful agent for innovation and investment.”

Gamesa Energy Vice President Jeff Bladen cited the inherent structure of competitive markets as playing a significant role in determining where to allocate investments in new wind power facilities.

“Competitive markets provide two key advantages to the development of wind energy projects – clear prices to value the energy produced with the wind and a diverse grid of resources that can fill in the gaps during periods of little wind,” Bladen said. “Price transparency is what competitive energy markets provide to wind farm developers – a reliable resource for what the wind energy is worth today helping inform investment decisions.”

Pennsylvania Public Utility Commissioner Robert F. Powelson underscored the benefits of competitive markets for Pennsylvania’s consumers.

“Prior to 1996, Pennsylvania utility rates were 15 percent higher than the national average, we had antiquated generation assets and with those reliability issues. Over the last 10 years utility customers have enjoyed billions in savings because of competitive markets, and the investment flow in generation assets has been nothing short of spectacular,” Commissioner Powelson said. “We’re seeing remarkable statistics from our markets. In Duquesne Power’s area, customers are paying less for power today than they were in 1992. That’s the remarkable aspect of a functioning competitive market. We want to build renewables and we are on the right track due in large part to having a functioning competitive marketplace.”

Compete Coalition represents 389 electricity stakeholders, employing over 7 million American workers, including customers, suppliers, generators, transmission owners, trade associations, and economic development corporations – all of whom support well-structured competitive electricity markets for the benefit of consumers.

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