FERC proposes revisions to power market. (Technology: Update).

The Federal Energy Regulatory Commission (FERC) has proposed a sweeping revision to wholesale power markets that could lead to big changes at the retail level. While it may be two to three years before those impacts trickle down to them, facility managers need to take such market changes into account when choosing new energy systems, such as chillers and lighting controls, having lifetimes of 10-25 years.

That's the message of "Coming Soon To A Power Market Near You: FERC'S 'Standard Market Design' the September Tip of the Month at www.energybuyer.org, a service of Energywiz, Inc. Energywiz is a New York-based energy consulting firm focused on helping commercial/industrial energy customers and their consultants get the most out of the competitive energy marketplace. Its EnergyBuyer.org site recently won the Golden Web Award for overall quality and value.

The tip reviews how and why FERC is proposing major changes to the way that power is priced in wholesale markets, how transmission systems are to be operated, and reliability maintained through adequate generating capacity. The tip translates how some of FERC's proposals could affect customers, especially those in older American cities and other areas where transmission and generation are barely adequate to ensure reliability and decent pricing in the face of future load growth.

"Power markets certainly need fixing," says Lindsay Audin, president of Energywiz, Inc. "but care is needed to be sure one does not worsen an already bad situation. FERC's plan addresses many problems seen at the wholesale level, but its avowed purpose is to help the retail power customer at the end of the power line. FERC needs to show how its proposals address end user concerns if it hopes to have its design clear the barriers presently being thrown in its path." Audin also pointed out that the FERC Standard Market Design (SMD) will have no direct impact on the present credit woes of generators and power traders, a problem that is having a wide-ranging impact on new plant construction.

Among the problems FERC seeks to ameliorate through its SMD are: the balkanized American transmission grid that limits access to cheaper power in many areas, pricing that doesn't reflect the true value of generating assets, and the lack of demand responsiveness at the retail customer level. The Tip offers guidance for power customers planning new energy systems to ensure that they are both ready for changes to power markets and positioned to take advantage of them when they happen.