This is an excerpt from EERE Network News, a weekly electronic newsletter.

August 07, 2002

Proposed Federal Rules for Power Markets to Help Renewables

New rules for electric power markets were proposed on July 31st by the Federal Energy Regulatory Commission (FERC), the federal agency that regulates the transmission and wholesale sales of electricity in interstate commerce. FERC's proposed "standard market design" aims to achieve fair and open transmission access for power generators and intends to "open doors for demand-response providers and other energy service companies...and enhance opportunities for new technologies such as generation, renewables, efficiency and grid measures." The rules are also intended to prevent abuses of the power market previously carried out by energy traders such as Enron Corporation.

Connecting to the electrical grid and selling power on a day-to-day basis are among the many nuts-and-bolts activities required to make renewable energy projects successful. Unfortunately, some electrical grid operators have rules that make such grid connections difficult and set rates that seem to discriminate against intermittent power sources like wind power. That combination is a one-two punch that hampers the development of renewable energy resources in the United States. The new FERC rules include measures intended to eliminate those barriers for renewable energy sources. The new rules are also intended to encourage technologies that reduce energy use.

FERC will accept comments on the proposed rules until mid-October, and intends to phase in the plan over the next two years. See the FERC Web site.

One example of the types of rules that hamper renewable energy development is the case of DOE's Bonneville Power Administration (BPA), which until recently charged a penalty of up to $100 per megawatt-hour for power generators that failed to deliver power on schedule. Since future wind power generation cannot be predicted accurately, the penalty discouraged wind power development in BPA's service territory. In late July, BPA announced a new rate proposal that will remove the penalty for wind power, requiring wind generators to pay only the cost of providing the power from other power sources. The new rate proposal requires approval from FERC. See the BPA press release.