Friday, June 13, 2008

Campaign for Fair Electric Rates Urges Reform of Wholesale Electricity Markets

The Campaign for Fair Electric Rates is a new coalition effort focused on educating the public regarding the failure of the wholesale electricity markets operated by regional transmission organizations (RTOs) and independent system operators (ISOs) to adequately protect consumers. FERC has authorized organized cartel-type spot markets in an effort to simulate a competitive market environment for the sale of wholesale electricity.

Electricity rates in the states like New York, which allowed utilities to sell their power plants so that their rates are no longer under state regulation, have experienced higher prices, as can be seen by this comparison from Power in the Public Interest (Click on graph to enlarge):

In New York, most electric power must now be bought by retail utilities in wholesale markets, where FERC, the federal regulator, relies on markets and market rates to set prices.

The difference between electricity prices in RTO states and others that did not deregulate is increasing, according to McCullough Research, which has examined the contention that the higher prices are due to fuel costs. See Why Are Electricity Prices in RTOs Increasingly Expensive?

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