The Chairman of the House Energy Committee submitted a letter to FERC Chairman Bay seeking the Commission's feedback on the current and future state of the organized electricity markets. The letter notes the current atmosphere of market, regulatory and technology changes as well as changes in consumer expectations.

"As the changes occur, the competitive electricity markets - particularly the organized wholesale markets - continue to underachieve, a result of pervasive and persistent problems within their respective regulatory frameworks. We have previously communicated many of these concerns to the Commission, ranging from an inability to provide accurate price signals to a lack of fairness and transparency in governance structures and stakeholder processes. Despite continued best efforts by the Commission and among the independent system operators (ISOs) and regional transmission organizations (RTOs) to address these issues and adapt to changing market conditions, the restructured wholesale markets have, in many ways, become mere administrative constructs that are continuously 'tweaked' through the regulatory process. Such inefficiencies have impeded the efficient deployment of capital and prevented consumers from realizing the potential benefits that competitive markets should yield. With some of the organized markets seemingly ill-equipped, and in the absence of comprehensive reform, it is difficult to see how these markets will be able to adapt to new market forces, technology advances, changing consumer expectations, and shifts in the regulatory and policy landscape."

The letter goes on discuss the recent Supreme Court cases of FERC v. EPSA and Hughes v. Talen Energy Marketing, regarding the Commission's jurisdiction under the Federal Power Act. The letter notes that the Committee is, "concerned that, in an evolving electricity sector, distinguishing between wholesale and retail will become increasingly difficult, resulting perhaps in more litigation of this nature."

The letter also asked for FERC's perspectives on the following questions:

"1. Have the competitive markets fared as expected since restructuring began over 20 years ago, particularly in terms of market efficiency, capital investment, reliability, electricity rates, and consumer impacts?
2. Are the competitive markets equipped to promote, integrate, and adapt to new technologies, new products and services, and state and federal policy changes?
3. What is the Commission's view as to how non-FERC jurisdictional federal and state actions, such as the federal production tax credit or state renewable energy mandates, impact the operation of wholesale markets generally, and, specifically, in terms of impacts on reliability, source and technology neutrality, and wholesale power prices?
4. How do new technologies, programs, incentives, and policy changes at the state and federal levels affect the jurisdictional 'bright line'? Is that line becoming increasingly blurred as a result of such changes?
5. Does the Federal Power Act continue to be well-suited for today's electricity sector? Is it well-suited for the electricity system of the future?"

The letter concludes by asking for FERC's technical assistance in educating Committee members in preparation for a more comprehensive review of electricity markets in the future. The full text of the House Committee Letter to Chairman Bay is available on the NEM Website.

Stemming from its inquiry into price formation issues in RTOs/ISOs initiated after the polar vortex events, FERC adopted Order 825 establishing settlement interval and shortage pricing requirements for organized markets. "We require that each regional transmission organization and independent system operator align settlement and dispatch intervals by: (1) settling energy transactions in its real-time markets at the same time interval it dispatches energy; (2) settling operating reserves transactions in its real-time markets at the same time interval it prices operating reserves; and (3) settling intertie transactions in the same time interval it schedules intertie transactions. We also require that each regional transmission organization and independent system operator trigger shortage pricing for any interval in which a shortage of energy or operating reserves is indicated during the pricing of resources for that interval." The RTOs/ISOs must make a compliance filing 120 days after the effective date of the Order. The RTOs/ISOs will then have twelve months from the compliance filing date for the tariff changes implementing reforms to settlement intervals to become effective, and 120 days from the compliance filing date for the tariff changes implementing shortage pricing reforms to become effective. The full text of Order 825 is available on the NEM Website.