FTC Staff Makes Recommendations to FERC on Measures to Reduce Cost of Providing Electricity, Improve Power System Reliability

The Federal Trade Commission’s staff submitted a comment to the U.S. Federal Energy Regulatory Commission recommending ways to lower the barriers faced by companies seeking to enter regional and local markets to sell services that maintain or enhance the reliability of electricity generation, transmission, and distribution.  The comment also discussed ways to promote more efficient pricing of these services (known as “ancillary services”) in areas beyond those with organized wholesale electricity markets.  FTC staff further encouraged FERC to enrich its geographic market analysis with the analysis contained in the 2010 Horizontal Merger Guidelines issued by the FTC and the Department of Justice.

The comment stated that the recommendations of the FTC staff, if adopted by FERC, are likely to benefit consumers by helping to increase competition in markets for these ancillary services and improving the reliability of the power system.

Electric utilities and other power producers use ancillary services to compensate for inevitable fluctuations in voltage and frequency, for unanticipated outages of generators or transmission lines, and for unexpected spikes in demand.  The equipment used to provide these services can include, among other resources, reserve capacity of generators, large energy storage devices, and quick reductions in power use by customers.

The FTC staff comment is in response to the FERC’s Notice of Proposed Rulemaking on Third-Party Provision of Ancillary Services; Accounting and Financial Reporting for New Electric Storage Technologies.

The Commission vote approving the comment was 5-0. (FTC File No. V120009; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

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