Resource adequacy in competitive markets: a regulator's perspective

The whole world is engaged in changing the ways in which electricity will be bought and sold. Here in the United States, the change began with a variety of Federal regulatory initiatives geared at transforming wholesale markets, and rapidly spread to state backed initiatives directed at transforming retail electricity service. The 1992 Energy Policy Act and FERC's related open access Orders 888 and 889 introduced new entities to the power markets and required major changes to the provision and pricing of transmission service. Other institutional changes will occur in response to the FERC's Order 2000 on Regional Transmission Organizations (RTOs) and impending Federal reliability legislation. Nearly apace with Federal initiatives, some states moved from the model of command and control regulation to one that includes competitive generators and load servers as mixed with regulated transmission and distribution utilities. Other states have decided either not to open their electric industry up to retail competition, or are studying the issue. These numerous and rapid changes have created a great deal of uncertainty among market participants regarding their roles and obligations, and created concerns regarding the long term reliability of the industry. This presentation focuses on the implications such changes may have for the status of generation resource adequacy.