About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

GAO-03-726R 1 (2003-06-06)

handle is hein.gao/gaobaamfm0001 and id is 1 raw text is: G ~GAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 June 6, 2003 Congressional Requesters: Subject: Electricity Markets: FERC's Role in Protecting Consumers The electricity industry is currently undergoing a restructuring, evolving from an industry characterized by monopoly utilities that provide consumers with electricity at regulated rates to a competitive industry in which prices are largely determined by supply and demand. The Federal Energy Regulatory Commission (FERC) has been engaged in this restructuring effort and is currently working, among other things, to foster competitive wholesale energy markets across the nation while protecting consumers against abuses of market power. At the retail level, about half the states have pursued restructuring their retail electricity markets in order to allow consumers such as residential, commercial, and industrial customers to choose their electricity suppliers. Proponents of electricity restructuring believe that it will ultimately provide consumers with lower electricity prices, more services, and technological innovation. However, opponents cite extremely high prices and market manipulation in California as evidence that, without more stringent oversight, restructuring may leave consumers vulnerable to higher prices, market manipulation, and less reliable service. In light of ongoing electricity restructuring efforts, you asked us to describe FERC's role in protecting electricity consumers. This report does not evaluate FERC's success in serving this role, but does provide examples of how FERC has acted previously to protect consumers. GAO plans to issue a report in the summer 2003 on the progress FERC has made so far in preparing itself to monitor competitive energy markets. A complete list of the requesters appears at the end of this report. Results in Brief FERC's role in protecting electricity consumers is to ensure that prices in the wholesale electricity market are just and reasonable. Traditionally, FERC has ensured rates are just and reasonable in the wholesale market by regulating them based on a utility's costs of service plus a regulated return on the utility's investment. However, with the advent of greater competition in the electricity industry, FERC believes the best ways to ensure wholesale prices are just and reasonable today is by (1) fostering competitive regional wholesale markets that have balanced market rules (i.e., rules that encourage efficient behavior and infrastructure development and deter abusive behavior), (2) continuously monitoring these markets for anticompetitive behavior, and (3) enforcing or correcting market rules as needed. As part of these efforts, FERC oversees the interstate transmission system to ensure it remains open without discrimination to all buyers and sellers of electricity. This oversight also works to protect consumers by ensuring companies that generate electricity will be able to transmit their power without disruptions or inefficiencies. GAO-03-726R FERC Consumer Protection Page 1

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most