Road seen dividing with grim
outlook for competition
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Calls for more assertive
FERC role on RTOs

Diana Moss, American Antitrust Institute vice president and senior research fellow, raised the question at a press briefing in December and we suspect she thinks they are.
     We prefer press briefings that give answers to those raising questions but if Moss' antitrust report unveiled in December helps lower line-loading failure, markets will benefit.
     TLRs may be caused by different and more intense use of the system but Moss suspects anti-competitive behavior.
     Those with firm transmission capacity who get bumped from time to time have long suspected the use of undue market power may be at hand.
     FERC in AAI's view should aggressively pursue RTO formation while getting ready to face technical problems in meshing market-based policies with command-and-control reliability regulation.
     FERC, the FTC and the Justice Department, she added, should work together to counter claims that anti-competitive conduct is justified for reliability's sake or that mergers could produce reliability benefits to offset potentially anti-competitive effects.
     Agencies should get ready for different outcomes based on the regulatory "public interest" standard and the antitrust "no harm to competition" standard.
     Moss sees a large fork in the road with one path leading to competition and success will not be attainable without a more aggressive FERC stance on getting the grid turned over to independent entities.
     The other path gives greater significance to reliability, AAI suggested.
     That road has a much smaller role for competition and antitrust and thus, a greater role for regulation.
     "Taking this path would likely cement in place a command and control-based approach to reliability," Moss specified.
     Yet is a middle path possible -- one that achieves maximum competition while coming to terms with constraints of reliability, AAI asks.
     Reliability has deteriorated much more dramatically since the mid-1990s than measures of adequacy such as generation capacity reserve margins or spending for grid building.
     She points to the growing frequency of TLRs concentrated in recent years in a small number of Midwest firms, a region with lots of mergers.  
     Moss was FERC coordinator for merger competition analysis before moving to AAI where she's produced Competition or Reliability in Electricity?  What the Coming Policy Shift Means for Restructuring.
     Moss looked at the industry's corporate governance problems, market manipulation, excess of market power and the potential acquisition of failed independents' assets by large, vertically integrated utilities and called it "a little shop of horrors" although it's anything but little.
     She urged regulators to probe the connection between reliability and competitive problems "particularly when RTOs are not yet fully in place and when reliability and market oversight are carried out in a balkanized system.
     AAI is five years old, a non-profit research and education group and advocate of active use of antitrust law to help competition flourish.
     It has more than 70 contributors of $1,000 or more to its general treasury including APPA and NRECA.
     The website is www.antitrustinstitute.org.  (Story originally published in Restructuring Today 12/17/03)