Lessons Learned From Electricity Restructuring: Transition to Competitive Markets Underway, but Full Benefits Will Take Time and Effort to Achieve
GAO-03-271
Published: Dec 17, 2002. Publicly Released: Jan 16, 2003.
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Highlights
The electricity industry in the United States is undergoing major change, the outcomes of which will affect every consumer. The industry is restructuring from one where electricity prices are set by regulation to one in which competitive markets set the price. GAO was asked to report on the extent to which federal and state actions, to date, have achieved the goal of restructuring. GAO discusses lessons learned from efforts to date.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Energy Regulatory Commission | To help Congress ensure that the fullest benefits possible are achieved from electricity restructuring, and to better understand what progress has been made, the Chairman of the Federal Energy Regulatory Commission (FERC) should determine how restructured wholesale electricity markets are performing by developing and implementing a plan to collect necessary data and perform evaluative analysis. These data should be sufficient to allow evaluation of the competitiveness of these markets (including, but not limited to, the extent of market power, efficiency of the industry, and ease of market entry) and the expected benefits to retail consumers (such as lower retail prices and the availability of new products). Where possible and appropriate, FERC should work in concert with state and regional entities to take advantage of their knowledge, expertise, and access to important data relevant to the impacts of restructuring on consumers. |
Closed – Implemented
FERC reports as of July 31, 2007, that it has taken a number of steps to implement this recommendation, including collecting more comprehensive information, reviewing market oversight data on a daily basis, regularly reporting to the Commission and public, and expanding efforts to work with States and regional entities. As such, FERC considers this recommendation fully closed and implemented. On July 28, 2004, FERC reported that its Information Assessment Team will identify gaps in FERC's data collection, and expects to propose changes to FERC regulations in the fall 2004.
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| Federal Energy Regulatory Commission | To help Congress ensure that the fullest benefits possible are achieved from electricity restructuring, and to better understand what progress has been made, the Chairman, FERC, should report annually to Congress and the states on the status of restructuring efforts, identify emerging issues and impediments to reaching FERC's goal of achieving national competitive wholesale electricity markets, and make appropriate recommendations to Congress and the states for changes to improve the functioning of these markets. |
Closed – Implemented
On July 28, 2004, FERC reported that it implemented GAO's recommendation through the issuance of the "State of the Markets Report," which is issued annually by OMOI. The reports are presented by OMOI staff to the Commission before issuance and serve as an ongoing resource to FERC, state commissions, industry, and customers.
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Best practicesElectric energyEnergy industryEnergy marketingFederal regulationsIndependent regulatory commissionsPrices and pricingElectricity restructuringElectricity marketLessons learned