Carl Pechman, FERC Economist, on the Role of the Pivotal Agency

“There is a fundamental change going on in the structure of the industry.”

Carl Pechman, an economist at FERC, the Federal Energy Regulatory Commission, spoke today at SolarTech's Solar Leadership Summit in San Jose, California.

He noted that FERC was "a really sleepy agency for many years." But his presentation and the recent actions of FERC showed that the agency is anything but sleepy these days.

Greentech Media's recent coverage shows that FERC realizes the changes occurring in the electrical grid. FERC Chairman Jon Wellinghoff spoke last month on the need for flexible electricity pricing and consumer energy awareness. We covered FERC Commissioner Philip D. Moeller speaking on the need for energy storage on the electrical grid last year. It seems that the commissioners at FERC 'get it' and realize that the grid is transforming and that they must be involved in regulating this shift.

Pechman spoke on what it is that FERC does as well as its current, future, and long-term views on the U.S. market.



"FERC is a creature of statute," which:



But its fundamental first principle is to ensure "just and reasonable rates" which are "not unduly discriminatory or preferential." Pechman noted that "within the agency there's a real hesitance to put the finger on the scale of any particular tech."

FERC acts with an open process of generic rule-making on broad policy issues. Pechman cited these FERC orders as milestones that have led change in the utility industry:



How is FERC changing the structure of the market?



Creating the 21st Century Grid

Pechman noted that for most of the grid's existence, "The customer was considered load and the idea of the utility was to serve load." But now "[w]e're getting a very different idea of what the customer is. [...] The customer is not just load but potentially power production and storage and able to respond to the system."