Summary
The ongoing transition (or restructuring) of electricity markets from regulated monopolies to competitive markets is one of the largest single industrial reorganizations in the history of the world. While information is becoming more critical for understanding how well restructuring is working, there are troubling indications that some market participants deliberately misreported information to manipulate prices. GAO was asked to describe (1) the electricity information collected, used, and shared by key federal agencies in meeting their primary responsibilities and (2) the effect of restructuring on these federal agencies' collection, use, and sharing of this information.
Federal agencies collect, use, and share a wide variety of electricity-related information to carry out their respective missions. Federal agencies have three principal sources of information: (1) routine formal data collection instruments sent to industry participants to report on operations and other industry-related activities, (2) third parties such as energy news services that package federally collected information as well as collect original information some of which reflects current market conditions, and (3) individual companies under investigation. Agencies use the information that they collect to carry out their respective missions--ranging from Federal Energy Regulatory Commission's (FERC) monitoring of electricity markets to Energy Information Administration's dissemination of information about the electricity sector and Environmental Protection Agency's pollution monitoring. Agencies share electricity-related information through a variety of means, such as using the Internet to distribute published reports and access their databases, interagency meetings, and other means. In addition, most federally collected information is made publicly available, although it is sometimes subject to delayed release or released in aggregated form in order to protect business-sensitive information. Restructuring has substantially changed the collection, use, and sharing of electricity information at some agencies and has exposed gaps in the federal government's collection of this information. Restructuring has affected FERC dramatically by changing how FERC performs its mission of assuring just and reasonable prices and by shifting its focus from periodic review of cost information to monitoring current market conditions. To monitor these conditions, FERC needs to access market information on wholesale transactions; however, no federal agency, including FERC, has access to complete and timely information on electricity markets and market participants, exposing gaps in key information. Such information gaps exist primarily because FERC is limited in its authority to collect information for full and effective market oversight and it lacks specific authority to collect current information which may lead to market participants challenging these collection activities. For example, FERC authority does not generally extend to non-jurisdictional entities such as the power marketing administrations, other non-utilities, and North American Electric Reliability Council. As long as these information gaps persist, FERC will be unable to oversee electricity markets in a comprehensive manner. Restructuring's effects on the sharing of electricity information, coupled with recent national security concerns, have highlighted the sensitive nature of some information that federal agencies collect or need. Because of the importance of having timely, reliable, and complete information, we are recommending that FERC take action to resolve its information gaps. As part of this action, we are recommending that FERC present its findings to the Congress because information-related issues--raised by restructuring--may require Congressional action to ultimately resolve.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
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Recommendations for Executive Action
Recommendation: Given that effective oversight of evolving electricity markets requires the acquisition of and access to timely, reliable, and complete information, the Chairman, FERC, should demonstrate what information FERC needs.
Agency Affected: Department of Energy: Federal Energy Regulatory Commission
Status: Implemented
Comments: On July 31, 2007, FERC reported that its Information Assessment Team had reported its findings to the Commission and that, in response, FERC developed and acquired a comprehensive set of data sources to meet it oversight needs. FERC considers this recommendation as fully implemented and closed. On July 28, 2004, FERC reported that it has created the Information Assessment Team to identify information needs. The team will present its findings to the Commission in fall 2004.
Recommendation: Given that effective oversight of evolving electricity markets requires the acquisition of and access to timely, reliable, and complete information, the Chairman, FERC, should describe the limitations resulting from not having this information.
Agency Affected: Department of Energy: Federal Energy Regulatory Commission
Status: Implemented
Comments: On July, 31, 2007, FERC reported that On May 25, 2005, the Information Assessment Team (referred to in FERC's 2004 response) presented its final recommendations to the Commission on information the Commission needs to promote greater market transparency in electricity markets. For example, the Commission acted on a number of data collections to streamline filings, update methodologies, or reduce the amount of information submitted to the Commission. The Commission streamlined Nuclear Decommissioning Trust Fund reports and hydroelectric project preliminary permit application requirements and allowed utilities to file electronically securities issuance applications and certain natural gas pipeline and oil pipeline data, thereby giving the Commission more timely access to this data. The Commission also proposed to permit utility information on interlocking positions and customers to be filed electronically. Electronic filing aids the Commission by increasing the reliability and completeness of the information, and gives the Commission greater ability to analyze it in the course of performing its market monitoring functions. The Commission also issued two Notices of Inquiry (NOI) through the FIAT effort. The first sought comment on collecting electric generator run status information. A second NOI sought comment on collecting and calculating Available Transfer Capability (ATC) data. ATC is a measure of unused electric transmission system capability that a utility can offer for sale. Market participants have told the Commission that variations in the way ATC is calculated provide opportunities for undue discrimination and create obstacles to doing business. Neither NOI became a rulemaking, however, comments filed in response to these NOIs helped inform the Commission's Order No. 890 (referenced above). Order No. 890 does several things to increase transparency: (1) Increases non-discriminatory access to the grid by eliminating the wide discretion that transmission providers have in calculating ATC. The rule requires public utilities, working through the North American Electric Reliability Corp., to develop consistent ATC calculation methodologies and to publish those methodologies to increase transparency. (2)Increases the ability of customers to access new generating resources by requiring an open, transparent and coordinated transmission planning process. Each transmission provider's planning process must meet nine specified planning principles: coordination; openness; transparency; information exchange; comparability; dispute resolution; regional coordination; economic planning studies and cost allocation. (3) Requires that transmission providers post on their OASIS all business rules, practices and standards related to transmission services provided under the pro forma Open Access Transmission Tariff, or OATT.
Recommendation: Given that effective oversight of evolving electricity markets requires the acquisition of and access to timely, reliable, and complete information, the Chairman, FERC, should ask the Congress for sufficient authority to meet its information collection needs and responsibilities.
Agency Affected: Department of Energy: Federal Energy Regulatory Commission
Status: Implemented
Comments: On July 28, 2004, FERC reported that there are provisions in pending legislation that would grant FERC explicit authority to assure market transparency and to oversee the reliability of the transmission system. These provisions would be adequate authority to permit FERC to meet its information collection needs, according to FERC.
Recommendation: Additionally, FERC should consider the cost and potential reporting burden associated with additional information collection, since market participants will incur additional costs and burden hours, and where possible, explore creative ways to obtain information.
Agency Affected: Department of Energy: Federal Energy Regulatory Commission
Status: Implemented
Comments: On July 28, 2004, FERC reported that OMOI has developed creative ways to obtain information without imposing new burdens on the reporting public through the acquisition of third party vendor information, and through sharing arrangements with regional transmission organizations and their market monitoring units. The Information Assessment Team will also examine what information is supplied to other federal agencies and how FERC can access that information rather than imposing new reporting burdens on the industry directly.
