Commissioner Mark Christie of the Federal Energy Regulatory Commission has been a prominent advocate of the need to overhaul the competitive market design at the heart of the regional wholesale power markets that have evolved in the U.S. over the past 25 years ("It's time to reconsider single-clearing price mechanisms in U.S. energy markets", Energy Law Journal, May 2, 2023).

The fossil fuel-fired "dispatchable" generation units that Christie sees as crucial to ensuring power grid reliability are retiring faster than passively fueled renewable energy resources can be brought on to replace them. In our discussion, Commissioner Christie makes clear that his top target for reform is capacity markets, not the security-constrained economic dispatch model employing locational marginal pricing, or LMP, in real-time and day-ahead spot markets. LMP is the central design element of all state and regional competitive wholesale power markets in the U.S.

"I think in the real-time energy markets, the real-time energy markets and the use of LMP has saved consumers money by getting economic dispatch, by getting the least-cost unit dispatched. So I think in the real-time energy markets, I think there has been consumer savings," Christie says.

"There's many functions to RTOs and I think that the most important function of all, and the one I think where they’ve provided undisputed benefits, has been to provide a larger balancing authority," he says, adding: "Probably the biggest single benefit of RTOs has been that they've provided a regional system operator, which I think has been of tremendous benefit to reliability and also, I think, to cost savings because they can dispatch cheaper resources across a broader territory."

But Christie, an ardent states rights advocate, does not see FERC's role as ensuring these consumer-friendly regional power markets are ultimately in place everywhere, which former FERC Chairman Pat Wood attempted to do 20 years ago. "How you regulate your utilities is really an individual state decision" to make, and not FERC's, he says, calling Wood's Standard Market Design "massive overreach and an invasion of basically state retail authority."

Nevertheless, Christie says, "I don't think that, frankly, the real-time energy markets, which use LMP, what's called locational marginal pricing, are really the first place we ought to be concerned. I think the real concern and we ought to focus on first is in the capacity markets," Christie elaborated, asserting that capacity markets should be replaced with utility self-supply programs that incorporate integrated resource planning by state regulators. IRP is a central element of standard monopoly utility regulation.

"I think an IRP process – it gets you the best mix of a balanced holistic approach where you can balance all the different resources that you need and try to get them at the best cost to consumers, which is what the goal ought to be," Christie says. "Everything we do as regulators in the energy area has got to be about what's good for consumers. We have to look at what is going to get consumers reliable power at the least cost. And I think everything we do, we’ve got to be asking ourselves, is this the best thing for consumers?"

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