|Topic||Market Failure, Regulation, And Public Choice|
|Key Words||Power Suppliers, Markets, Demand, Price Restrictions, Price, Competition|
The Federal Energy Regulatory Commission (FERC) has determined that three wholesale electric power suppliers - American Electric Power Co. based in Columbus, Ohio, Southern Company in Atlanta, and Entergy Corp. in New Orleans - wield too much influence on electricity markets in their home regions because their power is essential to meet consumer demand peaks. As a result, they will face new price restrictions.
The rationale is to avoid the electricity price spikes that hit California in 2000. FERC wishes to make wholesale power markets more orderly, but also maintain competition. It promises to take similar action against another power generator or marketer if its electricity is "pivotal" during peak demand, such that the company "is in a position to demand a price above competitive levels".
The affected companies are studying the ruling. One is considering legal action.
(Updated January 15, 2002)
|Source||Associated Press, "Price controls imposed on energy," St. Petersburg Times, November 22, 2001.|
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