"If it ain’t broke, don’t fix it," is a treasured, if ungrammatical, bit of folk wisdom, and that’s the position the Federal Energy Regulatory Commission (FERC) appears to be embracing when it comes to competitive electricity market policies.

FERC announced last year that it was preparing to take a look at deregulation with an eye toward proposing new rules to improve operations in organized electric markets, boost competition and bring additional benefits to energy consumers. It proposed looking at four specific issues: The role of demand response and greater use of market prices to promote electricity demand reductions during a power shortage; improving opportunities for long-term power contracting; market monitoring; and board governance at regional transmission organizations (RTOs) and independent system operators (ISOs).

Citing what it called "deep systemic problems" in organized electric power markets, a group of organizations collectively opposed to deregulation petitioned FERC to broaden the scope of its investigation to examine the viability and fairness of the entire RTO market structure. It argued that FERC needed to address "the core issue of whether RTO markets are producing unjust and unreasonable wholesale power prices," and that the scope of its proposed review was not sufficient to support such an investigation.

Other groups—including COMPETE, an organization that promotes electricity competition as being in the public interest, and the Electric Power Supply Association, a national trade association representing competitive power suppliers—took the opposite view, arguing that deregulation needed only to be tweaked, not gutted. "The Commission is on solid ground in its regulation of organized competitive wholesale electricity markets, and should not overturn its precedents and weaken confidence in the organized markets based upon such a thin and unsubstantiated pleading," COMPETE and 81 other parties said in a January filing.

FERC sided with the latter group. In February, it announced about a dozen specific proposals, all related to the four issues originally discussed. (For details on the proposals, download FERC Reforms Aim to Improve Operations of Organized Wholesale Power Markets (PDF).) "The reforms we are proposing today reflect four areas of the competitive markets debate where proposed improvements were supported by the law, facts and economic theory," FERC Chairman Joseph T. Kelliher said in making the announcement. "We are issuing this package today because we do not want to delay any of the consumer benefits from these reforms."

COMPETE and its allies applauded the decision to enact only incremental changes in organized competitive electricity markets. "The Commission has identified a core set of issues in this rulemaking that will build on the innovation and consumer benefits made possible by electricity markets overseen by regional transmission operators and independent system operators," says former FERC Commissioner William Massey, counsel to COMPETE. He adds that the resulting regulatory certainty of the FERC's actions "will help assure continued investment so consumers can continue to benefit from the efficiencies and environmental advances brought about by these markets."