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Power Marketer
Practical Law Glossary Item 6-521-0014 (Approx. 3 pages)
Glossary
Power Marketer
As used in electricity generation, an entity (often a trading company) engaged in the purchase and sale of electricity. Generally, power marketers do not own generation or transmission facilities. Rather, they buy electricity from utilities, independent power producers and other suppliers of electricity to sell wholesale to other utilities or marketers. Power marketers are, therefore, able to take advantage of differences in the prices at which these suppliers sell electricity.
To become a power marketer, an entity must file an application with the Federal Energy Regulatory Commission (FERC) to obtain a Market-Based RateAuthorization allowing it to make wholesale sales.
Power marketers were made possible with the deregulation of the electricity sector following the enactment of the Energy Policy Act of 1992 (EPAct 1992) which, among other things, required FERC to issue regulations opening up the power grid by requiring the wholesale delivery of electricity to be done on a non-discriminatory and non-preferential basis.
To implement the provisions of the EPAct 1992, in 1996, FERC issued FERC Orders 888 and 889 requiring utilities that own, control or operate transmission facilities used in interstate commerce to, among other things:
- File open-access nondiscriminatory transmission tariffs (rates) containing minimum terms and conditions.
- Separate their transmission from their generation and marketing functions.
There are hundreds of power marketers currently operating in the US, including four federally-owned power marketing administrations within the Department of Energy that sell the power produced by federally-owned hydroelectric and nuclear power plants:
- Bonneville Power Administration (BPA). Established in 1937, the BPA is based in the Pacific Northwest. The BPA markets wholesale electricity from 31 federal hydro projects in the Columbia River Basin, one non-federal nuclear plant and several other small non-federal power plants. About one-third of the electricity used in the Northwest comes from BPA.
- Southeastern Power Administration (SEPA). Created in 1950, SEPA is responsible for marketing and selling electricity generated in reservoirs operated by the US Army Corps of Engineers to customers located in Georgia, Florida, Alabama, Mississippi, southern Illinois, Virginia, Tennessee, Kentucky, North Carolina and South Carolina.
- Southwestern Power Administration (SWPA). Established in 1943, the SWPA markets and sells hydroelectric power primarily to public bodies such as rural electric cooperatives and municipal utilities in Arkansas, Kansas, Louisiana, Missouri, Oklahoma and Texas from 24 US Army Corps of Engineers multipurpose dams.
- Western Area Power Administration (WAPA). Created in 1977, WAPA markets and delivers hydroelectric power from 56 power plants operated by the Bureau of Reclamation, US Army Corps of Engineers and the International Boundary and Water Commission and one coal-fired plant to customers located in 15 Western states, including Arizona, California, Colorado, Montana, Nevada and Utah.