October marks National Energy Awareness Month, a celebration of energy resilience and sustainability in power markets across the United States. This month, federal agencies offer consumers meaningful insight into power sector operations and more efficient energy management techniques to implement at home. Optimizing our national energy resilience and security has been a core focus of the industry for the past three decades – a conversation expected to only intensify in the years to come. As we celebrate 30 years of this pivotal initiative, it’s a great opportunity for Americans to build a fundamental understanding of competitive power markets and the role they play in securing energy efficiency and reaching environmental targets.
Competitive Markets
In a competitive electricity market, power generators compete to provide electricity at the lowest cost while safeguarding reliability. In contrast, consumers living in areas not covered by competitive markets are beholden to rates set by utilities.
Competitive wholesale power markets present the most effective route to achieving national energy, environmental, and economic targets. This is largely possible since competition breeds both innovation and investment in new technologies that improve reliability, environmental impact and affordability. Moreover, this market structure places investment risk in the hands of power generators rather than consumers.
Independent System Operators & Regional Transmission Organizations
Before the introduction of Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs), single entities owned every leg of the power market – from generation, to transmission, and finally to distribution through the grid. ISOs and RTOs give buyers a choice of suppliers while also preventing monopolies and other barriers to market entry for prospective participants. They are charged with dispatching power plants while overseeing plans for expansion and new resource integration. ISOs and RTOs work to keep the energy grid in balance as generation and load fluctuate according to demand. Finally, they make generation predictions to ensure sufficient power and reliable backup sources are available in times of high demand.
In short, ISOs and RTOs function as their jurisdictions’ energy authority as they work to keep prices low, power reliable, and the grid safe. The duties of RTOs mirror those of ISOs, but RTOs are also responsible for their regions’ greater transmission network. ISOs typically operate within a single state, like the California ISO. The PJM Interconnection – the nation’s largest RTO – governs power generation, transmission, and distribution in markets spanning thirteen states and the District of Columbia.
Markets for the Future
Right now, there are critical conversations surrounding competitive power markets throughout the nation, which have significant implications for consumers’ access to reliable, affordable, and cleaner energy.
To deliver the best results, market rules must balance energy needs and ensure fair competition among all power providers. Policies that give outsized support to certain companies or types of resources impede the market’s ability to send the right price signals and continue to make sure the best options are available to keep America’s electric grid strong, secure, affordable and innovative.
EPSA tracks these key issues and advocates to unleash private investment and ensure all resources can provide cleaner, reliable power at competitive costs – helping to protect ratepayers and taxpayers from paying more than they should for essential electricity.
See EPSA’s Competitive Power Principles.
How You Can Put Energy Awareness to Use
Every year, the DOE, FERC, and other regulators spotlight how energy – namely electric power – is critical to national security and the economy. Energy awareness is clearly beneficial on a national scale, but how else can you be energy aware in your daily life? Ensuring efficiency and managing overall usage is not only great for the environment but can also produce significant energy savings for households, offices, and facilities. To practice energy awareness every day, try some of these simple steps:
- Collect and examine your electricity and fuel bills separately to pinpoint your largest source of consumption.
- At your home or office, identify any leaks or gaps around walls, ceilings, windows, doors, switches, and outlets. You can seal these at home yourself, request assistance from a landlord, or inform your office manager. In addition, make sure heating systems are in tip-top shape. These energy efficiency pitfalls can save consumers up to 20% on their energy bills. Other small changes can include switching to LED bulbs, unplugging electronics not currently in use, and only running the dishwasher when fully loaded.
- Utilize informational resources like Home, Office, and Facility Energy Checklists from the Department of Energy to understand the short-term and long-term steps you can take to stay energy smart.
