The New Rules: A Guide to Electric Market Regulation

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THE NEW RULES: A GUIDE TO ELECTRIC MARKET REGULATION by Steven Ferrey (PennWell Corp. 2000).

The New Rules is a well-written guide by Steven Ferrey, who does double duty as a professor at the Suffolk University School of Law, and as an energy practitioner. At the outset, The New Rules suffer from a disability, which (and I am guessing), is the product of the marketer's artifice and not the author's art. Professor Ferrey struggles mightily to fulfill the promise of delivering what is "new". Much of the contents probably could not be "new", given the length of the writing/publishing process and, more importantly, the speed of change in the electric power industry. However, The New Rules can be a useful compendium of information for new entrants, including lawyers, to the electric power business.

The New Rules contains 370 pages, is divided into fourteen chapters with two appendices1, and includes a list of acronyms and a valuable glossary. The author writes: "[t]his book takes you through the new rules shaping and governing power markets at the millennium. It is written for professionals in the power business."

The fourteen chapters of The New Rules discuss energy technologies2, distributive generation, wholesale power and transmission rules, EWG, QFs, PURPA, mergers and acquisitions and power contracts. The last chapter is provocatively entitled, "The New Risk Paradigm." What is not included in any of the chapters is analysis of RTOs and ISOs, the role of nuclear power, greenfield generation and hedging and risk management. The New Rules, however, can not be faulted for not describing the California implosion or predicting the Enron debacle. However, Professor Ferry is prescient when he writes:

Transmission access is an essential resource that impacts the type of rules required to manage the system, and it is often overlooked in the competitive market.

Chapters 2 and 3 are a discussion of wholesale power sales, and FERC Order Nos. 888 and 889. There is no reference to creeping federalism, interconnection or the plethora of issues surrounding the governance and operations of ISOs or RTOs. Chapter 4 is a quick review of EWGs, PUHCA and SEC Rule 58.

Chapters 5, 6 and 7 are an extended discussion of QFs and PURPA. Apparently, the author feels very comfortable with the subject having authored The Law of Independent Power.

It is not until Chapter 8 that The New Rules touches on a more current issue - deregulation of retail markets. The discussion is neither detailed or incisive (other than an extended analysis of what is labeled the "hangover" of stranded costs). Professor Ferry reaches no conclusion either as to the benefits or disadvantages of retail unbundling.

Chapter 9 is an eleven page (without endnotes) discussion of mergers and asset acquisition. …