Texas Newspapers Asks, “When is Electricity Trading Illegal?”

Michael Giberson

In the Fort Worth Star-Telegram, Jim Fuquay tries to answer the question that may be on the mind of power traders in Texas and elsewhere: When is electricity trading illegal?

“They exercise market power. They just come right out and tell you,” [energy market consultant Steven] Stoft said of his experience working for a Canadian generator. “Every other company in the world does it to the extent it can. The difference is, it’s illegal in electricity.”

Of course, whether it is illegal in any particular case depends on the locally prevailing law.

As a matter of policy, I think generators ought to be free to excercise all of market power they can get, and generators should be free to agree to contracts in which they give up that freedom, and networked consumers ought to demand that any generator holding significant market power contractually yield that freedom as a condition of interconnecting to the network.