On July 31, 2002, the Federal Energy Regulatory Commission (FERC) issued a
Notice of Proposed Rulemaking aimed at creating a nationwide Standard Market
Design (SMD) for wholesale electric power markets. The proposed SMD rule
was the third major rulemaking (after Orders 888 and 2000) by the FERC aimed
at providing open access to the transmission network to realize the benefits of
competitive wholesale power markets. As a result of significant voluntary market
developments, the FERC terminated the SMD rule proposals in 2005. However,
relevant effects of the SMD proposal shaped the wholesale electricity market.
In particular, SMD created the opportunity for Power Marketers, such as eXion
Energy, to become market participants. Specifically, the FERC modified its
regulatory requirements to permit business entities to file for rate tariffs in order
to buy and sell electricity at wholesale among all electric utilities. These new
entities, called Power Marketers, do not own or operate generation, transmission,
or distribution facilities, but are treated as electric utilities. Thus, the combined
entry of power marketers constitutes a change that not only established a major
milestone, but also propelled the industry on its path to competition.
Power Marketers play a critical role in the wholesale electricity market, especially
pertaining to market liquidity, price transparency and efficiency. Power marketers
engage in the buying and selling of electricity in the wholesale electricity markets.
They generally do not own or control generation assets but might be part of
a company or group that does. They do take ownership of the electricity (as
opposed to brokers), and they are involved in interstate trade.
