What Does a Power Marketer Do?

On July 31, 2002, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) 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 SESCO, 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.