Photo by René DeAnda at https://unsplash.com/photos/zfKlCKK-Ql0.
On February 24, 2021, President Biden signed a new Executive Order (EO) concerning “America’s Supply Chains.” The EO has two parts. First, the EO directs an immediate 100-day review, requiring certain federal agencies to assess vulnerabilities in industry supply chains. Of interest to the electricity sector: (1) the Department of Energy is instructed to submit a report identifying risks in the supply chain for high-capacity batteries, including electric-vehicle batteries, and policy recommendations to address these risks; (2) the Secretary of Commerce is tasked with evaluating semiconductor manufacturing; and (3) the Secretary of Defense must identify risks in the supply chain for critical materials, including rare earth elements. Second, the EO calls for an in-depth one-year review of supply chains across industries, including an evaluation of the energy sector industrial base.
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The Federal Energy Regulatory Commission (FERC) will be pursuing two examinations concerning market power and electric reliability that were brought about by extreme winter weather in the Midwest United States and Texas.
On February 22, 2021, FERC announced that its Office of Enforcement, Division of Analytics and Surveillance (DAS) would be looking into possible wholesale natural gas and electricity market manipulation that occurred during the extreme cold weather. On top of the infrastructure issues occurring throughout the prolonged winter weather conditions, prices for natural gas and power surged significantly. In an effort to keep the power on for consumers, many utilities paid the increased prices.
The DAS examination into market power will be part of its ongoing market surveillance currently being performed. DAS is responsible for evaluating daily and monthly trading data from participants and the financial markets as a way of screening natural gas trading hubs and electricity markets in the United States. From its analysis, DAS ultimately decides if a formal investigation from the Office of Enforcement is necessary. FERC states that if DAS finds evidence of potential market wrongdoing, the continuing investigations will be non-public.
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