Much closer market scrutiny than has occurred in the first few years is necessary. Law enforcement must be proactive, rather than reactive. It may also be necessary to identify a broader range of practices that are per se illegal, or at least trigger heightened scrutiny and to have a broader range of disciplinary measures to reflect the especially vulnerable and volatile nature of the commodity. Triggers for heightened scrutiny should be based on well-known structural conditions that are believed to increase the likelihood of the exercise of market power. Any entity that has engaged in market tightening behavior and later profited from actions that exploit the tightness should be subject to greater scrutiny.
Consumers express a strong commitment to reliability and an aversion to price shocks.
This is the baseline against which competition will be judged. The most obvious means for preventing the overheating of markets is to have adequate reserve margins. However, in a competitive market, it is not clear that any supply-side entity has an interest in carrying excess capacity. For firm residential and small business customers, it may be more important to develop programs that let them enjoy stable prices without sending utilities plunging into markets to avoid blackouts. Proposals to build peaking reserves at stabilized prices become attractive if markets are going to be extremely volatile.