In 2005 we are told that "Professional Ethics" issues have become important in the electricity marketplace!
Of course one is reminded by the ENRON and other related fiascos in the electricity business (see my column two years ago on this issue). Already FERC has issued guidelines on professional ethics "code of conduct" situations. This matter raises three main concerns in my mind.
The first concern relates to the approach of using an "ethics" approach to resolving many grey areas. The idea behind codes of conduct revolves primarily around the use of information that is obtained in some "questionable" manner to improve the competitive position of a market participant, usually a generating company. A generation marketer is permitted to use public information to improve his/her performance; but he/she may not use information gained from a casual conversation with a transmission system operator. Indeed he/she may not cross the various "Chinese Walls" erected by elaborate schemes to prevent misuse of information.
The second concern, which is Corollary I of the first, is that the electric power community will somehow try to "police" itself. This is done by developing example cases of actual or potential situations whereby in some subtle manner, the generation marketer squeezes information out of the "system" unethically. If that happens, then how will the situation be corrected and/or rectified? The natural means would be some form of an internal review process (which may or may not include arbitration) whereby the wrongdoer is identified, and remedies found.
The third concern, which is Corollary II of the first, is that the alternative to an "ethics" approach is the strict legal approach with carefully defined laws which would then provide the basis for lawsuits, determination of harm done, penalties and the like. Our guess here is that the policy makers are watching the viability of the ethics approach before jumping into detailed legislation of complex laws.
Unfortunately, all of the above takes time, time to learn, time to develop bills in Congress and time to properly implement. In the meantime, a lot of money would have been obtained in questionable means, companies are bankrupt, whole state budgets are threatened, and the list goes on.
Unfortunately, there are no easy answers to the complexities of power markets. What we would hope for is that the policy makers would try to control the cost of the process to society and to determine a clear path. Let’s hope that the ethics "code of conduct" experiment will work.