Certified Energy Manager Practice Exam

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Which order helped create a marketplace for public utility rate schedules?

Order 500
Order 888
Order 889
Order 436

The correct answer is: Order 888

Order 888, issued by the Federal Energy Regulatory Commission (FERC) in 1996, was pivotal in creating a competitive marketplace for electricity. The order mandated that utilities open their transmission lines to third-party providers. This requirement was aimed at fostering competition in electricity generation and ensuring that consumers could benefit from lower prices and improved services. One of the central components of Order 888 was the requirement for public utilities to file open access transmission tariffs. This meant that utilities had to provide detailed information on their rate schedules, making it easier for independent power producers to access transmission systems. As a result, consumers and other stakeholders could compare rates and services transparently, leading to more informed choices in the marketplace. The emphasis on nondiscriminatory access initiated by Order 888 significantly transformed the energy sector. It encouraged the development of competitive pricing structures and helped to establish the conditions under which a thriving marketplace for electricity could emerge. This ultimately promoted efficiency and innovation within the industry, benefiting consumers and leading to the expansion of renewable energy sources.