ELECTRICITY:

Google arm gets OK to sell power in competitive markets

The Federal Energy Regulatory Commission today granted a subsidiary of Google Inc. the authority to sell electricity on wholesale markets.

The FERC order allows Google Energy "market-based rate authority" to sell electricity at market prices similar to generation and utility companies. FERC granted the authority based on Google not owning or controlling wholesale generation or transmission facilities or not being active in the retail market, where customers may be "captive" or relying solely upon the company for electricity.

Google's decision to apply to become an electricity seller last month raised questions about its future in the utility business. Google also released a "PowerMeter" application to monitor home energy use last year and has invested significantly in renewable energy projects.

The company said the new subsidiary will help manage the costs of its electricity consumption and enable it to use cleaner energy, even if it is not near the company's facilities. In its application, Google said it intends to act as a power marketer by purchasing electricity and reselling it to wholesale customers (E&ENews PM, Jan. 6).

There are other non-utility companies that have market-based rate authority in the wholesale electricity markets, including Safeway and the pharmaceutical company Merck & Co. Inc., FERC said.

They may not be the outliers for long at FERC. Chairman Jon Wellinghoff said other companies with large energy costs may soon follow Google's lead, especially as FERC and grid operators provide more opportunities for demand-side customers to participate in the supply side of the grid.

"I think it certainly would be something to help companies control their costs," he said.

Wellinghoff said these companies could also help the markets, as their participation can help control load issues on the grid. For instance, Google could provide ancillary services -- support for reliability or power quality -- for the grid through its large server batteries, he said.

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