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What Are Seams?
Seams are barriers and inefficiencies that inhibit the economic transaction of capacity and energy between neighboring wholesale electricity markets, or control areas, as a result of differences in market rules and designs, operating and scheduling protocols and other control area practices.
Seams exist between most control areas because wholesale electricity markets have evolved using different sets of rules and procedures. For example, seams can result from different pricing models, inconsistent transaction submittal times, variations in transmission tariff services, or differing operating criteria. Such is the case among control areas in the northeastern United States and with their neighbors in eastern Canada.
The FERC's View
For the past few years, the Federal Energy Regulatory Commission (FERC) has been encouraging the elimination of seams and advocating the need for markets to standardize. In July 2002, the FERC issued a Notice of Proposed Rulemaking for standardized market design, which provides specific guidelines on these issues.
The FERC's goal in eliminating seams is to foster more efficient markets, first by making the markets more similar, and second by coordinating the scheduling practices that govern the flow of energy and payments for that energy between markets — that is, to make sure that energy trading across borders uses the same process.
