A standard market design for regional transmission organizations

Electricity Journal

Volumn 14, Issue 10, 2001, Pages 27-53

  Chandley, John D ^a,b  

^a Law and Economics Consulting Group   (United States)

^b CALIFORNIA ENERGY COMMISSION   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

COMMERCE;

COMPETITIVE MARKETS; MARGINAL COSTS; MARKET PRICE; REGIONAL TRANSMISSION ORGANIZATION; SECURITY-CONSTRAINED ECONOMIC DISPATCH; STANDARD DESIGN; STANDARD MARKET DESIGN;

ELECTRIC LOAD DISPATCHING;

EID: 0001891223     PISSN: 10406190     EISSN: None     Source Type: Journal    
DOI: 10.1016/S1040-6190(01)00253-6     Document Type: Article

References (20)

1. . Regional Transmission Organizations, Order 2000, 65 Fed. Reg. 809 (Jan. 6, 2000);
2. FERC Stats. & Regs. 31,089 (1999), order on reh'g; Order No. 2000-A, 65 Fed. Reg. 12,088 (March 8, 2000);
3. FERC Stats. & Regs. 31,092 (2000), rehearing pending. All page references cited are to the Order published on the FERC Web site at http://www.ferc.fed.us/Electric/RTO/post_rto.htm (accessed Nov. 30, 2001).
4. Id., at 423-425 and 633.
5. Id., at 333-334, 381-382.
6. Id., at 332, 382.
7. Id., at 333, 489.
8. See, e.g., FERC, Order Provisionally Granting RTO Status (for the Pennsylvania-New Jersey-Maryland, or PJM, RTO), issued July 12, 2001, in Docket No. RTO1-2-000, at 2.
9. Id., at 13.
10. FERC, Order on Compliance Filing and Status Report, issued July 12, 2001 in Docket Nos. RTO1-74-002 and RTO1-74-003, at 23.
11. For further details, see William H. Hogan, Electricity Market Restructuring: Reforms of Reforms, J. REG. ECON. (forthcoming).
12. Supra note 6, at 19.
13. Many lessons learned from simplified zonal systems would apply as well to some of the proposals to use flowgate transmission rights, which raise issues similar to those that arise with zonal pricing and interzonal congestion rights. For example, the concept of defining "commercially significant flowgates" (CSFs) and offering rights only for these CSFs is analogous to the notion that important and frequent congestion can be predicted so as to define zones and interzonal rights, but presumably unimportant and infrequent "intrazonal" congestion can be managed and priced with less care and no rights. Simplifying assumptions that ignore and fail to price grid realities have been the source of persistent incentive problems in several markets. These issues are discussed further in later sections of this article.
14. Congestion Management Working Group of the NERC Interface Committee, Final Report on the NERC Market Redispatch Pilot, Nov. 29, 1999, filed with FERC on Dec. 1, 1999.
15. Because of their different starting points, not everything in PJM or New York is readily transferable to other regions, and work remains to be done in PJM and New York as well, especially on the mechanisms for interregional scheduling and dispatch coordination, interregional transmission rights, associated pricing and settlement mechanisms, and a consistent and effective regional approach for assuring supply adequacy.
16. See, e.g., FRED C. SCHWEPPE, MICHAEL C. CARAMANIS, RICHARD D. TABORS, AND ROGER E. BOHN, SPOT PRICING OF ELECTRICITY (Norwell, MA: Kluwer Academic Publisher, 1988);
17. Larry Ruff, Stop Wheeling and Start Dealing: Resolving the Transmission Dilemma, ELEC. J., June 1994, at 24-43;
18. Don Garber, William Hogan, and Larry Ruff, An Efficient Wholesale Electricity Market: The SDG&E Pooling Proposal, ELEC. J., Sept. 1994, at 48-60;
19. and William Hogan, Coordination for Competition in an Electricity Market, Center for Business and Government, Harvard University, March 2, 1995;
20. and Regional Transmission Organizations: Millennium Order on Designing Market Institutions for Electricity Network Systems, May, 2000, both available at http://www.whogan.com (accessed Nov. 30, 2001).