By Seabron AdamsonSeabron Adamson is senior consultant with London Economics Ltd., a consulting firm for the private sector. A native of Georgia, Mr. Adamson joined London Economics in 1992 and currently resides in the United Kingdom.
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The debate over "PoolCo" vs. bilateral contract markets is a question of market mechanism, or how transactions can be made while recognizing the realities of power systems. The big picture, the structure of the industry, is not yet clear, but the debate continues to focus on how things should work, instead of addressing what is meant to be working. We risk arguing about the relative merits of carburetors and fuel injection, and forgetting our destination. I submit that we need less mechanics and more navigation, at least at this point.
When it is time to choose a market mechanism, the following criteria will help in our selection:
s The market mechanism should support, not hinder, the proposed structure for the industry. If we believe a system that unbundles generation, distribution, and transmission of electricity is best, a PoolCo mechanism may be most appropriate. If we wish to keep any vertically integrated utilities, contract markets are a more natural evolution.