ISO

To the Editor:

In your recent article about New York's "demand curve" ("New York Throws a Curve," May 15), opponents dismiss the role of installed capacity in restructured electric markets. Instead, they suggest a complete reliance on revenues from the energy market to recover all fixed costs. Yet, as your article notes, an energy-only approach might require price spikes of up to $30,000/MWh to cover the fixed costs of "peaking" units that seldom run but are needed for reliability.

The ISO graples with the politics of scarity.

In regions that have embraced electric industry restructuring, such as New York, New England, and the mid-Atlantic states, where independent system operators (ISOs) have taken over and the standard market design (SMD) has grabbed a foothold over bulk power transactions, one fascinating question still dogs theorists and policymakers alike:

Is a power supply shortage really all that bad?

Can RTO market monitors really be independent?

The Federal Energy Regulatory Commission (FERC) initiatives on regional transmission organizations (RTOs) and standard market design give new prominence to the market monitoring institution (MMI), a novel regulatory tool never before contemplated in legislation.¹

To the Editor:

I read your May 15, 2003, "Frontlines" column ("Grid Glut?") and have to respectfully take issue with a couple of your thoughts.

To the Editor:

I read your May 15, 2003, "Frontlines" column ("Grid Glut?") and have to respectfully take issue with a couple of your thoughts.

The collapse of wholesale markets has utilities once again making the purchasing decisions, and taking all the risks.

If a common theme is emerging from the various policy directions across the country, it seems to be that responsibility for supply resources is moving away from open markets and back into the hands of load-serving utilities.

The commission tacks a new name onto a familiar concept.

By now it is old news that the Federal Energy Regulatory Commission (FERC) on April 28 back-pedaled on standard market design (SMD), even renaming it the "wholesale power market platform." But SMD is far from dead, as some had wished. Instead, it is merely toned down, bowing to political furor and regional differences.