Chasing the Uncatchable
Why trying to fix mandatory capacity markets is like trying to win a game of Whack-A-Mole (Parts I & II)
FERC has little to show for more than a decade of tinkering with mandatory capacity markets.
Capacity markets
FERC Chasing the Uncatchable
Trying to fix mandatory capacity markets like trying to win whack-a-mole, Part I
FERC’s efforts to get capacity markets “right” have led to endless – and futile – tinkering. The cure proposed – making capacity auction markets mandatory – has unfortunately proved far worse than the disease.
Pennsylvania Expands Access to Customer Account Data
Submitted by aburr on Sat, 2013-06-01 13:49Responding to suggestions from its Office of Competitive Market Oversight (OCMO), the Pennsylvania Public Utility Commission issued a tentative order seeking comments to guide its development of procedures needed for giving competitive electric generation suppliers quicker access to the customer account numbers of regulated utilities.
Learning to Love Congestion
Competitive market problems and their implications for customers’ net costs.
In competitive power markets based on locational marginal pricing (LMP), the facts sometimes conflict with popular belief. Most notably: 1. When there’s congestion, the books don’t balance, and ratepayers always pay more than the generators receive. The difference is sometimes called “congestion cost.” 2. Congestion in a competitive market doesn’t necessarily increase ratepayers’ costs; and 3. Reductions in LMP are incomplete and sometimes misleading measures of economic benefits of transmission upgrades. These three facts and their implications should be considered in transmission planning, market design, tariffs, and system operations.
Trusting Capacity Markets
Does the lack of long-term pricing undermine the financing of new power plants?
The PJM Interconnect’s Reliability Pricing Model generally has succeeded in attracting and retaining low-cost generation and demand resources to maintain resource adequacy. But sluggish demand and low prices have weakened the market for long-term capacity contracts. Suppliers aren’t willing to lock in current low prices, and buyers don’t want to pay more for future certainty. Is the market dysfunctional, as some state lawmakers suggest, or does the lack of long-term contracts indicate a rational balance of supply and demand?
The High Cost of "Free" Capacity
Fickle behavior by LSEs threatens to destabilize organized markets.
Dodging capacity payments might become an art form among load-serving entities and large electric consumers, as evidenced by Duquesne’s plan to exit PJM, as well as alternative market-designs proposed by large users. But such behaviors might only serve to disrupt organized markets and cause a return to full regulation.
Pay-as-Bid vs. Uniform Pricing
Discriminatory auctions promote strategic bidding and market manipulation.
Some advocates claim markets can help reduce electricity prices by changing the design of wholesale auctions. However, taking a pay-as-bid approach could make matters worse.
Mending Our Broken Capacity Markets
The ability to provide reliable capacity is becoming both riskier and more costly to society and investors alike.
The ability to provide reliable capacity is becoming both riskier and more costly to society and investors alike.
Capacity Markets: A Bridge to Recovery?
A review of the ongoing evolution of market design.
While it appears that capacity markets are here to stay, there is little consensus regarding the best design. Markets in the United States are in a state of flux, with debate raging over many different capacity market pricing schemes. While the winning recipe has yet to be selected, it is likely that participants in certain markets will witness significant changes.
Power Measurements
Energy trading returns, healthier and wiser.
Power Measurement
Energy trading returns, healthier and wiser.
The recent announcement of a trading joint venture between TXU and Credit Suisse First Boston (CSFB) is the latest in a series of positive news items supporting the return of energy trading. Wall Street firms continue to expand into the energy-trading sector, with Citigroup as well as CSFB moving into an area already well represented by the likes of Morgan Stanley, Goldman Sachs, and UBS.