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ELECTRICITY MARKET MONITORING

ELECTRICITY MARKET MONITORING. presentation by Teoman G ü ler Department of Electrical and Computer Engineering University of Illinois, at Urbana Champaign 14 May 2004. OUTLINE. Introduction and motivation for market monitoring FERC, ISO/RTO and MMU Current state-of-art

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ELECTRICITY MARKET MONITORING

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  1. ELECTRICITY MARKET MONITORING presentation by Teoman Güler Department of Electrical and Computer Engineering University of Illinois, at Urbana Champaign 14 May 2004

  2. OUTLINE • Introduction and motivation for market monitoring • FERC, ISO/RTO and MMU • Current state-of-art • Market monitoring research • Future research areas

  3. COMPETITIVE MARKETS • The principal aims of vibrant competition in markets are to reduce prices and to improve the quality of services • Characteristics of workably competitive markets are: • many buyers/sellers without market power • demand and supply responsiveness to price • liquid and efficient marketplaces • equal access to essential facilities

  4. ELECTRICITY MARKET REALITY • Since electricity is physically different from all other commodities, achieving workably competitive electricity market is a substantial design job. • Constraints for trading arrangements and related design issues are: • lack of storage  real-time imbalance • law of physics  congestion management • interdependencies  ancillary services

  5. MARKET FAILURES • The restructuring of electricity markets may not always result in true competition, for example in California Electricity Market • Disappointing outcomes are typically indicative of the need for market design that ensures vibrant competition • Introduction of an additional mechanism would be necessary to enable functioning of workably competitive markets

  6. THE CALIFORNIA CRISIS • extraordinarily high spot market prices • total energy costs increased to up to 10 times the historical levels • shortages and subsequent rolling blackouts • bankruptcies of: • states’ biggest utility, PG&E • the Power Exchange • number of small power producers

  7. CALIFORNIA WHOLESALE PRICES (TWh) ($/MWh) March 22, 2001 CAISO estimated generators manipulated market and overcharged $6.3 Billion March 19-20 first statewide blackouts January 17-18 blackouts January 30 PX suspends trading April 6 PG&E files for bankruptcy Source: CAL-ISO

  8. ENRON PHENOMENON • Enron memorandum indicates that Enron created number of strategies to take advantage of flawed California market design • FERC revoked the electric-market-based-rate authority of Enron Power Marketing and Enron Energy Services on June 25, 2003 • This is the first time the Commission has taken such broad action against a company and its affiliates

  9. FERC • The legislation that created FERC mandates responsibility of the Commission to ensure “just and reasonable rates” • One of the FERC’s stated goal is “protect customers and market participants through vigilant and fair oversight of the transitioning energy markets” • FERC mandates each ISO/RTO to set up a market monitoring unit to ensure the functioning of workably competitive markets

  10. MARKET MONITORING • Market monitoring (MM) entails the following tasks: • Identification of flaws in market rules that can create • distorted market outcomes • inefficient conduct • strategic behavior • Analyzing market power problems

  11. ISO/RTO MM ROLES • Monitor all wholesale power and ancillary services markets • Monitor transmission services and the behavior of transmission owners • Assess periodically the interrelation between the behaviors in markets and ISO/RTO operations • Prepare reports and recommendation to the Commission and state regulatory authorities • Propose appropriate actions to resolve problem issues • Improve continuously the monitoring initiatives

  12. MM UNITS CHARACTERISTICS • Independence from all other ISO functions • Overall responsibility and limited authority for ensuring functioning of workably competitive markets • dual accountability • FERC • ISO/RTO

  13. MM FUNCTIONS

  14. CORRECTIVE CONTROL • Monitoring units mitigates the market effects of any conduct that would substantially distort competitive outcomes in the market • Mitigation measures: • minimizes interference with open and competitive markets • authorizes the mitigation of only specific conduct that exceeds well-defined thresholds

  15. MITIGATION ISSUES

  16. MM TOOLS • data based metrics price metrics, load metrics, concentration metrics, etc • statistical analysis • market simulations experimental power flow simulations agent-based market simulations game theoretic models

  17. MMU STATUS • MMUs characterisitics in CAISO, PJM, ISO-NE and NY-ISO • Market monitoring units operations are different in each implemented version of : • media for data gathering • mitigation actions

  18. DATA GATHERING SOURCE

  19. REFERENCE PRICE LEVEL FOR MITIGATION

  20. MARKET MONITORING RESEARCH • We studied monitoring activities in other markets, and salient differences from electricity markets • We analyzed implemented metrics capability to capture network effects • We looked for seams effects on market operation • We are currently constructing market monitoring framework for comprehensive analysis and comparison purposes

  21. FUTURE RESEARCH AREAS • Efficient data and information gathering • Metrics including network effects • Effective mitigation tools

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