Electricity Market Design and Structure
Docket No. RM01-12-000
October 15-19, 2001
Staff Summary of Discussions
These notes reflect what staff heard from the panelists, including any points of
consensus among those at the table.
We do not intend to suggest, nor do we believe, that
the notes reflect industry-wide consensus.
Further, we recognize that many of the session
topics are tied to one another and difficult to separate, so there are areas of overlap from
one session to another.
The primary purpose of releasing these notes is to focus the comments of those
with alternative opinions.
In that regard, it would be helpful to staff if commenters
addressed their comments to points made in these notes.
Monday, October 15 (AM):
RTO Markets and Design: Required RTO Markets
Peter Cramton, Professor, University of Maryland
The Honorable David F. Hadley, Commissioner, Indiana Utility Regulatory
Mark D. Kleinginna, Corporate Energy Director, Ormet Corporation
John Meyer, Vice President of Asset Commercialization, Reliant
John L. O'Neal, President, Mirant Mid-Atlantic
Roy J. Shanker, Ph.D.
RTOs should operate a real-time energy market and ancillary service markets
to procure regulation, spinning reserves, and perhaps non-spinning reserves markets.
However, there was some disagreement about whether an RTO should be required to
operate a day-ahead energy market.
No one argued that an RTO needs to operate energy
markets farther forward than day-ahead.
Some panelists noted that bilateral contracts are an essential feature of such a
market and in fact only a small amount of power is traded in Northeastern spot markets.
The RTO need only schedule such bilateral contracts, and let market participants choose
whether to rely on bilateral contracts or spot transactions.
Most participants are likely to
manage risks better using bilateral markets, but they will also frequently use the spot
market as a result of load variation and generator outages.
One panelist suggested that a bid-based balancing market, by itself, may not allow
recovery of all legitimate fixed costs, especially in the absence of price-sensitive demand-