Public Power - January/February 2008 - (Page 28) Markets in the Sunshine BY JEANNE LABELLA onal transmission organizations and independent system operators (RTOs and ISOs) in the United States should post generating plant and load-specific offer and bid data one day after the market activity occurs, said utility analyst William Dunn in an evaluation for the American Public Power Association’s Electric Market Reform Initiative. RTOs operating organized markets in the United States currently wait six months before disclosing information about offers and bids for electricity sales in their spot markets. Even when the data are posted, the identities of the entities submitting the offers and bids are masked. The Federal Energy Regulatory Commission appears to have accepted the recommendations of some market participants that the RTOs should keep data under wraps to avoid facilitating collusion, said Dunn. But the possible benefits of posting information a day after the operating day “far exceed the risks of additional collusion by those market participants inclined to collude,” he said. “In fact, such data posting may help expose efforts to manipulate market prices and, as a result, discourage such behavior.” Organized markets in Great Britain and Australia make market data available the day after the operating day, he said. The market in Great Britain has “not collapsed in a frenzy of collusion and, in fact, generators have, from time to time, suffered the expected consequences of too much generation (i.e., low prices, forcing some generators to suffer significant losses),” he said. In Australia, where unmasked offer and bid data have been disclosed “the day after the operating day for many years,” “this does not appear to have led to concerns about collusion,” Dunn said. “This level of transparency is viewed as a posi28 JANUARY-FEBRUARY 2008 Regi tive aspect of the market design, including by potential private generators,” he said. The National Electricity Market in Australia has a mix of public and private ownership of generation. By making comprehensive market data available immediately, the market operator assures private generation that governmentowned resources are not favored, Dunn said. If U.S. electricity markets would follow the lead of the Australian and British markets and release market activity data a day later, the pressure on market participants to behave would be greater, Dunn said. Such information transparency also would lead to more economically efficient operation of the electricity markets and make it easier for market participants and others, including regulators, to detect anomalous behavior by sellers, buyers or transmitters. In U.S. markets today, “the operation of the markets is a black box on which those paying the bills are required to place full confidence,” Dunn said. Because the data going into the black box are not transparent, market participants have no way to monitor how the RTO actually operates the market. As a result, “market participants have to rely on a small priest- hood of market monitors to validate the black box market results,” said Dunn. “No matter how good a job they do, these monitors do not have any money at stake, and the market participants have no way to validate the market monitors’ performance. The more eyes looking at the data, the higher the chance that anomalous behavior by RTOs/ISOs and/or market participants will be detected.” “If market participants know that everyone else will have access to their offer and bid data, they may be less inclined to behave badly,” Dunn said. Similarly, RTOs might make better scheduling and dispatch decisions if they knew that information about their actions might be reviewed a day later by parties with money at stake, he said. Beyond timeliness, the data should be unmasked, Dunn said. He pointed to the observations of Synapse Energy Economics in a study completed in early 2007 for APPA’s EMRI program. Data disclosed by the PJM regional transmission organization, six months after market activity occurs, show the full set of power offers into the PJM market, but are of limited value because owners and plant identities are masked and no information is availPUBLIC POWER Illustration by Andy Attiliis
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