Michael Giberson
Among the presenters at the Harvard Electricity Policy Group session on market power monitoring, Speaker 4 was the one who had it all together. Note that the session summaries characterize the discussions but do not name names, so theoretically I can’t link the discussion to a person and I suppose doing so isn’t in the spirit of the thing. But Speaker 4, whoever he or she is, hit the nail on the head:
A major role for the market design process is to refine the local market power mitigation mechanism. It is the kluge that we’ll need.
Local market power mitigation mechanisms require a kluge because the theory and practice of market power mitigation in networks remains underdeveloped. That said, it is fair to say that both theory and practice related to monitoring for and mitigating local market power has improved substantially over the last decade or so.
I’ve found two solid, relatively brief surveys of the theory, such as it is, and practice of electric power market monitoring and market power mitigation. I’ll only comment about the first of the two here, a paper by Frank Wolak, and I’ll post about the other one – by Paul Twomey, Richard Green, Karsten Neuhoff, and David Newbery – at a later date.
