More On Power Markets And Reliability

Michael Giberson

A reader points out a newspaper article that amplifies the point I was making yesterday concerning electric power markets and reliability. Peter Key writes in the Philadelphia Business Journal:

Improved coordination among power-grid operators and the spread of locational pricing of electricity are two reasons why [the grid has operated smoothly during this summer’s heat waves]. Both increase the amount of timely information available to grid operators about the demands on their systems and what they can do to meet them.

“The more information you can get into the hands of dispatchers, the better they’re able to make decisions and see what can happen into the future,” said Audrey A. Zibelman, executive vice president and chief operating officer of PJM Interconnection.

The article provides an “operator centric” view of reliability — focusing on agreements between RTOs, information available to the control room operators, and even how changing locational prices reveals information to the control room operators — and tends to neglect the role of locational prices in providing the appropriate incentives and information to power producers and consumers. But for a newspaper article directed to the general public, the writer does do a pretty good job of explaining the basics of locational pricing.

Thanks to jdr for the pointer.