“Markets for Reactive Power and Reliability”

Michael Giberson

Two years ago, the Federal Energy Regulatory Commission issued a staff report diagnosing problems with the way reactive power is procured, paid for, and used in the U.S. electric power industry. The report was widely recognized as authoritative and thoughful, and as laying well the foundation for further progress on the topic. As far as public policy at the FERC, however, that is about as far as it went. Commissioners changed, as did priorities, and policy remains stuck where it was in 2005 (which, more or less, was where it had been since 1998, which – by the way – closely resembles the approach taken pre-1992).

However, while any particular momentum at FERC was lost after the report came out, the very talented folks at Cornell’s “Engineering and Economics of Electricity Research Group” have carried on (with support from the U.S. Department of Energy and National Science Foundation, it should be noted), producing a working paper that lays the issue out well and significantly advances the discussion. The paper is more than an analysis of reactive power procurement policy. As the authors note, to address that problem properly requires consideration of the proper market for real power and other reliability services. They get to the foundation, ensure it is secure, and build up from there.

This paper is good stuff, about which I hope to have more to say. You serious power market design geeks out there shouldn’t wait for my further comments, however. Go get the paper and read it now. (PDF is here: “Markets for Reactive Power and Reliability.” The paper is also available from this page at Cornell.)

[Here is a link to Lynne’s earlier post on the FERC staff report.]