California`s ISO: Why not clear the market?
- Lawrence Berkeley National Lab., CA (United States)
On December 20, 1995, the California Public Utilities Commission ordered California`s major investor-owned electric utilities (Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric) to file applications with the Federal Energy Regulatory Commission to establish an independent system operator (ISO) to operate a unified power grid and a power exchange (PX) to operate a public hourly spot market for bulk power. These applications, filed April 29, 1996, are the product of a two year debate conducted by a coalition known as the Western Power Exchange (Wepex). Wepex comprises representatives from the California electricity industry and many government agencies and customer groups. The central focus of this debate has been the nodal-pricing/bilateral-trading dichotomy. The current resolution of this debate, a compromise in which both market types are supported, is embodied in what the author terms the Wepex applications to FERC. The two central features of this compromise are (1) a separation of the nodal spot market (PX) and the bilateral market, which is composed of bilateral exchanges (BXs), and (2) the creation of pricing zones. This article will discuss the separation, and the next will examine zones. For a successful nodal/bilateral split, two things are necessary: (1) clearing the PX market and (2) allowing bilateral traders the option of trading with the least possible interference from the ISO. As we will see, the ISO application prevents both the PX and the ISO from clearing the PX market and prevents the ISO from clearing the combined market. Thus, true nodal pricing is not available to participants in the PX. However, as should be the case, the bilateral markets are quite free of interference. Bilateral traders are not required to submit price bids and are allowed to self-provide ancillary services.
- OSTI ID:
- 482529
- Journal Information:
- Electricity Journal, Vol. 9, Issue 10; Other Information: PBD: Dec 1996
- Country of Publication:
- United States
- Language:
- English
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