A motley assortment of naysayers and recalcitrants continue to oppose competitive electricity markets around the world. But the alternative to markets is centralized command economics—a...
To Pool or Not to Pool: A Distracting Debate
of the transmission system.
I pose the three questions to isolate what is reasonably left to be decided under the OpCo variants that might be different than the PoolCo model. If the answers follow the recommendations here (em just say yes (em the OpCo will provide an economic dispatch service that is open to anyone who wishes to participate. Pricing will apply marginal cost principles based on the voluntary bids of the participants. And these same prices would apply to all uses of the transmission grid under a comparable, open-access transmission tariff. Bilateral contracts would be fully available. With this voluntary approach, the OpCo and PoolCo models almost merge. The only remaining difference between the two would be in the accounting for bilateral physical contracts. Under the OpCo model, the system operator would monitor individual contracts and check for individual contract imbalances that have to be met by other contracts or through the OpCo economic dispatch. Under the PoolCo model, the system operator would not monitor the contracts, and all bilateral transactions would be handled through separate contracts for differences and customer control of bids for specific generation and loads.
These contract accounting differences may be important, but they are small differences compared to the common problems that remain in implementing either the PoolCo or OpCo approach. Both must specify the terms and conditions of the pricing and access rules, develop procedures for bidding and nomination of transmission uses, define transmission rights and allocate the existing transmission system, provide new rules and procedures for making network infrastructure investments, negotiate new interconnection agreements that are compatible with the competitive market, and so on. The remaining choices have more common challenges than differences. Progress in defining a competitive wholesale market depends on progress in dealing with these common problems. t
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