Achieving the smart grid’s potential requires a revolution in electricity pricing. Smart metering and smart rates might yield surprising and beneficial changes in the U.S. utility industry. But...
Industry Structures and Market Mechanisms
these criteria should make it easier to choose sensibly between the PoolCo and bilateral market proposals. But first we need to know where we want to go.
Finally, two misunderstandings from the January 1 mini-forum ought to be cleared up:
1) An England and Wales type PoolCo is a monopoly, but not a large one. Far from having a giant appetite, it is mainly a data-processing business. In England and Wales, the PoolCo functions account for less than 0.5 percent of total industry costs.
2) A PoolCo does not set prices, but operates a procedure (that is, a computer program) that determines prices through the interaction of generator bids and consumer demands. This could be accomplished in other ways, although these will also need procedures, since all possible bilateral contracts cannot be honored. The system operator must have a method of allocating the resources of the transmission system between sometimes conflicting demands, and allocating the costs of network services. t
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.