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The Role of Power Exchanges in Restructured Electric Markets

Fortnightly Magazine - October 1 1999

complete market information at the time the price is established and communicated. Other trading mechanisms that display trades as they happen may cause overreaction and more price volatility."

10 Similar arguments described in FERC NOPR, Docket No. Rm 99-2 pp. 175-176.

11 On a national level, this debate correlates to views advanced by Professor Bill Hogan. See "The RTO NOPR: No Mandate, But a Plan Works," Public Utilities Fortnightly, July 1, 1999.

12 The day-ahead hourly auction process was created to concentrate liquidity needed to meet hourly load shape requirements for utility default service. CalPX's new contract for monthly on-peak block is a continuous market.

13 See generally, "To Pool or Not to Pool: A Distracting Debate," by William W. Hogan, Public Utilities Fortnightly, Jan. 1, 1995, p. 24, and "PoolCo vs. Bilateral Markets?" notes and commentary by Vikram S. Budhraja, Robert J. Haywood, R. Patrick Thompson, Robert A. Levin, Ashley Brown, John A. Anderson, Ralph Cavanagh, Ellen Roy, Jan Schori, Peggy Welsh, Larry Ruff and Jeffrey K. Skilling, Public Utilities Fortnightly, Jan. 1, 1995, p. 27.

14 This design clearly separates the forward markets from the ISO's real-time balancing market.

15 See generally, "California's Scheduling Coordinator: Market-Maker With Advantage?" by Eric Charles Woychik, Public Utilities Fortnightly, Jan. 15, 1998, p. 34. See also, "Scheduling Coordinators: Market Fears and Profit Margins," by Joseph F. Schuler Jr., Jan. 15, 1998, p. 40.

16 Although the California ISO instituted price caps in its real-time energy and ancillary services markets due to initially detected market power issues, remedies are in process to lift or replace caps with "circuit breaker" mechanisms and ultimately lift them altogether as these markets become more competitive. During the first year of operations, the California ISO real-time market comprised about 3 percent of total energy delivered.

17 See "1998-1999 Market Year Report to Californians," California Power Exchange Corp., May 1999.

18 Some entities have claimed amounts scheduled with the Cal ISO but traded through the CalPX auction in their market share comparisons. The CalPX share numbers reflect total trading through the CalPX auction.

19 See "Delay in Release of CalPX Sends Prices Lower," Megawatt Daily, July 1, 1999. Also see "*DJ CalPX: Wed Delay Due To High Quantities Bid, Not Price," Dow Jones Newswires, June 30, 1999, http://kjnewspluscom/bin/story.

20 As determined from "Power Market Week's Top Wholesale Power Sellers - 1998," CalPX participants represent roughly 80 percent of volumes traded in Western markets during 1998.

21 "The California Power Exchange was the best thing to come out of electric restructuring in California. They provide an efficient and reliable wholesale market." Commissioner Carl W. Wood, California Public Utilities Commission, August 1999.

22 See intervenor testimony filed Phase 2 California Public Utility Commission Post-Transition Proceeding, July 30, 1999.

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