... those adopting LMP have not seen an erosion in their returns on equity."
"Why," they ask, "does it [LMP] seem to be the congestion management paradigm of regulators and academicians?"
Here Patton and Esposito answer their own question: "The proponents of the centralized market structure fail to recognize the substantial consulting income they derive from setting up such structures, and from adjusting them as time progresses."
Yet it's no answer, either, simply to redispatch assets to get around the bottlenecks--in other words, to accept all transmission schedules and then just "socialize" the cost of congestion. As Patton and Esposito explain, congestion costs went through the roof when they tried that early on in PJM, by scheduling all the low-priced resources and then sparing no expense to redispatch to accommodate the transactions. "
The failure of this early scheme is not difficult to understand. Ask a first grader if she wants to ride her bike uphill or downhill and the answer is quickly obvious."
The Dynegy execs see an unpleasant choice:
"Certainty of delivery with no certainty of price, or certainty of price without certainty of delivery. Either way, reliability, at least as defined in most markets, does not exist."
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