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The blackout could doom deregulation, but why treat reliability and reform as either-or?
Fortnightly Magazine - October 1 2003

would find itself obliged somehow to force other supplies out of the real-time market. To do that, the ISO would turn to accepting large volumes of decremental bids-offers to withhold supply. Yet the ISO on many occasions has faulted the "dec game" as a source of market manipulation, so the ISO must somehow accommodate this essential but unscheduled RMR energy-energy necessary for reliability but undisciplined by price. The result, of course, is chaos, as the ISO readily admits as it describes what has happened in the past:

"This glut of energy depressed the real-time imbalance energy price, encouraging load-serving entities to under-schedule their demand so as to serve their demand at the depressed real-time price."

Yet haven't we been told many times how excessive reliance on real-time trading proved a disaster for California?

The lesson remains clear: We'll have our pick of remedies after all the reports come in from all the committees and task forces assigned to study the Northeast blackout, but who's going to trust those remedies unless they have a value-based grounding derived from the discipline of a market price?


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