Perspective

Deck: 
Locational pricing makes the network secure, since the utilities and other market participants get 'paid' to monitor the grid.
Fortnightly Magazine - January 2004
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Perspective

Locational pricing makes the network secure, since the utilities and other market participants get 'paid' to monitor the grid.

The recent pressure on the board and stakeholders of the Midwest Independent Transmission System Operator (MISO)-to postpone the startup of energy markets and concentrate instead on "reliability"-is truly unfortunate. It allows opponents of restructuring to continue to pose a false choice: You can have markets or you can have reliability, but never both.

Such rhetoric has a nice ring, but that's about all. It's like faulting your quarterback for not being a team player because all he does is pass for touchdowns.

In reality, we've learned just the opposite-that reliability and commercial efficiency are not only compatible, but also mutually reinforcing.

Of course, ever since the blackout of Aug. 14, 2003, we've seen regulators, politicians, and company executives embrace reliability as the one issue needing attention. That is easy to understand. We should welcome it but not get sidetracked by "solutions" that hold out little promise.

For example, among the most discussed solutions today are legislation (mandatory reliability standards), investment (massive transmission upgrades), and capital redeployment (boosting distributed generation, to bring resources closer to load). Such solutions are worth examining. Some may even be desirable. Yet they do not offer the fastest, surest, and most efficient way to enhance the reliability of the North American electric grid.

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