A no-holds-barred interview with the electric industry’s chief architect of wholesale electric market design.
The Nation's Grid Chiefs: On The Future of Markets
Exclusive interviews with the CEOs of five regional transmission systems.
problems. That 85 percent would equate to about 800,000 MWh that we were able to handle thought the unit dispatch without using TLRs. If you assume that a lot of what was interrupted through TLRs would have been done during peak periods, when prices are higher — let’s say $100 a megawatt-hour, which is probably low — then you’re talking of a savings of about $80 million on that particular item, since the market started.
Fortnightly: Some ISOs on occasion have proposed a tariff to FERC without obtaining a majority vote from members, or without the super-majority vote required in some cases. How are you handling that?
Edwards: First of all we have a seven-member independent board of directors. Those seven members are totally independent of the organization other than the fact that they serve on the board. They cannot have had a relationship with a market participant for two years prior to coming on the board. There’s a cooling off period, which is normal.
We do not have a hybrid board, where we have stakeholders on the board itself. Our board is completely independent. Having said that, I think everybody realizes that you have got to build consensus to be successful in this business. And that’s what we try to do with market participants: build consensus to resolve issues. Not to please everybody, but to build consensus on where you need to go from a business perspective.
Have there been occasions where the board has taken positions that are not in alignment with the advice or the majority of the advice that came from the Advisory Committee? Yes, there have been. But that’s the exception and not the rule. The normal rule is that we build consensus.
However, when it comes down to it, from my perspective the board has got be independent to make those tough calls—when you’ve got half of your constituency saying one thing, and half of it saying something else. To me a hybrid board makes it very difficult for that to happen.
Fortnightly: What about the footprint going forward for MISO? I understand there’s a plan for some kind of market consolidation with PJM. Is that on the back burner now?
Edwards: We have initiatives going forward. We are evaluating many aspects of a “Joint and Common Market” with PJM. However, we think that we can solve a lot of seams issues—issues associated with differences between our processes and their processes, and our tariff terms and their tariff terms—and then reconcile all this by agreement between us without having to say “one market.”
What we are trying to do is work with PJM, and they with us, to determine the commonalities between us. How can we improve our seams agreements? How can we improve our joint operating agreements to extract as much value for the market participants as possible?
At some point, does it make sense to have one market? In an ideal world that might be the case, but we have evolved where we are today and we think we need to take it one