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Unintended Consequences

Does anyone care about rising redispatch costs?

Fortnightly Magazine - February 2007

make in such circumstances, reasonable concerns can be raised that the system is being operated in a manner that results in more costs than incurred before the ISO’s involvement.

As ISOs report more and more congestion cost ( i.e., redispatch cost), one can’t help but wonder if the increased congestion cost is being driven unnecessarily by decisions that fail to adequately consider the tradeoff between reliability and cost. It is obvious that from the ISO standpoint the safer course of action is to spare no cost to avoid an outage.

In our opinion, energy market participants should be asking the ISOs and RTOs the following questions:

1. Are we spending too much time figuring out how to allocate congestion costs ( e.g., by using LMP) when we should be trying to figure out how to eliminate the congestion cost?

2. Who is checking to ensure that we are not redispatching when there are other more economic choices to be made in light of a low-probability N-1 congestion problem?

Only then will we know whether we are truly getting the least-cost, best-fit economic dispatch intended.