Locational marginal prices in PJM respond to demand and fuel costs.
Andrew L. Ott
The evolution of real-time locational marginal prices (LMP) in PJM Interconnection’s wholesale electricity markets demonstrates the characteristics of a well functioning and competitive market; prices are driven by supply and demand fundamentals. Although critics of wholesale electricity markets frequently have pointed to increases in LMP as proof that the wholesale markets aren’t working, in reality, the markets are working as they should. Increases in LMP are driven by higher demand for electricity or increasing fuel prices.
Now that fuel prices have fallen recently from the highs seen in 2008 and wholesale electricity prices also have decreased, it might be tempting to attribute the lower prices to the restructuring of the wholesale electricity markets. Unfortunately, it’s a little more complicated than that.
The changing architecture of demand response in America.
Ahmad Faruqui, Ryan Hledik and Sanem Sergici
Pilot projects are demonstrating the potential of smart metering and smart rates to make the most of supply and demand resources. But as empirical studies show, not all pricing designs are equally suited to every region.
Realizing the benefits of a modernized system requires an integrated strategy.
The U.S. power market consistently has displayed cyclical characteristics of boom and bust over the last two decades. Today’s market environment has been directly and significantly impacted by the recent economic recession. Decreases in load growth, declining commodity prices, and lack of accessible financing have caused challenges for the industry.
Aligning renewable energy incentives with RPS compliance.
Daniel P. Venora
States’ green energy policies are being used to serve multiple agendas. Lawmakers should revisit their renewable incentive programs to better align them with policy goals. A regional approach will yield a more efficient portfolio.
Transforming DR and smart-grid policies into reality.
George E. Johnson
Regulatory policies are evolving to make demand response and smart-grid planning a reality across the country. Cooperation between federal and state lawmakers will allow local flexibility within a uniform national framework.
ETRM software is adapting to a changing energy market.
Scott M. Gawlicki
Ask Ed Bell about energy trading and risk management (ETRM) technology and he’ll likely bring up his days with Enron back in the early 1990s. Bell—now a principal at Houston-based technology consulting firm International Commerce—says there are distinct similarities between the functional trading and risk assessment requirements his team had to plan for back then and the system requirements ETRM platform vendors and their clients have to prepare for today.
At the Power-Gen International trade show in December, Questar Chairman & CEO Keith Rattie delivered a firebrand speech opposing the prospect of CO2 cap-and-trade legislation. To summarize, he said the Waxman-Markey climate bill is an “asinine” piece of legislation—which it is, as anyone who reads it quickly discovers. But more broadly, he said concerns about greenhouse gases (GHG) are based on incomplete science and politically motivated alarmism.
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