Fortnightly Magazine - January 2010

Wellinghoff's War

FERC fights for the green-grid superhighway—even if Congress won’t.

The Senate’s deadlock over carbon cap-and-trade legislation has not deterred FERC Chairman Jon Wellinghoff from an agenda bent on promoting renewable energy and fighting climate change. Last fall, even as Congress dithered, FERC launched a landmark initiative that likely will lead to sweeping new rules for expanding the nation’s electric transmission grid, grounded on Wellinghoff’s belief in wind, solar, and green power resources.

LMP Works!

Locational marginal prices in PJM respond to demand and fuel costs.

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.

Not So Fast

Proving market performance requires detailed analysis.

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.

Rethinking Prices

The changing architecture of demand response in America.

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.

V