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Agenda
What we said last year A look at how markets are evolving Conclusions
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Predictions from last year
Market monitoring improvements Convergence of market rules and
standardization Increased transparency Power system and market system
coordination
To varying degrees, these predictions did occur
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What we did not predict
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Another thing we did not predict…
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Design Principles for Electricity Markets
Ensure Reliable Physical System Operation Provide Choices for Market Participants Facilitate Integrated Market & System
Operation– Physical system operation requirements are
satisfied (e.g. congestion management,security-constrained MW dispatch targets)
– Market incentives directly match system dispatch signals (e.g. natural incentive for following dispatch instructions)
– Market-based Congestion Management
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Implementation Principles for Electricity Markets
Technology is important Training, organization and participant
management– Power system and Market system operators
require extensive training to manage new and larger systems
– Organization may change as they transition from market development to market operations
– Active participant management to set achievable schedules and capabilities
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Common Designs Among Converging Markets
Transmission Access– Transmission rights are financial within market
footprint– Cross market / border coordination based on shared
physical usage on commercially significant flowgates Energy Market
– Bilateral contracts are financial– Physical resources can be self-scheduled or be
scheduled based on spot market bids Congestion Management
– Simultaneous feasibility tests– Locational marginal prices
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Market Migration Implementation
Start with the Basics– Maintain reliable system operation – Allow limited range of market trading activities– Target specific areas to gain market experiences
Recognize the maximum rate of change that can be successfully introduced– Financial models– Physical operations
Build on experiences gained– Understand what worked well & not well– Understand why
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ALSTOM’s RTOs/ISOs
96 97 98 99 00 01 02
E3
AIMS
OASIS
NZ AUSTRALIA
SPP
ISO NE
SPP/MISO
FTR Forward Market
PJM
DMT Market Simulation
PJM
ISO NE
Real Time Market Fwd Market, FTR, TTSE
FERC 888/ 889 NOPR
FERC 2000
PJM PJM PJM
Real Time Market
ERCOT
ALBERTA
Market Simulation
World wide experience and solutionsWorld wide experience and solutions
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FTR - Options
PJM
MISO
CAISO
CRR, Settlements
ERCOT
NZ
FTR
PUCT
Market Monitoring
PJM
Market Monitoring
SeTrans
POS MOS
SeTrans
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Electricity Market Terminology
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Market Evolution – going from here to there
Zonal
LMP
FwdMkt
RT Mkt
Hedge
SingleBuyer
MktSim
MktMon
AncServ
MCP
Pool
Tag/TLR
OASIS
Starting functions orTransitional functions
End state functions(SMD?)
?
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Diagram of Market Evolution (PJM) 1998 - 2003
Zonal
LMP
FwdMkt
RT Mkt
Hedge
SingleBuyer
MktSim
MktMon
AncServ
MCP
Pool
Balance
Tag/TLR
OASIS
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Diagram of Market Evolution (ISO-NE) 1998 - 2004
Zonal
LMP
FwdMkt
RT Mkt Hedge
SingleBuyer
MktSim
MktMon
AncServ
Pool
Balance
Tag/TLR
OASIS
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Diagram of Market Evolution (ERCOT) 2000 - 2004
Zonal
LMP
FwdMkt
RT Mkt
Hedge
SingleBuyer
MktSim
MktMon
AncServ
OASISPool
Balance
Tag/TLR
Retail
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Diagram of Market Evolution (MISO) 2002 - 2004
Zonal
LMP
FwdMkt
RT Mkt
Hedge
SingleBuyer
MktSim
MktMon
AncServ
MCP
Pool
Balance
TAG/TLR
OASIS
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Diagram of Market Evolution (SPP) 2000 – 2001, 2003-2004
Zonal
LMPFwdMkt
RT Mkt
Hedge
SingleBuyer
MktSimMkt
Mon
AncServ
MCP
Pool
Balance
TLR
Retail
OASIS
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Migration considerations
Market systems evolve IT should support evolution, not prevent it The IT and applications must be chosen so that the
path of migration can be traveled– You should not have to replace your system to migrate
The Market Participants will place increasing demands for information and capabilities
Market Monitoring and Reliability will also place increasing demands on the systems
Common functions change during the evolution of the markets– bidding, publishing, settlements, database
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Conclusions
Market functionality is converging Markets accommodate regional differences
by exception rather than the rule Developing markets can leverage IT,
applications, market rules, business process and other existing capabilities.
The industry is moving from a pioneering era to a cultivating era.
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