INDEPENDENT SYSTEM OPERATORS AND LOCATION BASED PRICING MECHANISMS

摘要

In a Jeffrey Deever novel called The Blue Nowhere, the main characters are driven by the belief that "Access is God." While the characters in the novel were referring to access to computer systems through hacking and cracking (cracking is the evil twin of true hacking), the phrase actually sums up what deregulation of the electrical power business is all about - access. Access to the physical transmission systems, and access to once protected rate payers by competitive providers (and visa-versa). Access to the markets in general, to accurate timely pricing information in all time frames, and access of all of us to the condition of our power infrastructure and the volatility/risk associated with it's use. But what has really changed to provide this new level of the cherished access and the accompanying risk and exposure? Not really as much as all the recent events and attention they have generated would lead us to think. The physical nature of electrical power generation and transmission is basically the same. It still requires a really big chunk of spinning metal to generate electricity and a really long hunk of hanging wire to carry it. Electrons are still electrons and will now and forever seek the easiest path from one point to another. What has really changed is the manner in which the price for electrical power is determined and it's transparency to the energy markets. This has been included a significant increase in the number of participants in the energy market and the reasons many of them are in the business. There has also been an important shifting of the risk and volatility in delivering reliable electrical service. Consumers in several parts of the country have discovered this in their energy costs. Another point that has recently been restated very clearly is that when there are not enough electrons to go around, they can get very expensive and sometimes someone may have to do without. Under the regulated market structure, loss of service was generally the result of physical conditions. While these are still possible, maybe more so than ever, in the new energy business, the choice to do without service may now also be the result of financial considerations. Consumers may voluntarily undertake this choice, once they have access to price information. The objective of this discussion is to provide basic information on two of the key elements that are bringing brought about this access - the Independent System Operators (ISO's) and location-based power pricing mechanisms (LBPM's). Like the Power Pools, the ISO's are will be assuming responsible for operating and protecting the infrastructure that moves electricity from the generation resources to the consumers. The ISO's will also be responsible for achieving and maintaining equal access for all qualified market participants to the grid and the "numbers" systems that support the open competitive paradigm for electrical power transactions. LBPM's are a key means by which transparency for the true value of electrical service is being achieved. This material presented here is primarily based on experience and training the New York Power Pool/New York ISO. This is not intended to be a comprehensive analysis of all ISO's. Rather it is a distillation of experience and training within the NYISO into basic fundamentals that may be of use to energy professionals in understanding the operation and behavior of the emerging competitive market for electrical power.