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Standard Market Design

Standard Market Design

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Standard Market Design

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  1. Standard Market Design Kevin Kelly, DirectorPolicy Innovation and CommunicationOffice of Markets, Tariffs, and RatesFederal Energy Regulatory Commission Committee on Regional Electric Power CooperationSan Diego, CaliforniaApril 29, 2002 Opinions expressed here are those of the author and not necessarily the opinions of the Federal Energy Regulatory Commission.

  2. Standard Market Design – A History(RTO follow-on rule to support wholesale markets) October 2001 “RTO Week” • goal: after independence and scope, focus on RTO functions • messages to FERC: -help form organized spot markets -standardize RTO market designs, tariffs • summary on FERC site,; call for comments December 2001 Commission Meeting • staff vision paper & strawman standard market design (SMD) • staff proposed outreach from mid-December to mid-March • staff proposed a March proposed rule and a June final rule • commission calls for industry to agree on a standard setting organization by March 15 Note: filings agreed but not fully

  3. WINTER 2002 OUTREACH • First SMD Conference: 3rd week of January • Second SMD Conference: 1st week of February • SMD meetings with state regulators: 2nd week of February • Numerous one-on-one meetings with stakeholders • Several rounds of formal written comments • seems to be majority agreement on some issues, not on others

  4. KEY SMD POLICIES BEING CONSIDERED • Organized Spot Markets for Energy And Operating Reserves including next hour, day-ahead, and demand response  • Transmission Rights and LMP Congestion Management  • Resource Adequacy Requirement  • New Transmission Tariff  • Regional ATC, OASIS, and expansion planning  • Market Monitoring and Market Power Mitigation  • Minimizing the Costs of Implementing a SMD 

  5. SMD at FERC’s MARCH 13, 2002 MEETING Commission wants more outreach/input before proposing an SMD rule. Commission staff summarized current thinking on SMD in a new paper, available at The Commission approved the paper as a basis for further discussions and asked for initial comments by March 27. Based on the initial comments, staff is beginning to draft a proposed SMD rule and new tariff – with some issues still to be resolved. More comment and outreach should lead to proposed rule mid-Summer. After further comment, a rule is expected near the end of the year.

  6. ISSUES NEEDING FURTHER DISCUSSION SOON • At the April 10 Commission meeting: we want to learn more by May 1 about your views, especially on these issues: • 1. Recovery of the transmission revenue requirement • 2. Transition of existing firm customers to the new tariff • 3. Allocation of transmission rights • 4. Long-term resource adequacy requirement • B. SMD software conference, May 22

  7. AFTER THE RULE ISSUES:PHASED IMPLEMENTATION The requirements of the rule would be implemented in phases: First phase: easier transmission tariff reforms. For example, -trading hubs -more flexibility to change receipt and delivery points Later phases: market design features that require development of new business practice standards and software For the future, we will need more comment on such topics as how to determine the later phases, what to send to the standard-setting organization, and howto develop modular software.