RTO governance structures can affect capacity market outcomes

Seth Blumsack, Kyungjin Yoo

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Scopus citations

Abstract

Regional Transmission Organizations (RTOs), which coordinate delivery for over two-thirds of the electricity consumed in the U.S., are required by the FERC to employ stakeholder-driven mechanisms to establish market and operational rules. These “governance structures” set up a quasi-political process for determining which market rules are adopted and which are not. This study shows how governance systems are not simply administrative constructs but have real impacts - the details of how the market rules are made will ultimately affect market outcomes. Using the capacity market in the PJM Interconnection as a case study, we model the preferences of individual stakeholders over different capacity market designs, under different decision rules for which capacity market design is implemented. We compare capacity market design choices under PJM's current decision system, which requires a super-majority in a sector-weighted voting context to implement a new market rule, with the decision systems used in the New York ISO and also under systems of preferential voting. This voting model is integrated with a model of capacity market clearing which allows us to demonstrate how different decision systems matter in terms of installed capacity and capacity market outcomes.

Original languageEnglish (US)
Title of host publicationProceedings of the 53rd Annual Hawaii International Conference on System Sciences, HICSS 2020
EditorsTung X. Bui
PublisherIEEE Computer Society
Pages3087-3096
Number of pages10
ISBN (Electronic)9780998133133
StatePublished - 2020
Event53rd Annual Hawaii International Conference on System Sciences, HICSS 2020 - Maui, United States
Duration: Jan 7 2020Jan 10 2020

Publication series

NameProceedings of the Annual Hawaii International Conference on System Sciences
Volume2020-January
ISSN (Print)1530-1605

Conference

Conference53rd Annual Hawaii International Conference on System Sciences, HICSS 2020
Country/TerritoryUnited States
CityMaui
Period1/7/201/10/20

All Science Journal Classification (ASJC) codes

  • Engineering(all)

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