The Year Ends with a Whimper for the Markets but a "Bang" for DSI!

Not only did Enron collapse in 2002, but with it down came other players – Mirant, The Williams Company, Dynergy, and others. Lawsuits abounded due to events in the California crisis. Ironically, most of those who were hopeful that competition would bring great rewards were in fact deeply disappointed. So FERC went back to the drawing board to announce the new "Standard Market Design (SMD)," a design that would hopefully solve all the problems: seamless congestion management, reliability and adequacy of committed resources, fairness to consumers and load serving entities, etc. But then the debate started. Clearly many viewpoints have and will continue to be made. Some key issues that are being voiced are:

• The SMD seems to favor mostly thermal systems. Hydro companies would like to see something more relevant to them,
• The multi-part bidding system gives the ISO/RTO even greater authority. Already, countries like the UK, have adopted a new market design which is less centralized (so-called ISO-Light),
• The SMD also gives FERC more authority than many at the state and local levels would like to see.

In short, the next few months will be critical in the final shape of the SMD.

Given the state of the industry as a whole, I was amused to see that DSI was actually moving forward with great new developments. For years we have been gearing up for a modular short-term electricity market simulator (STEMS) that is based on the newly adopted open systems standards thru EPRI’s efforts. Shortly, the STEMS will be configured to emulate the SMD for the California ISO, with some customization relevant only to them. The user of STEMS will initially be the ISO itself, but we see the opportunity for generating companies and regulators to be strong customers as well. Hopefully, with such high-fidelity tools, the market designer can at-least predict how the market would work and anticipate trouble well before it occurs.

Stay tuned for more on STEMS and SMD in the months to come. In the meantime, I appreciate your direct feedback – adebs@dsipower.com