Market Monitoring and Performance Standards

Electricity markets typically have market monitors that protect customers by monitoring for market manipulation and suggesting market design improvement. Market monitoring and mitigation of price manipulation will need to adjust to keep wholesale power prices competitive and protect all electricity customers. The traditional approach of quantifying the variable costs of generators to determine appropriate bids does not work well when applied to energy-limited resources (e.g., battery storage, wind or solar) that have low and complex variable costs. 

Similarly, performance standards and rules for reliability and generation services, which are dictated by the North American Electric Reliability Commission (NERC) and RTOs/ISOs tariffs are designed around the characteristics of fossil fuel-based generation mix. For instance, resource adequacy requirements are set as physical requirements to provide adequate resources to meet peak load, which has led to excessive reserve margins in some regions. In the Northeast, resource adequacy standards have cost customers $1.4 billion in excess capacity generation. Electricity markets and resource adequacy programs should be designed with performance in mind to accommodate a resource mix that considers the shortages that may result from variable resources.

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