Improving Coordination Between Regional Power Markets

Michael Giberson

Truland Building, ICES
April 19, 2004, 08:00 PM to 07:00 PM


Restructuring of the electric power industry?both in the United States and elsewhere?has fostered the development of regional wholesale power markets closely integrated with power grid operations. The natural focus of the system optimizations used in these markets has been on maximizing the value of in-system resources. Where cross-border flows are possible, accommodations are made, but relative to the optimization such adjustments are ad hoc. Cross-border flows are growing, however, and present an increasing challenge to transmission system operators. Industry efforts at interregional coordination have focused on practical barriers to trade between regions; academic research has addressed some of the engineering challenges of coordinating separate regional grid optimizations. The existing research has for the most part neglected a number of issues traditionally of interest to economists. The present research uses the methods of experimental economics to examine the consequences of a market design to promote more efficient use of the interconnections between regions.