Interface Between Engineering and Market Operations in Restructured Electricity Systems

We examine the impact of wholesale markets on operations of the bulk power system and elaborate some basic implications of engineering practices for designs of wholesale markets. This analysis is intended to provide a basis for enhancements to existing principles of engineering management. Wholesale markets bring economic and financial aspects that alter the context in which system operations are conducted, and introduce incentive and benefit-cost considerations that might alter operating procedures that previously were based on reliability considerations. The principles addressed are those relevant to the interface between engineering aspects of system operations, and economic aspects of market operations. We outline ways that engineering practices developed in the era of vertically integrated utilities might be adapted to the wholesale markets introduced since restructuring began in 1998 in the United States.