Reliability: reality or the power engineers' last gasp

Power systems reliability in North America has been defined largely (if not entirely) by engineers and in engineering terms. The NERC and the regional reliability councils have traditionally been the writers of the rules and the enforcers of the requirements. Their decisions have been based on increasingly refined engineering rules of thumb that have stressed conservative measures of system security over economic rationality. Does this make sense in a restructured world in which reliability may be relative for different customers and for different suppliers. The paper only begins to scratch the surface of a controversial issue. In the delivery of electric energy, how reliable is reliable enough and who and how should that decision be made? The paper uses as its point of departure the operating rules of the New York and New England Power Pools as well as the market operation rules currently being proposed by NERC committees. It focuses on the interactions between the engineering criteria and market criteria. It attempts to show that virtually all of the standards and rules of thumb that have been and/or are being promulgated in the power industry have significant impacts on the economics of the market impacts that cannot be ignored in the process of restructuring a power market.