Minitrack: Engineering and Economics Interactions

In this minitrack we address two important aspects characterizing the restructuring of the electric power industry in the US. The first is that reliability is now affected substantially by the fact that resources needed for grid operations are purchased from many independent participants in wholesale markets, each with its own profit motive. Thus the reliability obtained from the previous "command and control" system is degraded by a new dependence on market mechanisms that bring their own sources of unreliability and volatility. The effects are both short-term, as in day-ahead and real-time markets for energy, reserves, and congestion relief; and long-term, as in investments in transmission and generation capacity. The severity of these effects is heightened by the fact that in the U.S. the Transmission System Operator must adhere rigorously to the rules established in its tariff approved by FERC, thus eliminating much of the role for operators' judgment and discretion that was implicit in vertically integrated systems.