SWING CONTRACTS FOR ISO‐MANAGED WHOLESALE POWER MARKETS

To provide a viable alternative to contractual arrangements in current US RTO/ISO‐managed wholesale power markets, swing contracts must fulfill two basic roles. First, swing contracts must permit the efficient pricing and procurement of reserve (dispatchable power‐paths). Second, swing contracts must provide blueprints for the delivery of power‐paths in real‐time operations to ensure net load balancing. This chapter explains and illustrates key properties of swing contracts formulated specifically for the support of centrally managed wholesale power market operations. Swing contracts in firm form are suitable for routine short‐term net load balancing purposes. Swing contracts in European option form provide flexibility to the ISO with regard to the entailment of dispatch obligations. Swing contracts in American and Bermudan option form provide further flexibility to the ISO with regard to the exercise time itself.