Existing Electric Market Structures

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Del curso dictado por Duke University

Electric Industry Operations and Markets

121 calificaciones

Duke University

Electric Industry Operations and Markets

121 calificaciones

This is a two week course. In the first week you will learn about the core activities that the Industry executes to bring electricity to customers. We will review what electricity is, how it is generated, how it is transmitted, how it comes into buildings, and how consumption of electricity instantly feeds back on the transmission and generation of electricity. You will learn to: Define what electricity is; Describe how electricity is generated, transmitted and distributed; Describe how electricity is generated, transmitted and distributed; and Summarize how the consumption of electric energy instantly feeds back on the transmission and generation of electricity. In the second week, the course shifts to the markets that drive Electric Industry operations. You will learn about the various costs of the electric industry’s core activities, how electricity is priced, the various ways that electric markets are structured, how these market structures determine which power plants are dispatched to produce electricity when, and how recent changes in generator fuel prices, generation technology, market regulations, and environmental regulations are transforming both Electric Industry Markets and Operations. You will learn to: Describe the main cost components to the electric system; Compare the costs of different types of power plants; Interpret the retail pricing of electricity; Explain the different types of electric markets and understand how they operate to dispatch electric supply to meet demand in real time; and Explain why and how the electric industry is regulated.

De la lección

Electricity Industry Markets

In this second module, the course shifts to the markets that drive Electric Industry operations. You will learn about the various costs of the electric industry’s core activities, how electricity is priced, the various ways that electric markets are structured, how these market structures determine which power plants are dispatched to produce electricity when, and how recent changes in generator fuel prices, generation technology, market regulations, and environmental regulations are transforming both Electric Industry Markets and Operations.

Existing Electric Market Structures6:20

Ideal Economic Dispatch6:54

Generator Selling Price4:27

Actual Economic Dispatch3:57

Relationship Between Wholesale and Retail Prices8:18

Conoce a los instructores

Lincoln Pratson
Gendell Professor of Energy & Environment
Nicholas School of the Environment

The structure of electric markets in the US varies from state to state.

This is the result of variation in how each states public utility commission

regulates electric utilities that operate in the state.

Variability is also the result of the degree to which the state PUC has

adopted FERC recommendations on industry restructuring or

even forged ahead with its own restructuring measures.

Despite this variability, state electric market structures can generally be grouped

into one of four types.

All of which lie along a spectrum of structures.

At one end of this spectrum is the classic vertically integrated and

regulated utility, which monopolizes its market.

This is the utility that owns and controls every aspect of the electricity supply

tree from generation to transmission, to distribution and the utility

in this case is the sole provider of electricity to customers in its market.

The prices that the utility charges for

electricity are set by the state PUC in return for a monopoly on the market and

a reasonable rate of return on the utility sales of electricity.

The utility may buy electricity from or sell electricity to other utilities.

So is to minimize supply costs and, or enhance system reliability.

But the utility still owns everything and

still serves everyone within its own operation territory.

In this type of market structure,

the utility makes money by selling more electricity and building more electric

infrastructure both of which are entitled to reasonable rates of return.

Hence, this market structure does not promote operational efficiency or

minimize electricity prices.

Instead, the structure emphasizes reliability often through

excess capacity and, or redundancy.

The cost of which gets passed on in the form of higher electricity prices.

In theory, the traditional electric market structure could still exist in the US.

But as a result of PURPA and other regulations since 1978, the electric

market structure in most regulated states includes independent power producers.

In this structure, the utility still maintains a monopoly on transmission,

distribution and retail.

But it buys the lowest cost generation, either from its own generating assets or

from available independent power producers which compete with one another for

sales on the basis of price.

In this case, the generation is procured and

scheduled by a system operator who is part of or works on behalf of the utility and

chooses generation on the basis of reliability of supply and cost.

This more open market structure allows for competition among generators and

typically requires utilities to factor in the availability

of independent power producers in planning for future electricity demand.

However, in these regulated markets,

the independent power producers are not guaranteed a reasonable rate of return.

Limiting the degree to which they could complete with the utilities own

generators.

As a result, this type of market structure still tends to incentivize utilities

to sell more electricity and build more infrastructure in pursuit of increased

revenues at the expense of operational efficiency and minimizing price.

A much more competitive market structure has emerged in

a number of states following FERC order 888.

In this structure, utilities have divested themselves of their generation assets or

created separate companies from them such that all generation in the market is now

provided by independent power producers and

no generator is guaranteed a reasonable rate of return.

The utilities still maintain control of transmission and distribution, and

sell electricity to residential, and small commercial customers.

However, the utilities now buy electricity on the wholesale market which is managed

by an independent system operator that not only schedules generation based on

competitive pricing, but also schedules the utilities transmission and

distribution to ensure fair access to the market by the independent power producers.

This type of market may also include wholesale energy marketers who facilitate

the buying of electricity for independent power producers and

the selling of it onto utilities in large commercial, and industrial customers.

In this case, the independent system operator still manages the generation and

transmission market.

It's just that energy marketers now become a buyer and seller of electricity along

with the independent power producers, and utilities, and in the process of helping

the latter two players connect may end up reducing transaction costs.

All in all, the greater competition among generators and

sellers of electricity in this type of market structure has led to an improvement

in industry efficiency and lowered the price of electricity in real terms after

inflation has been accounted for.

The final market structure lies at the other end of the spectrum from

the vertically integrated utility monopoly.

This final structure represents not only complete competition among generation in

the wholesale market, but

also complete competition among final sales of electricity in the retail market.

In this market structure, wholesale energy marketers are joined by retail

energy marketers who buy and sell electricity from the wholesale market and

sell it to residential and small commercial customers.

The utility is reduced ownership of transmission and distribution, but

these infrastructures are managed by the independent system operator,

so as to provide open access to all electricity suppliers and buyers.

Thus, in this market structure, competition is maximized and

changes in the size of the electric market drive changes in the infrastructure

investments and industry innovation to capitalize on these changes.

Without, theoretically,

requiring incentives such as reasonable rates of return.

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