Publications

    Hogan, William W.Looking Ahead to National Legislation: Ensuring Reliability in a Competitive Market.” In, 1998. Publisher's VersionAbstract

    Executive Summary:

    Electricity markets employ open access and non‐discrimination to foster competition, market entry, and innovation.    The physical characteristics of the electricity system require explicit consideration of key elements in electricity market design.  Pricing and settlement rules for the real‐time market must provide efficient incentives, both for short‐term operations and long‐run investment. The ERCOT energy‐only market design emphasizes the need to get the real‐time prices right.    The recent innovation of the ERCOT Operating Reserve Demand Curve (ORDC) addressed the fundamental problem of inadequate region‐wide scarcity pricing that has plagued other organized markets, which have exhibited inadequate incentives both for reliable operations and efficient investment. 

    ERCOT employs an open wholesale electricity market as the basis for short‐term reliable electricity supply as well as for long‐term investments to maintain reliability in the future.  A review of energy price formation in ERCOT leads to two important conclusions: (i) while the ORDC is performing consistently within its design, scarcity price formation is being adversely influenced by factors not contemplated by the ORDC; (ii) other aspects of the ERCOT market design must be improved to better maintain private market response to energy prices as the driver of resource investment, maintenance expenditure and retirement decisions.   

    The paper identifies three general issues that have affected ERCOT energy prices in recent years, and recommends policy and price formation improvements consistent with efficient market design. These recommendations cannot reverse the impact of broader economic trends, such as low natural gas prices, or national policies, such as subsidies for investments in renewable resources.  However, the stress of these forces has exposed areas where there is a need for adjustments to pricing rules and policies within ERCOT.  

    Brown, Ashley. “Honey, I Shrunk The Franchise!The Electricity Journal (1995).Abstract
    Detroit Edison's suit to halt the Michigan Commission's
    limited retail wheeling experiment could result in two
    ironies: (1) Edison may still be required to wheel power to
    retail customers, but at rates less likely to be fully
    compensatory, and (2) its generation will be more devalued
    than it would have been without the suit.
    Brown, Ashley. “Sunshine May Cloud Good Decision Making.""” In, 1992.Abstract
    Foremost among a number of legislative reforms imposed upon state utility and regulatory commissions in recent years have been sunshine laws. The intent of sunshine laws is laudable and the idea simple: the public's business ought to be conducted in the open for the public to observe. Decision making should be transparent, with a clearly articulated rationale available for all who seek it. Not only the decision, but its evolution and the decision makers' thought processes, should be fully revealed. Few backroom deals can withstand such scrutiny. Should the level of accountability vary for an appointed or elected public official? In theory, no, but that only addresses questions about the appearance of accountability and openness. Does such a requirement improve the quality of decision
    making; or, more importantly, does it improve the quality of decision? There is a strong case that it does not?
    Brown, Ashley. “Title Conference Paper.” In, 1991.Abstract

    For years, utilities, regulators, and economists have discussed the possibility of opening access to the electric transmission grid. It is now well past the time to cut the Gordian knot in impasse over the debate, and to raise the key strategic question of whether utility owned transmission facilities belong in the ratebase paid for by native-load ratepayers. The question is complex, but requires public discussion and debate as we move inexorably to more competitive bulk power markets. The issue is best approached from three different perspectives: 

    • Who should bear the risk of residual revenue respon-
    sibility for transmission assets?

    • Are actual costs and uses reflected in the allocation of responsibilities for transmission revenues?

    • How can transmission pricing be used to reduce the likelihood of anti-competitive behavior by those entities owning both generation and trasmission.

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