William W. Hogan

Hogan, William. “ Demand Response Compensation, Net Benefits and Cost Allocation: Preliminary Comments ” (2010).Abstract

EXCERPT FROM THE INTRODUCTION:

The Federal Energy Regulatory Commission’s Supplemental Notice of Proposed Rulemaking (NOPR) addresses the question of proper compensation for demand response in organized wholesale electricity markets. Assuming that the Commission would proceed with the proposal “to require tariff provisions allowing demand response resources to participate in wholesale energy markets by reducing consumption of electricity from expected levels in response to price signals, to pay those demand response resources, in all hours, the market price of energy (also referred to as the ‘locational marginal price’ or ‘LMP’) for such reductions,” the Commission posed questions about applying a net benefits test and rules for cost allocation.

There is now an extensive record in this matter, and I have written on the various issues. The purpose of the present paper is to summarize critical points and pose implications for the issues of net benefit tests and cost allocation. The limited time of the technical conference format dictates a certain brevity, referring to the prior submissions for a fuller exposition. My comments highlight several questions: Why are we here? Why is this subject so confusing? Why are retail rates relevant? How can we match ends and means? Do we need a net benefits test? How should we allocate costs? Where should we go from here?

 

The Commission’s Supplemental NOPR did not address the underlying arguments presented in response to the original NOPR in this matter. But many of the basic issues in considering net benefits tests and cost allocation arise from the fundamentals that the Commission should address. Despite the important role that LMP plays in successful market design, the Commission should not assume that paying LMP is always appropriate.

 

Hogan, William W., Michael Caramanis, Elli Ntakou, and Aranya Chakrabortty. “Co-Optimization of Power and Reserves in Dynamic T&D Power Markets With Nondispatchable Renewable Generation and Distributed Energy Resources .” In, 2016. Publisher's VersionAbstract
Marginal-cost-based dynamic pricing of electric· ity services, including real power, reactive power, and reserves, may provide unprecedented efficiencies and system synergies that are pivotal to the sustainability of massive re· newable generation integrat ion. Extension of wholesale high-voltage power markets to allow distribution network connected prosumers to participate, albeit desirable, has stalled on high transaction costs and the lack of a tractable market clearing framework. This paper presents a distributed, massively parallel architecture that enables tractable transmission and distribution locational marginal price (T&DLMP) discovery along with optimal scheduling of centralized generation, decentralized conventional and flexible loads, and distributed energy resources (DERs). DERs include distributed generation; electric vehicle (EV) battery charging and storage; heating, ventilating, and air conditioning (HVAC) and c:ombined heat & power (CHP) microgenerators; computing; volt/var control devices; grid-friendly applianc:es; smart transformers; and more. The proposed iterative distributed architecture can discover T&DLMPs while capturing the full c:omplexity of each participating DER's intertemporal preferences and physical system dynamics.
Hogan, William W.Cross-product Manipulation in Electricity Markets, Microstructure Models and Asymmetric Information.” In, 2019. Publisher's VersionAbstract

Electricity market manipulation enforcement actions have moved from conventional analysis of generator market power in real-time physical markets to material allegations of sustained crossproduct price manipulation in forward financial markets. A major challenge is to develop and apply forward market analytical frameworks and models. This task is more difficult than for the real-time market. An adaptation of cross-product manipulation models from cash-settled financial markets provides an existence demonstration under uncertainty and asymmetric information. The implications of this analysis include strong empirical predictions about necessary randomized strategies that are not likely to be observed or sustainable in electricity markets. Absent these randomized strategies and other market imperfections, the means for achieving sustained forward market price manipulation remains unexplained.

Keywords: market manipulation; electricity markets; limits to arbitrage; asymmetric information

Hogan, William W.CarbonPricing inOrganizedWholesale Electricity Markets .” In, 2020. Publisher's VersionAbstract

Excerpt from the Introduction:

Thank you for the opportunity to participate in this technical conference. My comments here and during the conference are my own and do not represent the opinions of anyone else. The focus of my remarks will be on carbon pricing and the interactions with short-term electricity markets as found in the organized wholesale markets in the United States. I do not address the design and implementation questions focused on investments and resource adequacy that underpin capacity markets.

Panagiotis, Andrianesis, Michael C. Caramanis, and William W. Hogan. “Computation of Convex Hull Prices in Electricity Markets with Non-Convexities using Dantzig-Wolfe Decomposition.” In, 2020. Publisher's VersionAbstract
—The presence of non-convexities in electricity markets has been an active research area for about two decades. The — inevitable under current marginal cost pricing — problem of guaranteeing that no truthful-bidding market participant incurs losses in the day-ahead (DA) market is addressed in current practice through make-whole payments a.k.a. uplift. Alternative pricing rules have been studied to deal with this problem. Among them, Convex Hull (CH) prices associated with minimum uplift have attracted significant attention. Several US Independent System Operators (ISOs) have considered CH prices but resorted to approximations, mainly because determining exact CH prices is computationally challenging, while providing little intuition about the price formation rational. In this paper, we describe CH price estimation problem by relying on DantzigWolfe decomposition and Column Generation. Moreover, the approach provides intuition on the underlying price formation rational. A test bed of stylized examples elucidate an exposition of the intuition in the CH price formation. In addition, a realistic ISO dataset is used to suggest scalability and validate the proof-of-concept.

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