Market monitoring and mitigation: impacts on system reliability

The current electric power network, being a legacy network whose growth and design was based on marginal cost operation of a certain rather fixed pattern of generation, does congest and does operate at various limits under market operation. Having market power is having the means to raise the price of electricity above a competitive level. There are several means to raise prices available to generators in electric markets and some exist because of the way the interconnecting network works. Monitoring and mitigation procedures are necessary because of flaws that exist in market design. The greatest flaw in the design of electricity markets in the US is that the markets are incomplete and therefore cannot function correctly without some artificial rules meant to substitute for missing parts of the market. Identifying the potential for market power by including network effects is important. It is a properly designed network that can enable markets to function and, if not properly matched to the market design it causes dysfunction. One way to identify market dysfunction is to create metrics based on the network.