FERC's Supplemental Notice of Public Rulemaking 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...

In "The Ethics of Dynamic Pricing," Ahmad Faruqui lays out a case for improved efficiency in using dynamic prices for retail electricity tariffs and addresses various issues about the distributional effects of alternative pricing mechanisms. The principal contrast is between flat or nearly...

Organized electricity markets often require submission of supply functions ahead of the realization of uncertain demand. As a model of oligopoly behavior, the Nash condition of supply function equilibrium has a natural appeal. Typically this produces a continuum of possible equilibria,...

Coordinated electricity spot markets support open access to existing transmission grids. Associated financial transmission rights provide a key ingredient for long-term contracting and property rights for grid expansion. Design of a mixed system of merchant and regulated transmission investment...

A model of generator withholding is critical for analyses of market power. The California electricity market crisis of 2000-2001 saw increased utilization of fossil fuel plants. The stressed conditions could have affected normal outage rates. A hazard rate analysis applied to the Mirant...

Economists have long recognized that certainty of contract is essential to a healthy economy. Long-term forward contracts, in particular, help reduce financial risk. Those contracts can only accomplish that goal, however, if parties know the contracts will be enforced. From an economic and...