R Street commentary cited in FERC rulemaking: Uplift Cost Allocation and Transparency in Markets Operated by Regional Transmission Organizations and Independent System Operators
R Street Institute states that price formation visibility in energy and ancillary services markets is very important for efficient market functionality and comments that each of the Commission’s proposed requirements is reasonable.
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R Street Institute states that uplift reporting at the sub-zonal level would be useful because causes can vary within a zone, particularly with respect to transmission congestion, but notes that more granular reporting may lead to confidentiality concerns and opportunities for collusion.
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R Street Institute finds that monthly aggregation is reasonable and provides sufficient masking of daily offer behavior.
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R Street Institute states that transparency of operator-initiated commitments is important because such commitments often occur when the system is stressed, have a sizable effect on market outcomes, and may become more frequent given the penetration of meteorologically-sensitive resources. R Street Institute contends that reporting operator-initiated commitments by zone and commitment reason is reasonable. R Street Institute further contends that reporting on a sub-zonal basis would provide value in areas with transmission constraints.
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R Street Institute contends that the proposed temporal requirements are reasonable and already met by NYISO, MISO, and CAISO.
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Potomac Economics, XO Energy, and R Street Institute explain that when a constraint is violated, some RTOs/ISOs relax the constraint to reduce the shadow price to less than the penalty factor, which reduces congestion components of LMPs.
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R Street Institute argues that relaxing transmission constraints to prevent penalty factors from setting prices distorts congestion price formation, which undermines efficient commitment and dispatch in the short term and distorts market investments and retirements in the long term.
