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2009 State of the Market Report

Executive Summary

Figure E-7: Economic Withholding – Output Gap Analysis 2008 – 2009

Output Gap (MW)

1200 1000 800 600 400 200

0

Low Threshold

High Threshold Share of Actual Load

2.0%

    • 1.8

      %

    • 1.6

      %

    • 1.4

      %

    • 1.2

      %

1.0%

    • 0.8

      %

    • 0.6

      %

    • 0.4

      %

    • 0.2

      %

0.0%

Share of Actual Load

08 09 J F M A M J J A S O N D J F M A M J J A S O N D

727 102

31 35 35 47 91 89

105 825 771 828 708 888

971 112 897 130 625 102 671 84 484 146 479 126 579 222 491 66 472 57 441 35 412 7 407 44 238 41 144 18 136 4 113 56 113 16 105 1 120 26

2008 Low Threshold Results by Commitment Status (MW)

  • O

    ff-L ine

    • O

      n-L ine

2009

242 55 199 11 289 17 213 10 194 25 203 16 244 31 373 26 250 73 257 79 273 65 189 124 181 83 235 110 394 57 381 38 305 4 331 3 296 0 176 1

2 1 19 0 1

7

84 96 81 84 77

85

High Threshold Results by Commitment Status (MW)

  • O

    ff-L ine

    • O

      n-L ine

Overall, the output gap levels have decreased each year since 2007. The output gap in 2009 averaged 0.5 percent of actual load and declined to 0.2 percent during the second half of the year. These results and others in our report show little indication of significant economic or physical withholding in 2009. Nonetheless, we monitor these levels on an hourly basis and routinely investigate instances of potential withholding.

In addition to these screens for potential withholding, we calculate a “price-cost mark-up” that compares the system marginal price based on actual offers to a simulated system marginal price based on the assumption that all suppliers submitted offers at their estimated marginal costs. Based on this metric we found an average “mark-up” of the system marginal price of roughly 1.2 percent (down from 2 percent in 2008), indicating that the market outcomes in 2009 were highly competitive. Finally, market power mitigation in the Midwest ISO’s energy market continues to occur pursuant to automated conduct and impact tests that utilize clearly specified criteria. Because conduct has generally been competitive, market power mitigation has been imposed infrequently.

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