ISO-NE, PJM Team Up to Standardize Power Markets

Uniform electricity markets across the Northeast and Mid-Atlantic regions moved one step closer to becoming reality last week as electricity market administrators, Independent System Operator (ISO) New England Inc. and PJM Interconnection LLC, reported that they have teamed up with systems developer ALSTOM ESCA Corp. to formalize an agreement that will standardize their electricity markets. The ISOs also believe the model could be adopted by wholesale markets across the country.

In a letter sent by ISO New England to the Federal Energy Regulatory Commission, the administrator outlined a wholesale market program that would include features of both its own design as well as the current PJM market model. The end result called the Standard Market Design for wholesale electricity markets could then be used as a model for the rest of the country.

"This new market standard should put into place the necessary market improvements more quickly and at a reduced cost than if we were to implement a customized market system for New England," said William W. Berry, chairman of ISO New England. "Now is the time to stop the experimentation. Ultimately, we hope the Standard Market Design will serve as the benchmark for wholesale electricity marketplaces across the country, if not around the world."

Some believe the PJM market model is what the troubled California market needs. In fact, FERC Commissioner William Massey has urged California to adopt the PJM procedures and design in an effort to restore normalcy to its wholesale powermarket.

Under the agreement currently in the works, ISO-NE will purchase the current PJM market design and certain software components from ALSTOM and PJM. The two ISOs and ALSTOM will then work together to develop a standardized market design that includes solutions to reserve markets and a common solution to unit dispatch.

The companies also said that the approach should further expedite the elimination of trading barriers across different markets and promote FERC's goal of creating a seamless marketplace. ISO New England and the New York ISO will continue to work together on these issues under a joint board resolution passed on Jan. 16.

"Because of our geographic location, New York is in the center of the Northeast markets, with ISO New England, PJM and IMO each on one of our borders. We support the continued elimination of barriers across Northeast trading markets to develop a more seamless marketplace where everyone will benefit," said William J. Museler, CEO of the New York ISO.

The administrators said the proposed market design standard will be developed jointly with stakeholder input. ISO New England said it plans to propose the Standard Market Design to the New England Conference of Public Utility Commissioners and the New England Power Pool in a series of meetings next week. Additional meetings will be conducted in the next few weeks. The Standard Market Design for New England will be subject to FERC approval.

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