Further integration of electricity markets in the West offers the potential for cost reductions and improved market functioning, but it is not always intuitive to policymakers and regulators how such integration would work and how different stakeholders would be affected. The Western Interstate Energy Board and the Program on Energy and Sustainable Development (PESD) at Stanford University presented a two-day workshop for staff at public utility commissions and state energy offices in the West that used a customized version of PESD’s energy market game to explore potential benefits and challenges of regional integration.
Workshop participants spent the majority of their time actually playing the roles of generating companies (“gencos”), load-serving entities (LSEs), and vertically-integrated utilities in the game simulation. They directly experienced how regional market integration could change the strategy, performance, and operating environment of these different players.
Figure 1. Participants in Stylized Market
The first part of the workshop focused on playing simpler games that illustrate some important elements of competitive electricity markets, including transmission constraints, the potential for the exercise of unilateral market power, and the way that forward contracts can protect consumers from price volatility and the exercise of unilateral market power. The remainder of the workshop focused on the effects of regional market integration using a stylized set of market players composed of 4 Gencos and 4 LSEs in California as well as 4 vertically-integrated utilities outside California (see Figure 1).
Workshop Agenda [pdf]
Workshop Presentation Materials [pdf]
Workshop Takeaway Messages [pdf]