Testing the Reliability of FERC's Wholesale Power Market Platform: An Agent-Based Computational Economics Approach

Monday, November 3, 2003 - 11:00am - 11:35am
Keller 3-180
Deddy Koesrindartoto (Iowa State University), Leigh Tesfatsion (Iowa State University)
Joint work with Deddy Koesrindartoto

Given the serious reliability problems that have recently arisen in the restructured electricity markets in California and the Northeast, policymakers are now calling for more comprehensive testing of market restructuring proposals prior to implementation. The objective of our collaborative project with the Los Alamos National Laboratory is to test the reliability of the Wholesale Power Market Platform (WPMP), a standard market design proposed in April 2003 by the Federal Energy Regulatory Commission for U.S. wholesale electricity markets. The WPMP design has been adopted or submitted for adoption by wholesale electricity market operators in New England, New York, the mid-Atlantic states, California, and the Midwest.

The WPMP design is extremely complex and recent in origin, rendering difficult the application of traditional analytical and statistical tools. We are therefore taking a different approach, the development of an agent-based computational economics (ACE) framework incorporating the key features of the WPMP design. This ACE electricity framework will be used to test the extent to which the WPMP design results in efficient, fair, and orderly market operations over time, despite attempts by market participants to gain advantage through strategic pricing, capacity withholding, and induced transmission grid congestion. This is a challenging issue of utmost importance for social welfare and national security. Our presentation will report on our progress to date.