Wholesale electricity prices that reflect scarcity and surplus are pivotal to advancing demand response and storage and, as such, are a means to achieving a cost-effective transition to reliable, sustainable, and affordable energy. However, Europe’s power stakeholders cannot rely on wholesale prices reflecting system conditions, such as scarcity, in real time if and when such conditions arise. This is largely due to regulators’ interventions to protect electricity consumers from high prices out of fear that dominant market players will abuse their market power and hold consumers ransom.
Policymakers can break through the vicious cycle driving these interventions by establishing market monitoring mechanisms to provide stakeholders with timely, high-quality data analysis and interpretation to demonstrate that the market is serving its purpose and market participants are behaving appropriately. As European power market integration progresses—with greater cross-border trade and system reflective pricing—the need for effective market monitoring increases.
In a webinar held on 31 May 2016, Sarah Keay-Bright of RAP and Dr. Joseph Bowring of Monitoring Analytics, the independent market monitor for the PJM Interconnection in the U.S., discussed best practices for market supervision, including:
- Brief overview of the EU market monitoring framework and current state;
- Issues to be addressed in the European context, including the quality of market monitoring, governance, and enforcement;
- Lessons learned from other jurisdictions;
- Evolution of market monitoring in the U.S.;
- Monitoring Analytics’ role, governance, organization, and relationships with key stakeholders; and
- Monitoring Analytics’ key successes and outlook.