Raging at the Machine… -Thursday, July 11, 2019
I was passing time waiting for a flight out of San Francisco and I ran across a LinkedIn article by a very bright friend of mine – Ron McNamara – on incentives and market outcomes. Ron used to oversee Markets in MISO, and before that, he worked for AEP. The gist of the piece is that if you have a financial interest in an organized electricity market, then you should also be invested in that market’s architecture and rules. In markets for equities, credit, or “normal” commodities there is a clear ownership structure and relatively light regulatory oversight. The imperative is to make sure nobody can game the market, but the outcomes are between willing buyers and sellers. Not so for electricity. Consider for a minute; who “owns” the CAISO? Who “owns” SPP or PJM or MISO?