Review of the Proposed Reserve Markets in New England

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Date
2005-01Author
Cramton, Peter
Hung-po, Chao
Wilson, Robert
Citation
"Review of the Proposed Reserve Markets in New England," (with Hung-po Chao and Robert Wilson) White Paper, Market Design Inc., January 2005.
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Show full item recordAbstract
ISO New England proposes reserve markets designed to improve the existing forward
reserve market and improve pricing during real-time reserve shortages. We support all of the
main elements of the proposal. For example, we agree that little is gained by allowing reserve
availability bids in the day-ahead market. Doing so greatly increases the complexity of the
market without the prospect of more efficient pricing. Rather, offline reserves are most
efficiently priced and awarded well in advance, as is done by the improved forward reserve
market.