November 18, 2004
John F. Kennedy School of Government, Harvard University
Citizens Power, a wholesale power marketer, is concerned that the debate over reliability policies does not sufficiently consider commercial issues. In a restructured environment, commercial issues and reliability issues are inevitably linked. The purpose of this analysis is to advise Citizens Power whether joining the public policy debate over tagging and TLR policies will advance their long term goals for transmission service to meet commercial needs. This analysis finds that although the commercial impacts of the tagging and TLR policies are significant, without changes in the contract-path system the options to modify the policies are limited. The public policy debate at NERC over the tagging and TLR policies does not address the economic structures of the system for transmission reservation and congestion management. Recognizing that the commercial impacts of the tagging and TLR policies depend significantly on the structure of this system, this analysis finds that Citizens can more productively use its resources by advocating changes in the underlying system. The most important change from a commercial perspective is to explicitly incorporate economic incentives.
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