Page 1. www.albertamsa.ca. Making Electricity Markets Really. Work! Martin
Merritt, Alberta Market Surveillance Administrator. Page 2. www.albertamsa.ca.
Making Electricity Markets Really Work!
www.albertamsa.ca
Martin Merritt, Alberta Market Surveillance Administrator
There is no “right” model • Many models can work • A great deal depends on where you start • Harness self interest for collective good
Competent implementation of any model is key! www.albertamsa.ca
Martin Merritt
Human Nature - The free Lunch fantasy • Artificially low power Prices? • No Tax burden? • No Public debt? • Economic sustainability? Pick any 3 of the 4! …We can have almost anything we want… just not everything we want! www.albertamsa.ca
Martin Merritt
Premises of competitive markets 1.
The essence of a competitive market is a price signal.
2.
The market operator and all market participants are competent, and rational. Each act in their self interest per the market rules, guided by a price signal.
3.
The market design must cause the pursuit of self interest to produce societal benefits.
4.
The optimal outcome for society should not depend on expecting or forcing participants to behave irrationally. Sometimes we focus on the wrong things.
www.albertamsa.ca
Martin Merritt
3 Things to Get Right! • Level Playing Field • Information Rich Environment • High Fidelity Price signal Competition will do the heavy lifting! (if we let it!) www.albertamsa.ca
Martin Merritt
Market Design – State of the Art? Goldberg, Rube A twentieth-century American cartoonist and sculptor. Famous for his humorous diagrams of incredibly intricate machines designed to carry out simple tasks. A “Rube Goldberg contraption” is a machine with many apparently extraneous parts, which appears to have been designed by patchwork. www.albertamsa.ca
