Power Market Deregulation – The Beginning

1996 was a landmark year in the history of North American power markets. The United States Federal Energy Regulatory Commission (FERC) issued orders 888 and 889, both of which paved the way for the deregulation of electricity markets. The goal of these orders was to separate electricity generation from distribution in order to create a competitive market that would add efficiency to the sector and ultimately lower the price of power for consumers. Instead of single entities generating and transmitting electricity over large distances for local distribution, multiple players with distinct generation capabilities and transmission capacities emerged. Deregulation posed massive data management challenges, though, as large volumes of data were required to monitor and control the open market environment.

Market Data – The Challenge

Now, while various independent system operators (ISOs) and regional transmission operators (RTOs) control and monitor power grids in order to ensure reliability, companies involved in any stage of the electric power generation-transmission-distribution spectrum need to collect and analyze large amounts of data in order to make sound business decisions. Data published by ISOs or RTOs is of critical importance for an electricity generating company, as the pricing of electricity is volatile. This is due to the inherent nature of the electricity market–variations in the pricing of generation fuels such as coal, natural gas, or liquids; demand shifts; and the conditions of transmission systems affect the market. Accurate and timely market data from reliable sources is necessary for power trading companies in deregulated markets.

The question, then, is how can organizations collect data in a timely, accurate manner from multiple sources?  Manually collecting and combining data is highly inefficient. Building an in-house system to gather it may be a solution for some market participants, but this is an expensive option which does not enable individuals to easily collect and compare multiple data reports, visualize or analyze data, and integrate with other software systems.

How ZEMA Helps

Power market participants may dedicate countless man hours in an attempt to create and maintain an in-house data management solution. By switching to the ZEMA solution, a renowned and highly customizable data management software with a proven record in the power industry, users will meet their data management needs efficiently.

ZEMA vs. the Dynamic Market

One of ZEMA’s many advantages is its ability to quickly adapt to the dynamic market. The recent development of the MISO South region is an example of the type of change that occurs frequently in deregulated markets. During December 2013, MISO integrated the transmission systems of the Entergy Corporation and several other transmission owners and local balancing authorities based in Arkansas, Mississippi, Louisiana, and Texas to form the ”MISO South” region. As a result, MISO has become the largest RTO, covering the widest geographical area.[1] Figure 2 shows additions to MISO’s coverage area with the expansion of MISO South. As depicted, MISO coverage now extends from Manitoba, Canada to the Gulf of Mexico.

Figure 1: MISO Expansion Map [EIA]
Figure 1: MISO Expansion Map [EIA][1]

In April 2013, MISO changed their name from the “Mid-West Independent System Operator” to the “Mid-Continent System Operator”[1] as part of the plan to expand their area of operation. This geographical expansion added new data nodes to the system operator’s data reports. While other data management systems struggled to synchronize their services with these changes, ZEMA’s versatile architecture seamlessly incorporated the required modifications to its data collection programs to accommodate new rules for data collection and standardization.

Figure 2: Average LMPs Illinois, Michigan, Indiana, and Minnesota Hubs vs. Arkansas and Louisiana Hubs (MISO)

 Figure 2: Average LMPs Illinois, Michigan, Indiana, and Minnesota Hubs vs. Arkansas and Louisiana Hubs (MISO)

Figure 2 compares locational marginal price (LMP) data in various hubs as published by MISO during the month of December 2013. As is evident above, MISO began publishing Arkansas and Louisiana prices at 00:00 on December 19, 2013 when the South zone was formally including within MISO’s coverage area. ZEMA seamlessly collected this data as soon as it became available.  Power market participants who relied upon ZEMA to collect data during this market shift were kept abreast of important changes during this period.

To keep up to date with power market trends, leverage ZEMA’s advanced data collection and validation capabilities. ZEMA can collect accurate historical and current data from any ISO or RTO easily. ZEMA also excels at displaying time series, enabling market participants to keep track of power prices in these regions. To learn more about how ZEMA can help your business evolve with the market, book a complimentary demo with us.

[1] “EIA – Today in Energy”, U.S. Energy Information Administration, accessed July 2013, http://www.eia.gov/todayinenergy/detail.cfm?id=13511.

2 Ibid.

3 “Media Center”, MISO Energy , accessed July 2013, https://www.misoenergy.org/AboutUs/MediaCenter/pages/MediaCenter.aspx.