HKS Affiliated Authors


May 31, 2023, Paper: "Electricity market design depends on critical choices. There is no escape from the fundamentals. Under Order 888 the FERC recognized that a market based on tracing power flows between production and consumption was not viable. “A contract path is simply a path that can be designated to form a single continuous electrical path between the parties to an agreement. Because of the laws of physics, it is unlikely that the actual power flow will follow that contract path. … Flow-based pricing or contracting would be designed to account for the actual power flows on a transmission system. It would take into account the "unscheduled flows" that occur under a contract path regime.” (FERC, Order 888, April 24, 1996, footnotes 184- 185, p. 93.)"