Susan L. Pope
Assessment of concerns about price formation and prompt action to address the underlying problems identified should be an urgent priority for regulators, Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) in order to preserve and strengthen competitive electricity markets. In the absence of confidence in spot market price signals the structure of competitive markets is undermined. Market participants, especially generators, will not and do not see the price signals necessary to lead them to make operational and investment decisions independently that will, as a whole, meet the reliability needs of the system in the short-run and long-run. Regulators and ISO/RTOs therefore would likely look to inefficient solutions implemented outside of the structure of the spot markets, which over time may further distort and erode competitive price signals.