COMPETE Executive Director Joel Malina statement on Technology Policy Institute study

COMPETE Executive Director Joel Malina issued the following statement in reaction to a study released by the Technology Policy Institute on wholesale pricing differences between RTO and non-RTO markets:
“The conclusions in the study are not reliable because the methodology used to reach them is fundamentally flawed. The study compares only a small percentage of total wholesale transactions in non-RTO markets with every wholesale transaction in the RTOs.  Any conclusion based on that comparison is deeply misleading.   “Specifically, the study compares average wholesale transaction revenue for transactions in RTO and non-RTO states. In RTOs all generation dispatch is counted as a wholesale transaction, while in non-RTO markets most generation dispatch is internal and only bilateral coordination transactions show up as wholesale transactions.  Therefore the study compares transactions with vastly different proportions and purposes and leaves out the bulk of dispatch costs and revenues from one side of the comparison. In addition to its methodological flaws, the study ignores the real benefits RTOs are delivering for customers such as the rapid increase of demand response and disproportionate growth of wind power in RTO markets. “We agree fully with Scott Harvey, a director at LECG, who stated in a response to the study, ‘it is impossible to assess whether the conclusions in the paper…are a spurious artifact of the data or reflect actual outcomes.’   “Constant evaluation of the benefits and shortcomings of competitive markets is critical, but to have an honest conversation, we must start with accurate data.  Unfortunately this study falls short of that criteria.”