Efficient and Reliable Reactive Power Supply and Consumption --Insights from an Integrated Program of Engineering and EconomicResearch Page: 4 of 16
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2. Reactive power should be procured in an efficient and reliable manner.
3. Those who benefit from reactive power should be charged for it.
4. All providers of reactive power should be paid, and on a nondiscriminatory basis.
The report articulates two important goals for a well-designed pricing mechanism: "The
first is to encourage efficient and reliable investment in infrastructure needed to produce
reactive power and maintain the reliability of the transmission system. The second is to
encourage efficient production and consumption of reactive power from the existing
infrastructure, taking into account the opportunity costs of competing uses of resources,
so as to keep rates low."
The report concludes that "the ultimate goal should be an integrated set of co-optimized
markets with bilateral markets relatively free from federal regulation." This conclusion is
followed by a long list of questions that FERC staff plan to address, with the recognition
that "this goal requires research, software development, education and testing, and is
likely to require 5 to 10 years to fully implement."
2. An Integrated Program of Engineering and Economic Research on Restructured
With support from the U.S. Department of Energy (DOE) Office of Electricity Delivery
and Energy Reliability and the National Science Foundation, we have been researching
and developing a comprehensive set of integrated market/engineering design principles
and tools for a restructured electricity industry. " Our program is unique because it
emphasizes equally the effects of the physical electricity network on electricity markets
and the effects of the market on the physical network.
Our research objective is pursued through an interdisciplinary program that includes:
" Theoretical analysis - conducting conceptual abstract modeling and analysis
employing techniques of operations research, systems analysis, micro economics,
stochastic modeling, game theory, and auction theory;
" Empirical analysis - gathering and interpreting empirical data and estimating and
validating theoretical models using econometric methods, financial engineering
approaches, statistical analysis, and data mining;
" Computational methods - using numerical methods and agent-based models to
simulate and forecast market outcomes with realistic modeling of the electric
power system in conjunction with behavioral models of economic agents that
control various aspects of the system and interact in the market place; and
" Experimental economic approaches - performing controlled laboratory
experiments with live and artificial agents to explore decision patterns under
alternative rules and system conditions and to test behavioral assumptions upon
which such rules are founded.
Most recently, work has focused on:"'
* The theory, design and testing of multi-dimensional markets, taking into account
special problems of coordinating and planning for efficient power transfer across
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Thomas, Robert J.; Mount, Timothy D.; Schuler, Richard; Schulze,William; Zimmerman, Ray; Alvarado, Fernando et al. Efficient and Reliable Reactive Power Supply and Consumption --Insights from an Integrated Program of Engineering and EconomicResearch, article, January 1, 2008; Berkeley, California. (digital.library.unt.edu/ark:/67531/metadc901669/m1/4/: accessed December 15, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.