Proposal for a Stanford University Project on  
RETAIL PARTICIPATION IN COMPETITIVE POWER MARKETS

Motivation
Electricity restructuring has focused on developing rules for power exchanges that allow generators to bid their plants into the system.  However, most systems offer very limited opportunity for customers to vary their demand as the costs of providing that power change.  Such inflexibility causes very high peak prices and encourages the exercise of market power by critically placed generators.  Other industries coming out of a regulated environment (e.g., airlines) have learned to use prices to govern demands, use capacity more wisely and help preserve a balance between demand and supply.  There exists widespread interest in whether such demand-side approaches could also be applied to electric power with the same efficiency and how these pricing approaches might be formulated.

Purpose
The Stanford EMF effort would accomplish these three goals:
•	Provide visibility and a non-partisan environment that could help encourage more active policy consideration of real-time pricing opportunities in power markets;
•	Help governments and industry participants to understand more clearly how real-time pricing programs might work in practice and to show why some concerns may be displaced;  and 
•	Allow researchers to understand practical concerns about these programs and to direct future research into productive areas. 

Issues
•	How responsive is electricity use to market-based pricing?
•	What are the major data sources for these estimates?
•	How can real-time pricing be combined with price stability?
•	How should retail suppliers structure their demand-side bids?
•	How do price caps influence demand-side pricing programs?
•	What effects do demand-side programs have on mitigating price spikes?

Possible Key Participants 
Frank Wolak (Stanford University) 
Robert Patrick (Rutgers University)
Michael O’Sheasy (Georgia Power) 
Steven Braithwait (Christenson Assoc)
Ahmad Faruqui (EPRI) 
Christophe Aubin (Electricite de France)
Robert Bartels (U. Sidney) or 
Denzil G. Fiebig (U. Sidney)
Jasmine Ansar (PG&E) 
Gary Stern (So Cal Edison) 
Derek Bunn (London Business School)
Brian Kick (Duke Energy) 
Philip O'Connor (New Energy)
Vince Kaminski (Enron)    
Others from electricity companies     

Approach
A two-day workshop would be held initially to explore potential topics.  The workshop would be comprised of several sessions on energy demand analyses, data availability, and pricing approaches.  Each session would begin with three short presentations (about 15 minutes) that emphasized key findings rather than technical approach.  The second half of each session would allow open general group discussion in an effort to identify principal findings and additional topics for study.   

Potential Participants 
The initial forum would seek about 30-40 people representing a diverse set of perspectives to facilitate group discussion.  Participants might come from:
•	electric power generators and distributors
•	electric power regional trade organizations
•	electric power trading companies
•	electric power equipment/meter producers (ABB, General Electric, Schlumberger, and Siemens)
•	large electricity-using industries 
•	government and regulatory agencies
•	university and research organization staff

About EMF

Stanford’s EMF provides an international forum on energy and environmental markets.  Since 1976, EMF has conducted numerous studies that have brought together leading experts and advisors from business, government and universities to discuss important issues in a non-partisan environment.  Broad participation by many groups facilitates the communication process with leading companies and government agencies.