New York State Capacity Market Review. This analysis of the New York capacity market by Christensen Associates found that a significant portion of new generation built in the state has been financed not by volatile market revenues, but by bilateral contracts, utility ownership, or New York State Energy Research and Development Authority (NYSERDA) renewable energy programs. The authors conclude that New York has succeeded in providing generation capacity where it is most highly valued, using diverse fuels and meeting a variety of renewable resources and environmental policy goals without resorting to a mandatory forward market. (September 2012)

Financial Performance of Owners of Unregulated Generation in PJM: 2011 Update. This 2011 update of the financial performance of the largest owners of unregulated generation owners in the PJM Interconnection shows that profits earned by merchant generation continue to exceed those of regulated entities. With energy prices in decline, merchant generators are looking to the capacity markets as a critical factor in maintaining these high earnings. (July 2012)

Under EMRI, APPA has commissioned or conducted multiple a series of studies to gather more information about wholesale market operations and the associated impacts and to delve more deeply into assumptions and assertions often made in support of the current markets.

The findings of these studies paint a very disturbing picture of RTO-run Day Two markets and the state of “competition” in these markets. These findings constitute real evidence of RTO market failures that are harming consumers, and demonstrate that rates produced in these markets are not just and reasonable. The studies stand in stark contrast to the contrary claims by the RTOs and the owners of unregulated generation selling into those markets.

Fact Sheet: Fuel Cost, Market Structure and Electricity Prices in New Jersey, November 2011

Fact Sheet: Fuel Cost, Market Structure and Electricity Prices in Maryland, November 2011

These fact sheets demonstrate the important role of market structure in determining electricity prices in RTO states

RPM-Is There a Path Forward?, Presentation by  Susan N. Kelly at the Organization of PJM States, Inc. Annual Meeting, October 5, 2011

Incenting the Old, Preventing the New: Flaws in Capacity Market Design, and Recommendations for Improvement
by Matthew Wittenstein and Ezra Hausman. This study finds that the mandatory forward capacity markets, such as PJM's Reliability Pricing Model, may actually prevent the construction of newer, more efficient, and cleaner generating stock to replace aging and higher-emissions resources. (June 2011)

Financial Performance of Owners of Unregulated Generation: 2010 Update. This is an update to earlier financial analyses of owners of unregulated generation in the PJM Interconnection. In 2010, these companies continued to earn high profits, with returns on equity for several generation subsidiaries exceeding 20 percent. (Published 5/20/2011)

Adequacy of the FERC's ISO/RTO performance Metrics, by David Apgar. This analysis of the FERC's RTO performance metrics by an expert in best performance management practices finds the metrics to be insufficient to evaluate the RTO markets' competitiveness and potential to provide benefits to consumers. (Published May 2011)

Issue Brief: Why New CO2 Regulations Could Produce Windfall Profits and Unproductive Costs for Consumers. This issue brief explains the potential for pending closures of coal plants in RTO regions to produce excess costs to consumers and windfall profits for merchant generators. Such excess costs are "unproductive" because they do not reflect actual investments in new resources or environmental retrofits to existing facilities. (Published 3/16/2011)

A Review of PJM's Reliability Pricing Model. This paper provides an overview of the results of the seven auctions held to date under PJM's Reliability Pricing Model  (RPM) and to highlight several concerns. (Published 9/30/2010.)

The Effect of Cross-Control on Bidding Behavior and Prices in Electricity Auction Markets, by John Kwoka, Finnegan Professor of Economics at Northeastern University. This study examines the effect of frequent changes in control of electric generating units on the competitiveness of wholesale electricity markets. (Published 9/23/2010) 

2009 Financial Performance of Owners of Unregulated Generation. This study updates earlier financial analyses of owners of unregulated generation in the PJM Interconnection, and finds that the high profits earned by these companies continued during the recession of 2009. (Published 5/24/2010)

Retail Electric Rates in Deregulated and Regulated States: 2009 Update, March 2010
The Energy Information Administration's full-year 2009 data shows that electric rates in states with deregulated electric markets continue to exceed rates in regulated states and that the disparity is as high as in prior years.Read the report

APPA Releases Study on Productive and Unproductive Costs of Cap-and-Trade plus Video of Press Conference (7/15/09)

Discussion and Examples of Entry Barriers in the Electricity Generation Market by J. Edward Cichanowicz, August 2008.

Barriers to New Competition in Electricity Generation, June 2008, by John Kwoka, Northeastern University.
This report examines the belief of supporters of restructuring that competition would emerge in the electricity generation sector among different suppliers and that entry into the market would protect consumers against excess price and profit. But those assumptions have not been borne out. A number of real-world factors have impeded entry, with the result that entry has often been constrained and generation is not adequately competitive.


Bilateral Contracting in Deregulated Electricity Markets, By Ezra Hausman, Rick Hornby, and Allison Smith, Synapse Energy Economics, Inc., April 18, 2008
While bilateral contracts are widely recognized as crucial to the functioning of truly competitive electricity markets, this study finds that Regional Transmission Organizations have failed to create an environment conducive to the vigorous, competitive, long-term bilateral contracting that would provide the most benefits to consumers.

Raising the Stakes on Capacity Incentives: PJM's Reliability Pricing Model (RPM), by James F. Wilson, LECG, LLC, March 2008.
This report provides a description and assessment of the methodology and outcomes of PJM's new Reliability Pricing Model (RPM) capacity construct. Read the summary.

In Do RTOs Promote Renewables? A Study of State-Level Data over Time, authors Lester Lave and Kathleen Spees used statistical methodologies to isolate the effect of RTO membership from other factors influencing the development of renewables, such as state policies, resource availability and electricity prices.

Concept Paper by William H. Dunn, Jr.: Data Required for Market Oversight (pdf, Dec. 2007). “In essence, the operation of the markets is a black box on which those paying the bills are required to place full confidence.” Therefore, generator offer data in RTO markets should be made publicly available on the next day with the specific generation owners identified, as is common practice in the England, Wales and Australian markets. Other data, such as the operating characteristics of the generation plants, also should be released to the public.

Summary of Findings of Initial Studies released at APPA Symposium Assessing Restructured Electricity Markets, February 5, 2007 (pdf, Sept. 2007)

LMP Electricity Markets: Market Operations, Market Power, and Value for Consumers prepared by Ezra Hausman, Robert Fagan, David White, Kenji Takahashi, and Alice Napoleon, Synapse Energy Economics. The implementation of Locational Marginal Pricing (LMP) differs from the theoretical basis, and LMP itself does not mitigate market power. Pricing signals do not appear to be working to produce generation and transmission investment or load response.
Download Executive Summary of Study, Full Study and Presentation

A Comparative Analysis of Actual Locational Marginal Prices in the PJM Market and Estimated Short-Run Marginal Costs: 2003-2006 prepared by Serkan Bahceci, Julia Frayer, Amr Ibrahim, and Sanela Pecenkovic, London Economics International. Offers to sell electricity in PJM are often not tied to the marginal cost of producing that electricity. This difference can vary substantially over different times of the year, reaching as high as 25 percent.
Download Executive Summary of Study, Full Study and PowerPoint Presentation

The Impact of Fuel Costs on Electric Power Prices by Kenneth Rose, a senior fellow with the Institute of Public Utilities at Michigan State University. (pdf, June 2007) Fuel costs cannot fully explain the increase in wholesale electricity prices and that “simply attributing electricity price increases to only the cost of fuels used to generate electricity is overly simplistic at best.” Trends in PJM prices show that rather than moving in lockstep, electricity prices and fuel costs can sometimes even move in opposite directions. Download PowerPoint Presentation

Investment Performance in Deregulated Markets for Electricity: A Case Study of New York State prepared by Tim Mount, Cornell University. The main accomplishment of the hundreds of millions of dollars paid to generators through the New York capacity markets has been to increase the market value of existing capacity, rather than to improve reliability.
Download Presentation and Study

Analysis of Operational and Administrative Cost of RTOs prepared by William M. Bateman and Robert C. Smith, GDS Associates. In 2005 participants in RTO-operated markets paid over $1 billion in total RTO-related costs, the majority of which went to cover administrative costs.
Download Executive Summary of Study, Full Study and PowerPoint Presentation

The Flaws in the Primary Methodologies Used to Assess Electricity Restructuring prepared by John Kwoka, Northeastern University. The methodologies used in the primary studies of restructuring fell short of the standards necessary for good economic research, resulting in an absence of “reliable and convincing evidence that consumers are better off as a result of the restructuring of the U.S. electric power industry.”
Download Executive Summary of Study, Full Study and Addendum

Evaluations of Other Studies or Proposals

In “The Compete Coalition Oversells Independent Study Findings,” Laurence D. Kirsch and Mathew J. Morey of Christensen Energy Associates Energy Consulting found that the Compete Coalition publicized the results of an academic study of generator plant efficiency and restructuring by issuing incorrect and misleading statements about the findings. Kirsch and Morey also found a number of shortcomings with the study itself, which may bias the study results. [pdf, Dec. 2007]

White Paper by Robert McCullough: Looking for the “Voom” A Rebuttal to Dr. Hogan's “Acting in Time: Regulating Wholesale Electricity Markets” (pdf, June 2007)

Restructuring the U.S. Electric Power Sector: A Review of the LECG Study, By John Kwoka, Northeastern University, April 2007 responding to Analysis of the Impact of Coordinated Electricity Markets on Consumer Electricity Charge, By Scott M. Harvey, Bruce M. McConihe and Susan L. Pope, LECG, LLC, November 2006