Australia, California, Texas... have all set or raised price caps in their wholesale markets with horrible results.
In Texas pushing the cap to $9,000 created chaos and not much more power in Feb 2021, In Australia the current caps caused generators to decide not to bid in. In California it has lead to the demise of several peaker plants, and the rush to replace them.
Instead of a cap, markets should create a rule that investigates excessive bids, and bidders found gaming the market or grabbing windfall profits in a tight market should be fined the windfall profits.
The whole idea of a market clearing price might need to be examined and tossed too.
Both are worth investigating and debating. are fundamentals of current market designs, both may be obsolete?
As the resources in the market evolve, should not the fundamental concepts be re-examined too?
Doug Houseman
Expert Member
Top Contributor
No more wholesale price caps?
1 reply