The role of the transmission system has changed. The traditional role as the integrating function of a vertically integrated utility has been replaced by a new role as the "market operator" for competitive purchase and sales of electrical energy.

Amoung the variety of deregulation models adopted round the world, some common feature have emerged, eg:

  • A desire for efficiency gains to be achieved through a total restructuring of the electricity supply industry.
  • Decomposition of the vertically integrated utility into independent Transco, Genco, and Disco.
  • Separation of transmission and distribution networks as natural monopolies from competitive services.
  • Regulation of network monopolies and development of open access tariffs that require vertically integrated utilities or independent wire owners to provide transmission services to others.
  • Definition and enforcement of a "code of conduct" for the wire owners to ensure that transmission service users receive comparable access and service levels without discrimination or bias.
  • Introduction of competition in generation and retail markets.
  • Creation of independent system/market operators and regional transmission groups to further separate generation from transmission and to level the playing field.
  • Creation of spot and futures market energy prices that reflect the local value of energy and the cost of any transmission services.

    The emergence of a restructured electricity market has introduced a series of new players to the business: independent system/market operator (ISO/IMO), market participants (aggregator, broker, trader), distribution provider, end-user (customer, retailer), and producer (UG, NUG/IPP).

    New functions for the operator

    Focusing on the operator, the need to participate in the market requires the power producers to acquire the capabilities to take on new functions. These are listed below.

  • The means to automatically communicate generator maintenance plans to the ISO for near and long range planning. This can be accomplished through an Equipment Outage Scheduler (EOS) that provides a centralized location for maintaining outage schedules for participant resources. Similarly, an Interchange Schedule (IS) tool can provide a centralized location for maintaining interchange transaction schedules that are part of the system production plan.
  • To provide an accurate representation of future system conditions, a Demand Forecast (DF) model is also required. Such a forecast model would implement an advanced weather-adaptive load forecast algorithm, based on linear regression. The algorithm could make use of historical weather conditions and system load patterns versus predicted conditions to determine near-term load requirements.
  • An Operations Planning System (OPS) for determining unit commitment patterns and evaluating the economic benefit of proposed transactions. This system takes into consideration unique system constraints (eg crew availability, emissions, fuel, etc) and offers an advanced hydro/thermal co-ordination scheme. The plan generated minimizes fuel-related costs and produces an efficient bid for the energy market. A future consideration is to modify the algorithm to maximize revenues (rather than minimize cost).
  • An effective Risk Management System (RMS) for analyzing and adjusting future power balances, in which economic results and management of risk motivate the adjustments. The system’s capabilities would include forecasting, correlation analysis, portfolio analysis, contractual evaluation, product development and generation of a variety of reports. The RMS would focus on the management of a market participant’s power portfolio in an optimal manner. This focus is particularly related to the optimal structure of the power portfolio balance, where the expected return is maximized in relation to the desired level of risk.
  • A Trade Management System (TMS) for bidding, market clearing, invoicing, settlement, and communications between market participants. The TMS is an integrated trading system enabling a generation market participant to trade on the wholesale markets. This applies to bilateral markets and the organized markets, as well as settling and clearing the daily trade.
  • Generation Control System (GCS) for implementing the production plan determined by the Operations Planning System for accepted bids. It also implements requests (from the ISO) for regulation services, assisting in the minimization of the overall region’s (as bounded by the ISO) area control error. In addition to effectively and automatically maintaining system operating plans, the GCS monitors key elements of the systems such as system frequency, time error, interchange deviations from contractual agreements, and production and fuel cost information. This information, along with other participant-defined data, is maintained as historical records and is available for tailored report generation.
  • Sales Management System (SMS) combining contractual and invoicing systems and enabling management of both tailor-made industrial contracts and mass-processed household contracts.

    Integrating the systems

    In total these systems would be integrated, as shown in the diagram, to provide the power producers with the necessary tool set to participate effectively in the market. These systems integrate the operational requirements of power production with the business or transactional requirements of the marketplace.

    Two companies that have combined their individual areas of expertise to provide such an integrated package are GE Harris Energy Control Systems of the United States and OM Technology Energy Systems of Sweden. GE Harris provides the operational systems, with access to the physical generation and transmission of electricity, while OM Technology provides the market-based systems. The two companies have formed a strategic alliance called Power Alliance to offer these integrated systems to the energy marketplace.