Testing the reliability of FERC’s Wholesale Power Market Platform: An Agent-Based Computational Economics Approach

In April 2003 the U.S. Federal Energy Regulatory Commission proposed the Wholesale Power Market Platform (WPMP) for common adoption by U.S. wholesale power markets. The WPMP is a complicated market design encompassing real-time, day-ahead, ancillary, and financial transmission rights markets. Variants of the WPMP have been adopted in various parts of the U.S. (e.g., New England), but other regions (e.g., the Midwest) have resisted adoption on the grounds that the reliability of the design has not been sufficiently tested or demonstrated. This study reports on an ongoing collaborative project with the Los Alamos National Laboratory to develop an agent-based computational framework for testing the economic reliability of the WPMP. The key issue addressed is the extent to which the WPMP is capable of sustaining efficient, orderly, and fair market outcomes over time despite attempts by market participants to gain advantage through strategic pricing, capacity withholding, and/or induced transmission congestion.