First-Generation Capacity Markets

Todd S. Aagaard; Andrew N. Kleit

doi:10.1017/9781108779159.006

6 - First-Generation Capacity Markets

Published online by Cambridge University Press: 24 February 2022

Todd S. Aagaard and

Andrew N. Kleit

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Todd S. Aagaard: Affiliation:
Villanova University Charles Widger School of Law
Andrew N. Kleit: Affiliation:
Pennsylvania State University

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Summary

Traditionally state utility regulators ensured adequate capacity to meet peak demand by imposing regulatory capacity requirements on vertically integrated electric utilities. With electricity restructuring in many regions of the country in the 1990s, newly created regional transmission organizations operating under FERC’s purview began to introduce wholesale markets for capacity. This first generation of capacity markets in the Northeast U.S. were viewed as a more flexible means of complying with capacity requirements, rather than as an altogether new capacity policy. Accordingly, the early markets were adopted without considering the underlying question of how best to attain reliability in the new era of competitive electricity markets.

Type: Chapter
Information: Electricity Capacity Markets , pp. 74 - 91

DOI: https://doi.org/10.1017/9781108779159.006 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2022

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