1. Comments on Mount et al. The experiment –Test impact of pricing mechanism Uniform vs. “hybrid” (part uniform, part discriminatory) Interact pricing rule changes with demand bidding and cost changes –A note on market structure 6 firms with 100 MW of capacity, are sometimes pivotal Experiment sets the soft cap at $75/MWh, and a hard cap at $100/MWh Generation MCs at $20-$52/MWh in base case Load response strictly reduces load (ie a shift in the demand, not just a rotation of the demand curve)

2. What have we learned? This was a very strange regulatory rule –How central was the hybrid market design? –Bids above the soft cap were to be “reviewed” This aspect is missing from the experiment Lots of uncertainty about how this would be done –March 9 order resolved uncertainty, created new caps Bids below $271/MWh were ok, bids only reviewed during stage 3 emergencies

3. What have we learned? (cont.) Price responsive demand impacts (lowers) prices in uniform price markets more than in soft cap (discriminatory) markets –Consistent with theory…. Sort of What kind of outcomes does a hybrid market produce? –Students differ from professionals, what do we make of that? –What can we learn from bidding behavior in California? How many bids below $150?

4. NP15 ISO Prices January 2000

5. NP15 ISO Prices January 2001