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Back Podcast Ep. 23: NYISO’s Market Monitor – Guarding Competition for the Benefit of Consumers


Podcast Ep. 23: NYISO’s Market Monitor – Guarding Competition for the Benefit of Consumers

November 23, 2022
Every five minutes, 24 hours a day, electricity in New York State is bought and sold through competitive wholesale electric markets administered by the NYISO. 
And while we may not think about electricity the same way we do about other products and services, competitive wholesale electric markets are truly dynamic, with hundreds of buyers and sellers, or “market participants,” involved in the process of meeting consumer demand for power at the least cost available. But how do we make sure that prices in these electric markets are fair? And how do we make sure all market participants act according to the rules and requirements? 

That’s where Shaun Johnson and his team come in.

As the NYISO’s Director of Market Mitigation and Analysis, Shaun Johnson leads a group of 25 electricity markets experts who “police” the system, protecting consumers by making sure prices accurately reflect operating conditions and generator costs.

Johnson, the subject of our latest Power Trends podcast, is an economist who oversees a team of mathematicians, computer scientists, former energy traders, and technicians with years of experience in power plant and energy industry operations. In short, the team is responsible for evaluating the performance of the markets and identifying attempts to exercise market power.

"At the end of the day, our markets are here to ensure that consumers are getting reliable power at the least cost,” he said. “We are making sure that people are following those rules within our markets to create a competitive outcome that ultimately will drive down prices to consumers.”

To meet its goal, the Market Mitigation and Analysis (MMA) team examines data detailing market transactions and operating behaviors of generating assets to verify that consumer prices reflect competitive market circumstances. If they detect anomalies or a trend that raises questions, they have authority to investigate and request additional information from market participants. 

Team members even crisscross the state regularly to visit generators and observe their operations first-hand. This helps team members understand and verify trading or bidding behavior in the markets later on.  

“Less than one-half of one percent of our market outcomes end up requiring action,” Johnson is quick to point out. “But those sanctions, or penalties, have resulted in just over $13 million dollars being refunded back to New York consumers in the last three years.” 

In keeping with the important independence, the NYISO MMA group and an external Market Monitoring Unit (MMU) work independently and collaboratively to protect consumers and participants in the ISO-administered markets. Together, these guardians of the grid report not only to the NYISO’s Board of Directors, but also to the Federal Energy Regulatory Commission, which regulates the industry. The MMA group and the MMU, an outside independent monitor, work together to perform daily monitoring of the ISO’s markets, comprising an important system of checks and balances.

Johnson noted that electric prices are expected to continue to rise this winter due to spikes in global demand for fossil fuels that are lagging supply, as well as global instability caused by the war in Ukraine and economic instability across Europe. “Natural gas has gone through tremendous volatility in the last couple years,” Johnson said. “There’s a bunch of factors now that are driving historic demand and price increases for liquified natural gas. It’s going to be a very expensive winter for natural gas.”

Wholesale, competitive markets remain the best way to make sure consumers receive the least possible price for their electricity, even in the face of rising fossil fuel costs, Johnson notes. And the MMA team, acting as sheriff of these markets, makes sure these prices are achieved fairly; especially when prices rise.

“We are here to effectively protect consumers,” he said, “by ensuring that the markets are competitive.”

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