During the past three years, working with more than 150 organizations representing public and private stakeholders, EPRI has developed the Electricity Technology Roadmap. The Roadmap identifies several major strategic challenges that must be successfully addressed to ensure a sustainable future in which electricity continues to play an important role in economic growth. Articulation of these anticipated trends and challenges requires a detailed understanding of the role and importance of reliable electricity in different sectors of the economy. This report is intended to contribute to that understanding by analyzing key aspects of trends in the economic value of electricity reliability in the U.S. economy. We first present a review of recent literature on electricity reliability costs. Next, we describe three distinct end-use approaches for tracking trends in reliability needs: (1) an analysis of the electricity-use requirements of office equipment in different commercial sectors; (2) an examination of the use of aggregate statistical indicators of industrial electricity use and economic activity to identify high reliability-requirement customer market segments; and (3) a case study of cleanrooms, which is a cross-cutting market segment known to have high reliability requirements. Finally, we present insurance industry perspectives on electricity reliability as an example of a financial tool for addressing customers' reliability needs.

Recently, independent system operators (ISOs) and others have published reports on the costs of transmission congestion. The magnitude of congestion costs cited in these reports has contributed to the national discussion on the current state of U.S. electricity transmission system and whether it provides an adequate platform for competition in wholesale electricity markets. This report reviews reports of congestion costs and begins to assess their implications for the current national discussion on the importance of the U.S. electricity transmission system for enabling competitive wholesale electricity markets. As a guiding principle, we posit that a more robust electricity system could reduce congestion costs; and thereby, (1) facilitate more vibrant and fair competition in wholesale electricity markets, and (2) enable consumers to seek out the lowest prices for electricity. Yet, examining the details suggests that, sometimes, there will be trade-offs between these goals. Therefore, it is essential to understand who pays, how much, and how do they benefit in evaluating options (both transmission and non-transmission alternatives) to address transmission congestion. To describe the differences among published estimates of congestion costs, we develop and motivate three ways by which transmission congestion costs are calculated in restructured markets. The assessment demonstrates that published transmission congestion costs are not directly comparable because they have been developed to serve different purposes. More importantly, critical information needed to make them more comparable, for example in order to evaluate the impacts of options to relieve congestion, is sometimes not available.

In March 2005, the Midwest Independent System Operator (MISO) will begin operating the first-ever wholesale market for electricity in the central and upper Midwestern portion of the United States. Region-wide, centralized, security-constrained, bid-based dispatch will replace the current system of decentralized dispatch by individual utilities and control areas. This report focuses on how the operation of generators may change under centralized dispatch. We analyze a stylized example of these changes by comparing a base case dispatch based on a ''snapshot'' taken from MISO's state estimator for an actual, historical dispatch (4 p.m., July 7, 2003) to a hypothetical, centralized dispatch that seeks to minimize the total system cost of production, using estimated cost data collected by the EIA. Based on these changes in dispatch, we calculate locational marginal prices, which in turn reveals the location of congestion within MISO's footprint, as well as the distribution of congestion revenues. We also consider two sensitivity scenarios that examine (1) the effect of changes in MISO membership (2003 vs. 2004 membership lists), and (2) different load and electrical data, based on a snapshot from a different date and time (1 p.m., Feb. 18, 2004). Although our analysis offers important insights into how the MISO market could operate when it opens, we do not address the question of the total benefits or costs of creating a wholesale market in the Midwest.