Zonal Pricing
Alongside the development of the markets for electricity, the industry has
seen the formation of regional transmission operators, groups, and agencies
that manage the flow of electricity through (and across) the local operating
networks. These organizations play an important operating and financial role
in each of the areas in which they operate.
Each entity maintains a number of price postings determined by time-of-use and
time of sale – whether the power is being sold on a real-time (usually
15-minute interval) or day-ahead basis (same hour of the day on the next
following day). Examples of this zonal pricing published by these
organizations are shown on the following graph. You can also access data on
the Web sites of the various operating organizations, such as www.nyiso.com.
“The law of supply and demand works, as economists will affirm, given
an environment that supports fair and open economic competition. The mission
of the New York Independent System Operator (NYISO) is to allow for that law
to work in New York's wholesale electricity markets. Working together with the
Market Participants that make, transport, trade, and consume electricity, the
NYISO is dedicated to bringing the benefits of fair, open, and efficient
competition to the state's consumers of electricity.” ---
Load Control Zones
In order to maintain the operational and financial integrity of Zonal Pricing
systems, regions are subdivided into Load Control Zones. As the following
chart indicates, the operating regions of the state of New York are
alphabetized for identification, starting in the western part of the state
with “A” and moving eastward to the identifier for New York City as “Zone J”
and for Long Island as “Zone K.” This geographic nomenclature remains
consistent across pricing data on Web site postings.
Similar to the method used in New York State, the New England region is also
subdivided geographically in order to more easily identify operating areas
across the region. This chart shows the zonal identification, with the
approximate location of Entergy’s Pilgrim nuclear generating facility shown on
the map.
“ISO New England helps protect the health of New England's economy and the
well-being of its people by ensuring the constant availability of electricity,
today and for future generations. ISO New England meets this obligation in
three ways: by ensuring the day-to-day reliable operation of New England's
bulk power generation transmission system; by overseeing and ensuring the fair
administration of the region's wholesale electricity markets; and by managing
comprehensive, regional planning processes.” --- ISO New England Web
site www.iso-ne.com.
Data Display
The following chart is an example of how zonal pricing data can be displayed.
It shows the monthly price trend for day-ahead and real-time prices for the
Mass HUB location in central Massachusetts. The chart also shows the seasonal
volatility and overall increasing trend of prices over the month.
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