System reliability in the context of SMD

Summary form only given. A fundamental principle of SMD is that it supports system reliability. The key mechanism it uses is different from the long-standing mechanisms that have been used in the past. It is a move away from traditional centralized command and control to a distributed decision making paradigm. The same reliability criteria and requirements will still be in place and equally enforced. What has changed is how system redispatch is deployed to keep the system within the reliability requirements. Traditionally, this was accomplished by the control center operator making decisions on what should be done to correct the situation and then issuing the commands to have it implemented (cut transactions/TLR and/or change generator unit outputs). In the SMD context, the same reliability criteria will be imposed, but will take the form of publishing locational marginal prices (LMP) to reflect the congestion costs to redispatch the system. Market participants can choose to pay the price premium due to congestion that they are a direct part of causing, or can modify their behavior. In any case, there will be the ultimate backstop of command and control, as we traditionally know it - when the system runs out of the capacity to correct the situation by redispatch.